The Costs of the Living Wage

The cost of strategies such as living wage campaigns are born primarily by small to medium sized businesses. And guess which businesses are more likely to be locally owned? And although most large business absorb the increases by raising prices or accepting lower profit levels, some small business, especially those with under a 100 employees are forced to replace high-skilled workers. So although the employment levels looked good overal in areas where living wage ordinances were passedl, and in some cases employment levels even improved, it was also true that some high skilled jobs were lost. Most ordinances, however, do exempt employers below a certain size, in Santa Fe business with fewer than 25 employees were exempted. In this way some protection was offered for the smaller family owned shops. However, we need to remember that local ordinances that ensure living wages primarily affect local merchants.

Even given these concerns, it still makes economic sense overall to raise minimum wages. We just need to do more than just raise wages. As several business groups have rightly pointed out, the real problem is not wages so much as escalating housing and healthcare costs. Larger businesses absorb the cost of living wage ordinances, primarily, because they can either simply make up for the loss in other locations or spread the price increases over a larger base. Small and medium sized businesses do not have the ability to absorb costs as readily, and many are already vulnerable to the low price strategies of big box stores such as Wal-Mart. Conversely, housing subsidies and universal healthcare are strategies whose costs are born by all taxpayers. Modest increases in minimum wages in concert with housing subsidies and universal health care would go along way toward actually changing the economic landscape for poor families without over burdening already struggling local businesses.

So what role does living wage play in developing survivable communities? Well as we saw above, it can adversely affects local businesses and merchants, our neighbors. So we need to be cognizant of how they will bear the brunt of any change in minimum wage levels; and we, as a result, need to commit to spending more of our money with those local businesses. Fair enough, right?

But no discussion of living wage is truly complete if we overlook our individual role as employers and contracting agents. We need to also pay, at a minimum, the living wage level, to all domestic help. Raising the wages of domestic workers targets the most economically vulnerable portion of the workforce. Similarly in our organizations and community groups, as well as within non-profits, we need to make a commitment to supporting a living wage for all staff positions. Again, we need to support our neighbors.

And finally we need to make a commitment to pay all artisans, musicians and clergy, at a minimum, at a level commiserate with living wage levels. This means we try to purchase software, music, books, and art instead of just copying it or downloading it from the Internet for free. This means we pay people for the services they provide instead of forcing them into a form of intellectual servitude.

It is a different mind set, but given how most of us can see how clearly a living wage is essential for people to lift themselves out of poverty, it is sometimes daunting to see how we as individuals can also affect people lives in much the same way, one on one. How much do you pay your baby-sitter, your maid, or the man who cuts your grass? How much do you pay to hear a local band perform, or contribute to your local church to pay the minister’s salary? How much are you willing to pay to hear a local writer speak or take class from a noted printmaker?

It is the same issue as the various living wage campaigns. And it is the same answer. A living wage is one that allows a person to pay for housing, healthcare, food, and transportation, and at the same time helps them to do more than merely survive. And what are we willing to do, individually or collectively, to make that vision a reality?

It is hypocritical to campaign for increases in the minimum wage if we are simultaneously unwilling to pay the higher wages ourselves. Consider this the next time you are face to face with an artist, nanny or day laborer. They too deserve to be able to afford decent housing and healthcare.

Living wages, no matter how they are computed, are part of a larger push for raising the standard of living for those amongst us who are the most vulnerable. And as such, it is one of the principles I feel is essential to building real economic sustainability.

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Hecate (not verified) | Tue, 03/28/2006 - 4:10pm

Katrina,

Your post touches on another point that hasn't, IMHO, gotten enough attention. The US is one of the few developed countries that does not provide health care for its citizens. Many small employers can no longer afford the high costs of insurance and their workers go "naked" as a result. Those small employers, hell, large employers as well, would benefit as much as anyone from a program to provide medical care to all Americans. Currently, a large proportion of consumer bankruptcies are due to medical bills. Get sick, lose your job because you can't work, lose your insurance because you've lost your job, run up big medical bills because you're sick . . . .

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