Introduction
In two others posts I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada) and the twenty largest employers in Canada according to profit (see A Short List of the Largest Private Employers in Canada, According to Profit).
I have tried to calculate the rate of exploitation of workers of Magna International in an earlier post (see The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One); Magna International is one of the largest employers in Toronto. I also calculated the rate of exploitation of workers at the Canadian Imperial Bank of Commerce (CIBC) (see ???).
But what is the rate of exploitation? And why not use the usual rate of profit or the rate of return? The rate of profit is calculated as profit divided by investment. Since employers purchase both the means for work–buildings, computers, office supplies, raw material–and hire workers–we can classify investment into two categories: c, meaning constant capital, or the capital invested in commodities other than workers; and v, or variable capital, the capital invested in the hiring of workers for a certain period of time (wages, salaries and benefits).
The purpose of investment in a capitalist economy is to obtain more money (see The Money Circuit of Capital), and the additional money is surplus value when it is related to its source: workers working for more time than what they cost to produce themselves. The relation between surplus value and variable capital (or wages and salaries) is the rate of surplus value or the rate of exploitation, expressed as a ratio: s/v.
When the surplus is related to both c and v and expressed as a ratio, it is the rate of profit: s/(c+v).
In Marxian economics, you cannot simply use the economic classifications provided by employers and governments since such classifications often hide the nature of the social world in which we live. The rate of profit underestimates the rate of exploitation since the surplus value is related to total investment and not just to the workers. Furthermore, it makes the surplus value appear to derive from both constant capital and variable capital.
I decided to look at the annual report of some of the largest private companies in Toronto and Canada if they are available in order to calculate the rate of exploitation at a more micro level than aggregate rates of surplus value at the national or international level. Politically, this is necessary since social democrats here in Toronto (and undoubtedly elsewhere) vaguely may refer to exploitation–while simultaneously and contradictorily referring to “decent work” and “fair contracts.” Calculating even approximately the rate of exploitation at a more micro level thus has political relevance.
Conclusions First
As usual, I start with the conclusion in order to make readily accessible the results of the calculations for those who are more interested in the results than in how to obtain them.
We have the following:
Adjusted income before income taxes=s= $13,570
Adjusted total salaries and employee benefits=v=$10,997
The rate of exploitation or the rate of surplus value of Toronto Dominion Bank workers is =s/v=13,570/10,997=123 percent.
That means that for every hour worked that is equivalent to her/his wage, a worker at TD Bank works around an additional 74 minutes for free for TD Bank. Alternatively, this means that, in terms of money, $1 of wage or salary of a regular TD Bank worker results in $1.23 surplus value or profit for free (calculated on the basis of the procedure outlined in the post on the rate of exploitation of Canadian Imperial Bank of Commerce bank workers).
It also means the following (I use minutes as well as hours):
- For a 6.5 hour working day (390 minutes), TD Bank workers spend 174 minutes (2 hours 54 minutes) to obtain their wage for the day, and they spend 216 minutes (3 hours 36 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 7.5 hour working day (450 minutes), TD Bank workers spend 201 minutes (3 hours 21 minutes) to obtain their wage for the day, and they spend 249 minutes (4 hours 9 minutes) in obtaining a surplus value or profit for TD Bank.
- For an 8-hour working day (480 minutes), TD Bank workers spend 214 minutes (3 hours 34 minutes) to obtain their wage for the day, and they spend 266 minutes (4 hours 26 minutes) in obtaining a surplus value or profit for TD Bank.
- For an 8.5 hour working day (510 minutes), TD Bank workers spend 228 minutes (3 hours 48 minutes) to obtain their wage for the day, and they spend 282 minutes (4 hours 42 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 9-hour working day (540 minutes), TD Bank workers spend 241 minutes (4 hours 1 minute) to obtain their wage for the day, and they spend 299 minutes (4 hours 59 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 10-hour working day (600 minutes), TD Bank workers spend 268 minutes (4 hours 28 minutes) to obtain their wage for the day, and they spend 332 minutes (5 hours 32 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 17-hour working day (1020 minutes), TD Bank workers spend 455 minutes (7 hours 35 minutes) to obtain their wage for the day, and they spend 565 minutes (9 hours 25 minutes) in obtaining a surplus value or profit for TD Bank.
