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As Stimulating As A Tax Cut -- A Living Wage |
Current rating: 0 |
by Joan Ryan
(No verified email address) |
11 Jul 2003
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Champaign County, Urbana, the C-U Public Health District, and the Housing Authority of Champaign County all have passed Living Wage ordinances that require those paid with public funds to receive a Living Wage. The City of Champaign recently rejected such an ordinance after a brief and dismissive debate that ignored extensive public support for a Living Wage. The commentary below describes how the Living Wage, expanded to cover all workers in a jurisdiction, can be every bit as effective as a tax cut in stimulating local economies. Local governments can act to grow their economies in the ongoing Bush Recession, if they have the spine, even as Congress continues to dawdle on raising a minimum wage that hasn't been increased since 1997. ML |
They're handing out tax cuts like free samples to the folks who don't need them, but the congressional hand wringing about raising the minimum wage lumbers on.
The federal minimum of $5.15 an hour -- unchanged in six years -- is so low that a full-time job still leaves a single parent with one child about 12 percent below the federal poverty line. Taking matters into their own hands, more than 100 cities across the country have passed "living wage" laws, which set a higher minimum wage that gives workers a fighting chance to support their families without government hand-outs.
But most living-wage laws apply only to companies that contract with the city. San Francisco is hoping to join Santa Fe, N.M., in going a step further: It wants to require all businesses in the city to pay a minimum wage of $8.50 an hour. (California's minimum wage is $6.75.) The initiative is expected to go before voters in November.
The debate on San Francisco's proposal and on all living-wage laws centers on several core questions:
Are do-gooders actually inflicting greater harm on businesses and workers by relying on the government, rather than the free market, to determine wages?
On the flip side: Aren't taxpayers subsidizing private businesses by essentially picking up part of the underpaid employees' salaries through food stamps and other government assistance?
Economist Robert Pollin of the University of Massachusetts has studied living-wage laws for the Political Economic Research Institute. He found that the laws' costs generally ranged between 1 and 2 percent of any given company's total production costs or sales.
For most companies, Pollin found, the impact was not enough to chase them from the cities or order layoffs, as critics always warn. Some businesses covered the wage increase by raising prices by 1 to 2 percent. In San Francisco, a hotel that charges $200 a night for room would have to raise its price to $204 a night. Companies can also choose to adjust salaries in the executive suites or slightly compress profit margins.
"People can survive biologically on very, very little," Pollin said. "What we're really talking about is what kind of society we want to live in."
We're also talking about the social and economic benefits that come with a person earning a living rather than relying on government handouts. We can provide food and health care to the poor through our tax dollars. Or the poor can provide for themselves with higher wages, and we pay a bit more for goods and services to cover the increase. Which scenario builds a stronger community?
There are legitimate arguments against living wage laws. Some businesses will withstand larger blows than others. In San Francisco, the initiative needs to modify the wages for those who earn the bulk of their salary from tips; otherwise restaurants will be hurt.
But some of the criticism is puzzling. Some of the same people who support tax cuts for the wealthy oppose a higher minimum wage for the poor. If the theory behind the tax cut is that we stimulate the economy by putting more money in consumers' hands, wouldn't the equation still hold true if those hands belong to poor people?
I heard one critic argue that raising wages would raise the cost of child care, putting an even greater burden on working families. So we should continue to pay child-care workers a pittance so parents can continue to contribute their labor to businesses that pay them a pittance? Sounds like a good deal for everybody but the child-care worker and the low-wage parent.
When President Franklin Roosevelt supported the establishment of a federal minimum wage in the mid-1930s, he argued that "no business which depends for existence on paying less than living wages to its workers has any right to exist in this country." The minimum wage was always intended to be a living wage. Roosevelt's words, long forgotten in Washington, are finding new life in the cities, where many still believe a day's work deserves a decent wage.
©2003 San Francisco Chronicle
http://sfgate.com |
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Re: As Stimulating As A Tax Cut -- A Living Wage |
by Observer
(No verified email address) |
Current rating: 0
11 Jul 2003
Modified: 09:07:31 PM |
Thank you ML for sharing this article.
In my opinion (and we all have opinions, no?) the broader context of the living wage issue evolves around the question, who ultimately has the capacity to oversee the well being of entire populations in any given society? The historically grounded answer is, of course, the state, not any individual economic entity or even an aggregation of such entities. Of, course, some would argue, and I would agree with them, that the state is the largest economic entity in any society. That aside, for the moment, if the the public sector's business is to take care of the public, it makes excellent sense to have subnational units (individual states in the US) and their lower level governemnts to impose a living wage. This makes good sense economically, and also politically. So, let's support the movement behind the living wage camapign, and let's enlighten our local and state and national leaders to stop hiding behind their fingers and to take action! Else, their professional political aspirations may not be actualized oin the future.
Ragarding San Francisco, this $8.50/hr living wage is really an insult, especially because the working class in that city has to pay for the most expensive housing in the United States (nicer estimates that account for the housing market costs, have put the living wage in San Francisco, closer to $15-$16/hour, nearly twice the current $8.50 the city requires of its contractors.
Observer |
