Minimum and ‘living’ wages in a time of poverty

Bill Knight column for Thurs., Fri., or Sat., Oct. 3, 4 or 5

Washington, D.C., Mayor Vincent Gray recently vetoed that City Council’s passage of a living-wage ordinance – the Large Retailer Accountability Act, which would have required big-box retailers there such as Walmart to pay workers a “living wage” of $12.50 an hour, but it at least renewed debate about raising the minimum wage and revived conversations about what a living wage is.

“We all do better when we all do better,” said Sarita Gupta, director of Jobs with Justice, one of several groups in the coalition trying to pass the law. “We hope this vote sends a message to legislators in cities and towns across the country that residents will continue to speak out and demand fair wages for workers in their city.”

Washington’s Council couldn’t muster the votes to override Gray’s veto even though 71 percent of Washington residents backed the measure, according to a Hart Research Associates poll conducted Sept. 13-14.

The same percentage of Americans nationwide supports raising the federal minimum wage to $9, which President Obama proposed in his State of the Union speech. Both Gallup and Pew Research Center surveys arrived at the 71 percent support figure.

However, with the Washington defeat and the increased activism of workers at Walmart and fast-food joints demanding a $15 hourly wage, people may wonder about the who concept of a living wage and how it compares to minimum wages and the poverty level.

First, though, why is Big Business crying foul at having to pay “unskilled” workers more? Greed, it seems. After all, under economics’ notion of supply and demand, when something is in short supply, the price for it rises. Corporations routinely complain that they have trouble finding people willing to work at so-called unskilled jobs. So if that shortage exists, the logic of free enterprise should dictate that wages go up to attract applicants. But they aren’t increasing; in most places, they’ve fallen.

That’s ridiculous. Employers pay what markets can charge for land and lawyers, for power and water and so on. But they’re outraged at using wages to compete for employees.

Their justification at fast-food workers’ protests or job actions at big-box stores is that corporations have to pay low wages so their foreign-made clothes and mass-produced burgers and so on are affordable to U.S. consumers.

Of course, it doesn’t take a 21st century Henry Ford to connect the dots between earning wages and buying goods and services. If workers aren’t paid decent wages, they aren’t going to purchase as much.

And that leads to living wages, which are figured on as local a basis as possible since costs of living vary in different places. Illinois’ minimum wage of $8.25 an hour is the same for all individuals, regardless of how many dependents they have. A living wage is the hourly rate that someone must earn to support a family by working full-time (2,080 hours per year). The living wage takes into account monthly expenses including food, child care, medical costs, housing and transportation. For example, consider this breakdown of area markets by the Massachusetts Institute of Technology “Living Wage Calculator.” The first dollar amount is the hourly living wage for one adult; the second is for a household with two adults with two children:

Fulton County is $7.56; for 2 adults with 2 children it’s $17.04.
Henderson County is $7.53; for 2 adults with 2 children it’s $17.04.
Henry County is $8.08; for 2 adults with 2 children it’s $17.68.
Knox County’s living wage is $7.53; for 2 adults with 2 children it’s $17.29.
Livingston County is $7.75; for 2 adults with 2 children it’s $17.64.
McDonough County is $7.47; for 2 adults with 2 children it’s $17.04.
Mercer County is $8.08; for 2 adults with 2 children it’s $17.68
Peoria County is $8.13; for 2 adults with 2 children it’s $17.98.
Tazewell County is $8.13; for 2 adults with 2 children it’s $17.98.
Warren County is $7.37; for 2 adults with 2 children it’s $17.04.
Woodford County is $8.13; for 2 adults with 2 children it’s $17.98.

Some employers unfortunately build businesses on the backs of desperate workers willing to work in poverty – for these markets, one adult must make more than $5.21/hour to escape poverty, and two adults with two kids $10.60. Such companies seemingly accept increasing profits in a system of thinly disguised servitude.

University of Illinois urban planning expert Nik Theodore told the New York Times, “We see employers in a number of industries act as if there is a third-class labor market.”

[PICTURED: Graphic from This magazine -- this.org]