Bill Knight - October 10
11:42 am
Wed October 9, 2013

Decent Wages Benefit Everyone

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 District big-box retailers such as Walmart to pay workers a living wage of $12.50 an hour, but it renewed debate about at least raising the minimum wage and revived conversations about a living wage.

Sarita Gupta, director of Jobs with Justice – one of several groups in the coalition to pass the law – said, “We all do better when we all do better. 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.”

Bill Knight
Bill Knight

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 are wondering about the 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 workers more? Greed.

After all, under economics’ notion of supply and demand, when something is in short supply, the price for it rises. Corporations 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 fact, they’re falling in most communities.

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 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 and Iowa’s $7.25 an hour are 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 these wage analyses of area markets by the Massachusetts Institute of Technology “Living Wage Calculator.”

For 1 adult, the living wage in McDonough County is $7.47; for 1 adult with 1 child it’s $17.43; for 2 adults with 2 children it’s $17.04. For 1 adult, Knox County’s living wage is $7.53; for 1 adult with 1 child it’s $17.78; for 2 adults with 2 children it’s $17.29. For 1 adult, the living wage in the city of Burlington is $8.07; for 1 adult with 1 child it’s $18.39; for 2 adults with 2 kids it’s $18.10. For 1 adult in Hancock County, the living wage is $8.13; for 1 adult with 1 kid it’s $17.53; for 2 adults with 2 children it’s $17.04. And for 1 adult in Lee County, the living wage is $7.88; for 1 adult with 1 child it’s $18.08; for 2 adults with 2 kids it’s $18.10.

Some employers build businesses on the backs of desperate workers willing to work in poverty – for all these markets, 1 adult must make more than $5.21/hour to escape poverty; 1 adult with 1 child $7/hour; and 2 adults with 2 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.”  

Bill Knight’s newspaper columns are archived at billknightcolumn.blogspot.com

The opinions expressed are not necessarily those of Tri States Public Radio or Western Illinois University.