Mr. Kerry, $7 is Not Enough

John Kerry has proposed an increase in the federal minimum wage guidelines to $7.00/hour. However, I question whether even this amount is adequate to meet the needs of the greatest segment of workers potentially affected by the proposal. There is no magic formula for determining what wage will work for the majority of these workers because the amount of earnings needed varies depending on several factors. including the size of the family being supported and the geographic area and subsequent cost of living for each worker’s area of residency.

Today, more than 70 “living wage” campaigns are underway in cities, counties, states, and college campuses across the country. Taken collectively, these impressive instances of local grassroots organizing is now rightfully dubbed the “national living wage movement.” In short, living wage campaigns seek to pass local ordinances requiring private businesses that benefit from public money to pay their workers a living wage. Our limited public dollars should not be subsidizing poverty-wage work.

“When subsidized employers are allowed to pay their workers less than a living wage, tax payers end up footing a double bill: the initial subsidy and then the food stamps, emergency medical, housing and other social services low wage workers may require to support themselves and their families even minimally. Public dollars should be leveraged for the public good — reserved for those private sector employers who demonstrate a commitment to providing decent, family-supporting jobs in our local communities.” [Source: Living Wage Resource Center]

Hourly wages based on the “2003 Poverty Guidelines” provided by the U.S. Department of Health and Human Services for a family of four = $18,400 and $15,260 for a family of three. This works out to roughly $8.85/hour for a family of four, and $7.34/hour for a family of three [52 weeks at 40 hours (2080 hours)]. As we know, most people working in minimum wage jobs do not get 40 hours per week and are often subject to having their work schedules shuffled around as permanent parttime workers so that employers do not have to pay for health insurance or other benefits. Also keep in mind that these guidelines do not take into account variations in the local cost of living, for example the price of heating northern homes all winter, or the added costs of transportation/shipping added to food, gasoline, and other needed commodities for residents of rural areas.

“…consider the economic realities facing low income people today: the failure of the minimum wage to keep pace with inflation (it now buys less than it did in the 1960’s); the growing income gap between the rich and the poor; massive cuts in welfare and downward pressure on wages resulting from former recipients being forced into the labor market with no promise of jobs; the growth of service sector jobs where low wages are concentrated; the weakening of labor unions; rampant no-strings-attached corporate welfare that depletes tax dollars while keeping workers poor. The list goes on.”

As you read the various “living wage” proposals that have been made, you may be wondering about what the impact may be on the economy of an area that passes such ordinances. A study of the proposed Los Angeles ordinance finds that a living wage requirement would not cause a net increase in the City budget, employment loss or loss of city services to the residents of Los Angeles. In fact, in location after location in which living wage ordinances have been passed, the net effect has been positive and a stimulus for economic growth and stability, leading to the creation of higher paying jobs.