TD Bank workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.
The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the left.
Data on Which the Calculation Is Based
The annual report has both statistics on revenue and expenses, but there are also reported statistics in the annual report modified by an adjustment that is specific to the Toronto Dominion Bank; the adjustment in the annual report is not a standard adjustment. I have omitted any reference to such an adjustment since it would probably make the posts on the rate of exploitation in other posts less comparable.
The calculation of the rate of exploitation is undoubtedly imperfect, and I invite the reader to correct its gaps.
In millions of Canadian dollars:
page 15:
(millions of Canadian dollars, except where noted) 2019
Results of operations
Total revenues $ 41,065
Provision for credit losses $3,029
Insurance claims and related expenses $2,787
Non-interest expenses $22,020
Income before income taxes and equity in net income of an investment in TD Ameritrade $13,229
Page 23:
NON-INTEREST EXPENSES
Salaries and employee benefits
Salaries $ 6,879
Incentive compensation 2,724
Pension and other employee benefits 1,641
Total salaries and employee benefits 11,244
Occupancy
Rent 944
Depreciation and impairment losses 405
Other 486
Total occupancy 1,835
Equipment
Rent 245
Depreciation and impairment losses 200
Other 720
Total equipment 1,165
Amortization of other intangibles 800
Marketing and business development 769
Restructuring charges 175
Brokerage-related fees 336
Professional and advisory services 1,322
Other expenses 4,374 }
Total expenses $ 22,020
Adjustments
In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest); in such a case, the expense is deducted from total revenue. On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes.
Before entering into the issue of adjustments according to Marxian theory, however, it is necessary to address one of the categories that I did not include in the above calculation. It is a reference to Income before income taxes and equity in net income of an investment in TD Ameritrade,” which is equal to the $13.229 billion reported above. The inclusion of the term “equity” seems to refer to assets, but the following led me to believe that it was referring to net income rather than to assets as such (https://seekingalpha.com/news/3507506-td-bank-expects-230m-net-income-from-td-ameritrade-in-q4):
TD Bank expects ~$230M net income from TD Ameritrade in Q4
TD Bank Group (NYSE:TD) expects TD Ameritrade’s fiscal Q4 net earnings to translate to ~C$301M (~US$230M) reported equity in net income of an investment in fiscal Q4.
I therefore leave the category “Income before income taxes and equity in net income of an investment in TD Ameritrade” as is, except that I shorten it now to just “Income before income taxes.”
In the annual report, the category of “Non-interest expense” is subtracted from total revenue, to yield the category “Income before income taxes.” However, to calculate the rate of exploitation according to the principles of Marxian economics, it is necessary to make certain adjustments. To that end, we need to look in more detail at the category “Non-interest expense.”
In the category “Salary and employee benefits,” there is the subcategory “Incentive compensation.” A one-page TD document indicates what this involves for all employees:
TD’s Approach to Compensation
TD provides employees with a comprehensive total rewards package that includes a combination of base salary, incentive compensation, benefits, and retirement and savings plan
Further, for executives:
Executive Compensation
We have a balanced approach to executive compensation that is intended to attract, retain and motivate high-performing executives to create sustainable value for shareholders over the long term. … This compensation is tied to the bank’s share price and promotes decision-making that is in
the best long-term interests of the bank and its stakeholders.
There is thus additional compensation called incentive compensation, but the issue is whether such additional compensation is a result of workers being exploited or exploiting workers.
As I wrote in the post on the exploitation of Canadian Imperial Bank of Commerce (CIBC) workers:
Most employees, whether executive or not, seem to be eligible to some support of bonus as a function of performance. However, the gap between executive pay and the pay of regular employees has widened over the years, so it is reasonable to infer that the category “Performance-based compensation” is divided into two parts: one part is a function of the number of hours worked by regular employees as well as the intensity of that work; the other is based on the extent to which bank managers and senior executives are successful in exploiting those regular employees.
