Thursday, August 1, 2013

A Living Wage for Americans

I think a good way to find out whether someone thinks more as a liberal or as a conservative it to ask him or her how they feel about minimum wage laws. 
In general, a liberal will side with the worker saying that minimum wage laws are necessary to prevent lower skilled people from having to work for starvation wages. 
On the other hand, conservatives will generally side with the employer by saying that the free market should decide wages and that the government should stay out of deciding how much people are paid for their work. In addition, there is the argument that is repeatedly made that if the minimum wage were to be increased, companies would hire fewer workers which would raise unemployment. 
Readers of my blog know that I am decidedly liberal.  I think much of the reason for this comes from being raised in a household where my dad made a modest living supporting us by laboring on his hands and knees all day long as a unionized cement mason.  So it shouldn’t be surprising that I root for the interests of the working stiff over the interests of big business. 
Several weeks ago, liberal commentator (and former LBJ Press Secretary) Bill Moyers was on Charlie Rose promoting his upcoming PBS Frontline documentary about how a pair of middle class families (one black and one white) he followed fared over a 20 year span.  Needless to say, I watched it and as a bleeding heart liberal, was deeply touched by what became their endless struggles on the edge of poverty that took an enormous toll on their lives.  It’s easy for some to say that people like these are where they are because they are lazy.  But these were hard working full-time workers in economically struggling Milwaukee who through an endless series of layoffs were bounced from one low paying job to another. In essence, they were trapped into an impoverished lifestyle with no way out despite their best efforts.  For those who haven’t seen this 90 minute Frontline documentary and are interested, it is available online in its entirety through this link.   I defy even the most hard-edged conservative to watch this without feeling some sadness and compassion for these people.
When Moyers was asked by Charlie Rose what needs to be done, his response was that we need to raise the minimum wage.  But the battle to raise the minimum wage by perhaps a dollar or two per hour doesn’t really address the problems of full-time workers who at best are on the edge of poverty and at worst are homeless.  The only way to address this is to fight for a living wage for these people – more on that later. 
Before returning to the living wage discussion, I want to address a couple of points made by those on the conservative side of the argument over minimum wage laws.   
First, it is reasonable to say that workers and employers should be able to negotiate a suitable wage that satisfies both sides without the government intruding.  But in an economic environment where too many workers are chasing too few job openings along with the systematic destruction of unions over the last several decades, the worker is in a fight where he just doesn’t have a fair chance.  And with a steady trend of overall corporate profits improving while (or more accurately because) workers’ wages are flat or falling over the same period, the workers are clearly getting the worst of the deal.   
Secondly, there is the argument that if the minimum wage were to be raised, workers would be laid off and thus making unemployment worse.   But as the many workers who are now doing the work that two or more other workers used to do can tell you – employers in general are already hiring the least number of employees they can get away with.  And with the millions of dollars in lobbying money that business groups spend to fight any minimum wage increases, do you think they are really concerned with the possible consequences to workers instead of just trying to maximize their bottom lines by keeping wages as low as possible?  I didn’t think so! 
The concept of a so-called living wage means that somebody who works at least a 40 hour week should be able to afford modest housing and have enough money left over to avoid living at or near poverty.
As unfamiliar as this may be to some, the US already has de facto living wage laws in the form of government safety net programs such as Food Stamps, the Earned Income Tax Credit and Medicaid among others to try and keep the lowest wage full-time workers out of poverty.  But critics have (rightly, in my view) charged that government programs such as these are little more than corporate welfare that subsidizes their miserly stinginess towards workers at the bottom of the economic food chain.  At least there are publicly funded projects that require the bidding contractors to pay a living wage as a part of doing business in this sector – and that’s a good start! 
While many have advocated the concept of a living wage, an organization called Universal Living Wage through its website fleshes out the concept in detail along with addressing some of the facts and myths about how a living wage program would work.  As part of my research on the subject for this posting, I had the pleasure of briefly corresponding with the organization’s National Chairman, Richard Troxell who at one time was himself a homeless Vietnam Veteran and now fights for living wage laws and against homelessness.  
I hope the reader will visit this interesting site to learn more.  But two important points should be mentioned here.  One is that Mr. Troxell does not believe in a one size fits all wage.  He believes in tying the living wage to the local costs of basic housing so that its cost is limited to 30% of a worker’s gross income to allow enough money for other necessities (along with perhaps a few small pleasures) of life. And while the living wage is based on a 40 hour work week, those who work less than a 40 hour week also need to be paid the same hourly rate as those who work full time to keep employers from gaming the system by making more and more people into part-time workers – something many employers already do to avoid paying benefits.   
I don’t harbor any false illusions here.  As much as I believe in the need for a living wage, there has always been tremendous resistance being waged by the corporate world.  Most notable is the battle between Wal-Mart who wants to start up at least 3 stores in Washington D.C. and the local government who wants to require Wal-Mart (and other similar sized businesses) to pay a living wage to its employees there.  Wal-Mart says they will not build the stores if forced to pay a wage rate not of their choosing and that jobs would be lost – a claim that some find to be debatable. More importantly, when a giant employer like Wal-Mart is allowed to relentlessly drive down wages and benefits, its competitors will likely feel that they have no choice but to follow suit. 
But the award for corporate chutzpah goes to McDonald’s who in a campaign aimed towards its workers, tries to convince them that it is possible to work a minimum wage McJob and still live comfortably – if only they would budget their money properly!  They support this by a sample budget that apparently assumes a worker has a second job along with Food Stamps to pay for food and almost no expense for health insurance.  Unbelievable! 
You would think that the anti-government Tea Party types in Congress would want to eliminate much of the need for these government programs by making corporations pay their full share of a living wage.  But perversely, many of those same people are instead fighting to cut Food Stamps.   
But perhaps there is a little light at the end of the tunnel.  Long ago, there was the well-known story of Henry Ford who gave his assembly line workers a large raise, supposedly so they could afford to buy the cars they helped to make.  While this may have some truth to it, there is another account that says that the real motivation behind Ford’s apparent generosity grew from the frustration he was having with his high employee turnover rate and resulting cost of constantly retraining replacement workers.  Once he decided to pay a living wage to his workers, he was rewarded with loyalty to the company by the workers along with a far lower turnover rate.  Henry still got filthy rich, but his workers also enjoyed a better standard of living.  It doesn’t have to be one or the other! 
A modern day example is Costco, a warehouse club competitor to Sam’s Club.  While Sam’s Club adopts the Wal-Mart philosophy that has been derided as “Always Low Wages”, Costco despite competing in a business that requires deep discounting does just fine while paying its employees a living wage. 
So instead of having to pass a law that forces companies to pay a living wage, perhaps a simple attitude adjustment by the business community would work just as well.  One that instead of “work for us – we’ll pay you the very least we can get away with but you have no choice” to “work for us – we will reward your loyalty and hard work by paying you a living wage”. 
And best of all, workers who are paid a living wage will then have more money to spend which will help to grow our economy instead of forcing companies like McDonald’s to apologize for their weak earnings because of a chronically weak economy.  Paying a living wage is a win-win for everybody!

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