A Living Wage Works

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A Living Wage Works
by James Hall, Associate Editor

March 19, 2002

"Leaning Left"

James Hall "Living wage laws will lead to some employment loss, but on balance, the steep wage increases make it less likely that families with a living wage worker will live in poverty, especially in cities where the law applies more broadly." David Neumark, Economist, Michigan State University

"It's fundamental: If you work, you shouldn't be poor. People in America believe that." -- Jen Kern, Living Wage Resource Center, ACORN

America was founded on the idea that hard work pays off. Yet this isn't always the case. For poor, unskilled or semiskilled labor, it's still possible to work hard for a minimum wage and find yourself living below the poverty line, requiring public housing, food stamps, ADC and other government programs just to make ends meet. This is because our minimum wage, which has lost 35% of its value since 1980, is suitable perhaps as a training wage for students or part-time workers, but woefully inadequate for bread-earners raising families.

Attempts to raise the minimum wage nationally generally run into political fights with organized business interests and conservatives, who argue that raising the minimum wage will increase unemployment. Labor unions, religious groups, community organizations and their supporters have responded locally by advancing the idea of a living wage--a wage that raises a full time worker and his family out of poverty. Since 1994, almost forty US cities have passed living wage ordinances which mandate that businesses associated with a city or county area pay their workers a wage that varies by region, but that is essentially twice the amount of the current federal minimum wage.

A federal living wage has also been proposed, since one out of every ten contract workers for the federal government works for a minimum wage.

Now a 145-page study by conservative economist David Neumark, "How Living Wage Laws Affect Low Wage Workers and Low Income Families" examines the economic effect of living wage laws in 36 cities across the nation. Neumark's study concludes that despite having a small effect on unemployment, a living wage raises low-income families out of poverty.

Neumark, a conservative economist at Michigan State University, is a longtime opponent of the effect of minimum wage laws, which raise wages across the board-- including wages for students, entry-level workers, and part-time workers. And he remains a foe of a universal minimum wage for all workers. But Neumark found that living wage laws focus primarily on "breadwinners," adults who are the chief or sole source of a family's income. Giving breadwinners a living wage results in a low-income family moving out of poverty, becoming less dependent on government programs and becoming taxpayers in their own right.

This study comes at a crucial time for the living wage movement. Though cities and counties continue to pass living wage ordinances--New Orleans passed one just last month--business lobbies are increasingly challenging them, spending millions to counter ballot initiatives, filing lawsuits, and lobbying state legislatures to outlaw the practice (some seven states have outlawed living wage ordinances in their states).

While it is understandable that businesses want to hold wages down, it makes no sense for taxpayers to permit them to keep their wages down to levels below the poverty line. When the working poor require government programs just to survive, the taxpayer picks up the bill for these services. Living wage laws, which target the breadwinners of low-income families, force businesses to pay a fair wage, making the American dream of hard work leading to success possible.

Americans believe in the value of hard work, and a day's pay for a day's work. Companies that pay wages below the poverty line rely on the taxpayer to make up the difference between a minimum wage and a fair wage. Living wage ordinances are one of the best ways to force business to pay their employees a fair wage--a living wage.

Learn how you can start a living wage campaign in your area. ***

Photo of the author courtesy of staff files