Without further information, it is impossible to determine the proportion that is derived from exploiting bank workers and being exploited. I will assume, as I did in the case of the CIBC, that 10 percent of the “Incentive compensation” originates from the exploitation of TD bank workers. This 10 percent is equal to $247 million and must be subtracted from the subcategory “Total salaries and employee benefits” and added to the category “Income before income taxes.”
Another expense category is also relevant for making adjustments–the category “Rent.” The rent of buildings, like the rent of equipment, is an expense both at the level of the firm and at the level of the economy as a whole. However, in the case of occupancy, rent also includes the capitalized value of land, and this capitalized value of land is derived from surplus value (see Jorden Sandemose (2018), Class and Property in Marx’s Economic Thought: Exploring the Basis for Capitalism). Again, without further information, it is impossible to tell or determine the proportion that is paid for the rental of buildings and the rental of land. I will assume that 10 percent of rent is due to the exclusive ownership of land (a non-produced means of production). This 10 percent is equal to $94 million and must be subtracted from the subcategory and added to the category “Income before income taxes.”
Adding $94 million to $247 million gives $341 million.
“Income before income tax” must thus be increased by $341 million, and “Total salaries and employee benefits” must be decreased by $247 million.
This gives us the following:
Adjusted Results
Adjusted income before income taxes $13,570
Adjusted total salaries and employee benefits $10,997
The Rate of Exploitation of TD Bank Workers
To calculate the rate of surplus value, we need to relate “Income before income taxes” to “Total salaries and employee benefits.” So, with the adjustments in place:, s=13,570; v=10,997. The rate of exploitation or the rate of surplus value=s/v=13,570/10,997=123 percent.
That means that for every hour worked that produces her/his wage, a worker at TD Bank works around an additional 74 minutes for free for TD Bank.
According to a few people who have worked at TD Bank, the length of the working day is:
I worked 7.5 hrs each day, some overtime is required. but not so often.
I normally am scheduled to work 8 1/2 hours a day Monday to Thursday. On fridays i am scheduled for 6 1/2.
It depends on the activity but can vary from 10 hours to 17+ hours
8 hours a day
Nine hours
I will calculate the division of the working day from the shortest to the longest in the above quotes accordingly. I use minutes rather than hours.
- For a 6.5 hour working day (390 minutes), TD Bank workers spend 174 minutes (2 hours 54 minutes) to obtain their wage for the day, and they spend 216 minutes (3 hours 36 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 7.5 hour working day (450 minutes), TD Bank workers spend 201 minutes (3 hours 21 minutes) to obtain their wage for the day, and they spend 249 minutes (4 hours 9 minutes) in obtaining a surplus value or profit for TD Bank.
- For an 8-hour working day (480 minutes), TD Bank workers spend 214 minutes (3 hours 34 minutes) to obtain their wage for the day, and they spend 266 minutes (4 hours 26 minutes) in obtaining a surplus value or profit for TD Bank.
- For an 8.5 hour working day (510 minutes), TD Bank workers spend 228 minutes (3 hours 48 minutes) to obtain their wage for the day, and they spend 282 minutes (4 hours 42 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 9-hour working day (540minutes), TD Bank workers spend 241 minutes (4 hours 1 minute) to obtain their wage for the day, and they spend 299 minutes (4 hours 59 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 10-hour working day (600 minutes), TD Bank workers spend 268 minutes (4 hours 28 minutes) to obtain their wage for the day, and they spend 332 minutes (5 hours 32 minutes) in obtaining a surplus value or profit for TD Bank.
- For a 17-hour working day (1020 minutes), TD Bank workers spend 455 minutes (7 hours 35 minutes) to obtain their wage for the day, and they spend 565 minutes (9 hours 25 minutes) in obtaining a surplus value or profit for TD Bank.
It should be noted that I have used the verb “obtain” rather than “produce.” In Marxian economics, bank workers, as well as sales workers do not produce surplus value but rather transfer the surplus value already produced. This does not mean that these workers are not exploited capitalistically; they are used impersonally by the employer to obtain surplus value and a profit. Furthermore, things produced by others are used by employers such as TD Bank to control their working lives in order to obtain surplus value or profit.
TD Bank workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.
The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the left.
The Abolitionary 