Galen Weston Knows Paying a Living Wage is Bad for Capitalism

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Galen Weston Knows Paying a Living Wage is Bad for Capitalism

A full-time minimum wage worker takes home $25,877. In Toronto where rent averages $2,000 a month, that means living in poverty.

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Loblaw Co. Ltd. chairman Galen Weston Jr., is, with a fortune of $10.04 billion (USD), is one of the five wealthiest people in Canada. Last week, he expressed concerns that raising the minimum wage will cut into his company’s profits. Photo via strategyonline.ca

Galen Weston Jr., the mild-mannered, bespectacled grocery-store magnate you may recognize from President’s Choice commercials, is a thoroughly Canadian one-percenter. He is thoroughly Canadian in the sense that he isn’t flashy or grandiose like Richard Branson, and he doesn’t tout the benefits of vampirism or plot to destroy the free press, à la real-life super villain Peter Thiel. He is thoroughly of the one percent in the sense that his family is worth somewhere in the ballpark of $9 billion, he himself earned at least $5 million last year, and, despite that generous—one might even say obscene—level of wealth, he remains staunchly opposed to paying his employees enough money to live on.

The prospect of impending minimum-wage hikes in Ontario and Alberta, where employers will soon be required to pay the kingly sum of $15 per hour, elicited a strong reaction from the George Weston Ltd. CEO (which owns Loblaws, Shoppers Drug Mart, and No Frills, among other chains and brands) last week.

“We are flagging a significant set of financial headwinds,” Weston said in reference to the long-overdue wage increases set to come into effect over the next few years. He predicted the company’s labour costs will jump by about $190 million next year. Rather than address the fact that such a huge jump means his company is paying many of its employees below $15 right now—which equals to, in most Canadian cities, poverty-level wages. He’s chosen to portray his nearly $14 billion company as the victim of unfavourable legislation.

It’s true that a modest hike to the minimum wage is unfavourable to a profit-seeking entity, but it beggars belief that Weston or his company are the ones holding the short end of any stick. After all, the company reported a second-quarter profit $200 million higher this year than last, up to $358 million from $158 million.

In one of the world’s wealthiest nations, it is a moral crime that anyone should be unable to afford a home, food, medicine, and anything else they need to live in comfort. It’s shameful that we don’t discuss it in that way, just as it’s shameful that the man at the helm of one of Canada’s largest employers is comfortable rejecting measures that would improve the well-being of the people who work for him, both as a moral obligation and as an economic one. Well-paid workers means more people are buying goods and services, mind you, not necessarily at his stores.

However, while it’s shameful it’s not at all surprising. Nor is it surprising that, as CBC reported, Weston’s company is looking to mitigate this increase in labour costs by “digitizing manual invoice jobs and rolling out more self-checkouts at its Shoppers Drug Mart locations,” which is to say, cutting jobs. (Loblaw is one of Canada’s largest private sector employers, employing more than 192,000 full-time and part-time workers in the country.)

Weston may not even need to take those measures; he’s not shouting into the void with his worries about paying higher wages. With an election looming next year, Premier Kathleen Wynne may decide it upsets business leaders and potential donors too much. If her overtures to workers threaten to throw her standing in the business community into turmoil, she could easily back down. Weston knows this, and he’s surely lobbying hard to help sway her.

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Cashiers at the Loblaws Maple Leaf Gardens, who could soon be replaced with self-checkout machines. Photo by Craig White via Torontoist’s Flickr Pool.

All of this—the minimum wage hikes, Weston’s response, and his threats to cut jobs, the possibility that a cowed politician could roll back the gains for workers she’s tentatively inching toward—shows the problems inherent in taking an incrementalist approach to improving people’s lives.

Tinkering at the edges of a capitalist economy leaves the people and institutions with money and power—capital, in more ways than one—well-positioned to find ways around whatever meagre advances are made at their expense. It leaves workers with dramatically less power and uncertain about who is on their side and thus uncertain about who to hold to account or how. And it means politicians, if they lack a compelling ideological reason not to, are likely to gravitate toward the locus of money and power as a way to stay in office.

As can be expected, few, if any, media outlets reporting on Weston’s remarks touched on this at all. They may point to the hypocrisy of a wealthy business leader such as Weston pinching his pennies so tightly—an easy, though not inappropriate, target. It’s rare to see reporting go as far as Vice’s Money vertical did in laying out just how little that minimum wage actually is ($25,877 per year in Ontario after taxes and deductions, assuming an employee is full-time and permanent), hinting at the hardships workers are forced to face by employers like Weston. Stagnant wages and rising housing costs—average rent in Toronto just passed $2,000 a month—means his workers aren’t just squeezed, they’re living in poverty.

The problem is not precisely Weston’s comments, galling though they are. The problem is that, in the economic system in which we currently live, that attitude is perfectly logical and, in fact, beneficial to the system’s overall operation. This will come as no surprise to anyone, but businesses succeed by growing their profits, and they grow their profits in part by keeping their costs down. Labour is one such cost. It does not behoove a company with dreams of wealth and success to pay its workers more than it needs to. In fact, it behooves companies to pay as little as possible.

A record number of young Canadians are living at home into adulthood, and those numbers are even higher in the country’s most expensive housing markets. Precarious work is keeping those same workers from any sort of income security, even when they can find work. With less in earnings, workers are paying less into their pensions, and, shut out of a wildly expensive housing market, they face astronomical rents and eventually the very real prospect of homelessness in old age. If radical changes aren’t made to the way we provide for each other, and what we expect of the most privileged, it’s going to be a grim future for most of us.

The fact that Galen Weston Jr. can sit on his family’s billions and decry the prospect of paying a not-even-living wage is all the more reason to consider asking the Westons of the nation to contribute their fair share. Social programs alleviate the need to raise the minimum wage, after all: The more people’s needs are provided for by the government, the less they need to take home in cash pay to survive. And those cost money.

Weston is very concerned about a tiny increase to the minimum wage, but a maximum wage is what we should really be talking about.

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