Poverty pay isn’t inevitable. Look to the cleaners of New York

Back to school time, so let’s start with a quick quiz. The minimum wage in Britain is £6.31 an hour, while in New York it’s $8 an hour, or £4.93. So who do you think’s better paid: a hotel cleaner in London or one in Manhattan? You at the back: stop Googling. At the heart of this question lies one of the most important issues in economics and politics today – who gets paid what, and how. And the answer: New York City wins.

A cleaner on London’s Park Lane will almost certainly be on or around the minimum wage, say £6.31 for each hour. Her counterpart (because, let’s face it, it’s almost always women doing this physically punishing work) on New York’s Park Avenue is likely to be on nearly three times as much: an agreed hourly rate of $28.50, or £17.66.

Those figures upend most of what we’re usually told about how the economy works. How many times have you heard some frontbench MP or policy wonk blithely talk about how the labour market is dividing between “lovely jobs” and “lousy jobs”? As if the choice is between being a software engineer, say, or a care assistant. The implication is that anyone in the second category has opted for poverty pay and miserable conditions. In that worldview, you don’t get much lowlier than scrubbing someone else’s toilets. But the folk who do it in Manhattan hotels can expect to earn an annual salary of £32,150 – way above the average salary for all New Yorkers, and indeed for all Britons.

How often have you heard some otherwise well-meaning progressive sigh that it’s impossible to get multinationals to play nicely? To pay their staff well, or chip in their taxes. Well, here you have two people doing the same job in the same industry for the same global chains (Hilton, Holiday Inn, Hyatt) in two wealthy world cities – but one is earning nearly three times as much as the other.

So, what makes the difference between the hotel staff in London and New York? In our capital, between 2% and 4% of all hotel workers are in a trade union. Over the Atlantic, about 70% of New York hotel staff are unionised. Offer such high memberships to a public sector union official over here and they’d bite your hand off. And the hotel and motel trades council has just signed a deal taking a room cleaner’s salary up to $69,000 by 2024. A lot of Gotham city’s junior academics and journalists can only dream of such guaranteed earnings.

Go to the TUC conference in Liverpool this week and you’ll hear plenty of speakers complain about how Britain’s booming jobs market is really a boom in the lowest-paid service work. Graduates are becoming not barristers but baristas – and not just for a few weeks but for years. All true enough; but such complaints can slide into a lazy fatalism that restaurants and hotels and adult social care must inevitably be low-paid and exploitative of insecure migrant labour.

That response is wrong for two reasons. First, for the labour movement to recognise that Britain’s major growth industries are in poverty-pay sectors, and then not to try organising those sectors, amounts to little more than an early call for its obituarists to get typing. Second, workers in those sectors can not only organise – they can take serious industrial action. Rather than accept a 35% pay cut, care staff in Doncaster have been on strike for nearly nine weeks. After seeing one in three of their colleagues made redundant, carers in the north London borough of Barnet have just begun a planned walk-out. Cleaners and other ancillary staff at parts of the University of London have fought for, and won, living wages.

The grievances of London’s hotel staff are no less serious. I spent part of the weekend talking to workers for InterContinental Hotels Group. If you’ve ever been in a Holiday Inn or an InterContinental or a Crowne Plaza, you’ll know IHG. On some measures, it is the biggest hotel group in the world. It’s also a tight-fisted employer: despite having promised two years ago to pay staff in the capital the London living wage, most of its employees are on just above minimum wage: about £6.81 an hour. None of the staff I talked to reported pay rises. What they did point out was hearing from managers how well the hotels were performing, how heavily booked they were.

Over the past 11 years, IHG has given shareholders nearly $10bn. Its chief executive will be paid a minimum of £1m this year and a maximum of £4.1m – yet it cannot afford to pay some of the poorest people in London £8.80 an hour. Ask the press office why not, and it says the company will meet its target by 2017.

This is a business that counts on staff turning to the taxpayer for benefits to top up poverty pay. It’s a multinational that can’t be bothered to train or keep its staff, all of whom asked to be kept anonymous for fear of reprisals. One woman told me how, without an induction, she was launched on to the reception desk of a big London hotel: “Within half an hour, I had a breakdown – I was crying.” A black British man related how he was called “chocolate boy” by a colleague – and managers refused to intervene. I heard stories of how hotel cleaners start the day with a handful of painkillers. Kevin Curran of the union Unite attests that IHG hotel managers warn staff not to talk to him – then try to stop him handing out leaflets on the road in the grounds. Then they claim that this 50-year-old wiry marathon runner is “intimidating”.

Sad stories like these are not inevitable: New York City proves that. The lesson from hotel workers there is that a classically disorganised sector can be organised; that the biggest of multinationals can hold to binding local agreements. It takes committed, deft organising, true: not the bunch of lay organisers and one full-timer Unite has so far devoted to London’s hotels. But it’s possible. One thing ties together good jobs and crap jobs: both are produced not only by economics but by politics too.

Twitter: @chakrabortty