Paying to work

18th April 2012

On Monday The Financial Times ran a piece by Sam Jones and Ed Hammond discussing how half of all hedge fund managers in central London are not based in Mayfair and St. James's command compared to nearly 70 percent five years ago, citing poor market conditions, new regulatory oversight and higher taxation as the basis for moves to more "modest" neighbourhoods, including Knightsbridge and Soho.

The following day, the FT reported that inflation over the past few years has outstripped minimum wage growth as well as medium income growth, leaving this year's increase lower in real terms than it was in '04. Despite the Low Pay Commission's recommendation last month that the level be frozen this year for young people and increased 1.8 percent for adults, the economic downturn has continued to hit many hard, with the CBI business lobby group, which sits on the LBC, saying, "Retailers, care homes, hospitality and other consumer-facing businesses are experiencing particularly tough conditions, so it's good that the LPC listened to the CBI's advice and made sure its recommendations preserve jobs and support the fragile recovery."

The results of a new study published by Teela Sanders and Kate Hardy from Leeds University supports this claim. Their survey of 200 lap dancers-the largest study of its kind ever conducted in the UK-raises hard questions regarding the clout of workers in a business that, although empowering for many participants, ultimately exploits their labour for personal profit-a dilemma to which many outside the sector can relate.

Carried out during 2010-2011, "The Regulatory Dance" consists of an interviewer-administered survey conducted with 197 dancers from 45 towns and cities in the UK and 16 international locations disproves many negative notions regarding women in the profession. All of the dancers surveyed by Sanders and Hardy had some education, with current students comprising one-third of the sample and 60% of that sample attending school full-time.  And the largest proportion-21.4%–joined the business because they wanted to, suggesting a high rate of choice and independence amongst those in the profession.

But this independence has its limit. 70% had left a shift without a penny in their hands upon paying for house fees, commission and travel to work. Sanders explained to The Telegraph that since dancers keep strip clubs alfoat, they are viewed as pawns in the game of supply and demand. At first glance, the lap dancing profession may seem irrelevant to hedge fund headquarters and minimum wage growth. But the study's analysis of industry management of vulnerable employees mirrors a broader issue of employer investment in workers at all levels. Lap dancers pay clubs to be able to perform. In an economy with stalled minimum wage growth and companies slashing budgets, there is another name for lap dancers: interns.

Internships

Designed as hands-on training for students poised to enter professional careers, internships can serve as the basis for one's entry into the workforce through practical experience, with interns who perform exceptionally well often invited to join their respective companies in paid capacities. But interns can pay a high price to get their foot in the door-literally. Many companies fail to include intern salaries in their financial budgets, compensating those at the bottom tier in the form of academic credit or travel stipends, if that; if stipends for meals and travel are not provided, interns often pay to work for companies rather than vice versa. For years, the ethics of unpaid internships have been the subject of debate, with organisations including the IPPR and Internocracy arguing that under national minimum wage legislation, many volunteers could be legally defined as workers open to compensation claims. ""Employers often mistakenly believe there is a grey area around internships in the NMW (national minimum wage) legislation that allows them to take on unpaid interns as long as both sides understand it a voluntary position," a 2010 report argued, "-but this is simply not the case." In the wake of increased inflation-and the Institute for Fiscal Studies' 2011 forecast that real median net household income will be lower in 2015-16 than it was in 2002-3-it is time to critique the role managers must take in valuing employees-indeed, investing in them-at all hierarchal levels.

Speaking to O'Connor about the minimum wage's latest downturn, Professor Alan Manning of the London School of Economics argued in favour of targeted, systemic solutions including a "premium" minimum wage up to 10 percent higher than the standard national minimum wage for people over 30 and a higher minimum wage for people living in areas with costs of living above the national average. These recommendations, coupled with financial regulation of those atop the totem pole, are long overdue-but they must not exclude those who lie outside the sphere of compensation.

The decision to work, whether as a lap dancer or law intern, is a choice that comes with a high cost if managers refuse responsibility for their cheap labour. Likewise, as already discussed, many students yearning for employment will be at a distinct disadvantage without (often unpaid) internship experience, but must find paid work in order to get by. This is the ultimate paradox of rich vs. poor, as only the affluent who are able to receive outside income can afford to work for none.

Financial solutions for those at the bottom income scale and regulation for those at the top are a strong start. But if they exclude workers outside the pay scale, then discussion regarding the ethics of exploitation is at least slightly disingenuous.

 

More on Mindful Money

Executive pay: Are we looking at the wrong numbers?

Wellbeing, happiness and sustainability: hallmarks of a new economic paradigm

Business: Is student expertise being exploited?

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