Fighting for Living Wages

Nobody in America who works full time should live in poverty. However, the fact is as of April 2007 over 37 million people, more than the population of the State of California, do. According to recent US Census figures, 5 million more people are poor today that were not in 2000. Nearly 8 million live in neighborhoods of concentrated poverty where at least 40% of the residents are poor.

Perhaps the most telling statistic is that over 25% of all full time workers do not make enough to keep a family of four above the poverty threshold. The Federal Minimum Wage is an idea whose time has come and gone. The time has come to replace the Federal Minimum Wage with locally derived living wage standards.

Thinking globally, a salary of $40,000/year or more puts one in the top 1% of wage earners in the world. Here in the US, however, that income will put you nearly $10,000 below the US median income. The root question is why are more people falling into poverty in the wealthiest country in the world? One of the biggest reasons for this is that wages in the United States have remained essentially stagnant for the last 30 years. Yet inflation, in terms of the increase in the cost of living, has increased 3% per year, on average, over the same time period. In addition, the real value, adjusted for inflation, has decreased over 25% since 1967.

The net result of all this is more people falling into poverty and more people just barely getting by. The most effective way to combat poverty is the implementation of living wage laws.

Corporate executives and big business owners have created a number of arguments against both raising the minimum wage and against implementing living wage laws. They say that raising wages will cost them too much. Statistics say the opposite. The cost of paying low or substandard wages actually incurs more cost to a company.

Between 1973 and 1998 the number of hours worked per worker in the US has increased 140/year. Working more and longer hours has been shown to negatively affect employee health. When employee health suffers, so does their employer. Higher stress leads to more illness which results in costs to the company in absenteeism, turnover, and lost productivity.

Low wages not only affect the businesses paying them, they impact each and every one of us. How? Low wages which don’t allow an employee to meet their basic needs such as food, clothing, housing, and childcare, results in more people turning to Federal, State, and Local social services. This impacts us all through higher and higher taxes.

These myths created in opposition to living wage laws are nothing more than a justification to support an economic system that views this form of economic slavery as simply the “cost of doing business”.

Opponents will argue that living wage laws will cause inflation and inhibit economic growth.

Fact. Studies on existing living wage laws have found that very little of the increased labor cost is passed on to either consumers or in city contracts.

After Oregon raised the minimum wage for restaurant workers, an economic impact study showed that the increase in restaurant meal prices was actually less than the inflationary increase in general food and beverage prices.

Chicago’s “big box” ordinance, which would impose a $10/hr minimum wage for employees of “big box” retailers such as Walmart, Target, and Home Depot impacted consumers by $0.80 per year per shopper.

After Baltimore enacted a living wage law, the impact to the city in contract costs was a reduction of 2.4%.

Opponents will argue that living wage laws will result in higher unemployment. This is in direct contradiction to the reason for the creation of the minimum wage in 1938. When the law was enacted, it was believed that better wages increase consumer spending, stimulating the economy, resulting in creating more jobs. Over 70 years of evidence proves this theory out. An overwhelming number of studies done have shown that wage increases that keep up with or slightly ahead of inflation have little to no effect on unemployment rates.

Businesses impacted by living wage laws have seen their labor costs increase, typically by approximately 2% of their overall operating budgets. However, studies have shown that these costs are typically absorbed through increased efficiency and reduced costs associated with absenteeism and turnover where the impact is near zero. In some cases, businesses have seen increases in profitability due to wage increases.

Perhaps the biggest myth is that most low wage workers are teenagers. Prior to the last minimum wage increase, a study was done by the Economic Policy Institute to forecast the impact. The study showed nearly 12 million workers would benefit by a $1/hr increase in the minimum wage. Of these 12 million workers, 72% were adults over the age of 20 and 60% were women. Prior to the 2007 increase in the minimum wage here in Arizona, statistics from the Arizona Advocacy Network showed that 74% of the 125,000 minimum wage workers in Arizona were older than 25, and 25% were single mothers.

Contrary to popular opinion, living wage laws positively affect local economies. They help increase employee morale, resulting in a more stable and productive workforce. Higher wages stimulate businesses in low income neighborhoods. They bolster one’s self respect and, in some cases, have been shown anecdotally to reduce neighborhood blight.

As the cost of living continues to rise and wages remain stagnant, more and more Americans are watching the American dream fade into the distance. This is why I urge you today to join the Universal Living Wage Campaign. The group is found on the internet at www.universallivingwage.com. You can find resources to help determine what the living wage in your area is, information to combat the myths of the opposition, and ways to voice your support for ending economic slavery. Together we can make a difference for all Americans.

Resources:
1) 2006 Current Population Survey, Census Bureau, found at http://www.census.gov/population/www/cps/cpsdef.html
2) Kraut, Karen, Klinger, Scott, and Collins, Chuck. “Choosing the High Road: Businesses that pay a living wage and prosper” (2000). United for a Fair Economy. Retrieved from www.responsiblewealth.org/living_wage/Living_Wage_Report.pdf on April 2, 2009.
3) Dube, Arindrajit. “Living Wage Policies and Walmart: How a higher wage would impact Walmart workers and shoppers”. December 2007. UC Berkeley Labor Center. Retrieved from http://laborcenter.berkeley.edu/retail/walmart_livingwage_policies07.pdf on April 6, 2009
4) Anonymous. “Summary of Major Living Wage Studies Through 2002”. Wayne State University Labor Center. Retrieved from http://www.laborstudies.wayne.edu/research/ResearchSummaries.pdf on April 6, 2009.