What is the New Minimum Wage – Living Wage Vs Minimum Wage

“A living wage is considered to be a rate of pay for a 40 hour week that allows the wage earner to afford “housing, food, utilities, transport, health care and a certain amount of recreation.”” “The Economic Policy Institute defines living wage as the “wage a full-time worker would need to earn to support a family above the federal poverty line, ranging from 100% to 130% of the poverty measurement.” Example: The wage rates specified by living wage ordinances range from a low of $6.25 in Milwaukee to a high of $12 in Santa Cruz.”

Being written in October of 2006, this report focuses on a minimum wage of $5.15 per hour. This reader believes, however, that even with the recent minimum wage increase the article remains valid as the current gross boost for a 40 hour work week amounts to less than $100 monthly. The 2008 increase will up the average minimum wage worker’s income a little more than $200.00 monthly, and 2009 will raise their monthly income just over $300. When the increases are totally effective, the minimum wage worker will earn about $3300 more per year, for a consistent 40 hour work week, than they do now.

Although many see raising the minimum wage as a “first step” to instituting living wage laws, this report shows the country to be divided on the best ways to tackle poverty. The Los Angeles area has benefited greatly from instituting a living wage ordinance. Job loss was minimal, benefits were solid for workers covered, there was no decline in the number of firms bidding for governmental contract and the city was not impacted in its ability to retain or attract employers willing to pay decent wages.

On the other hand, Santa Fe, NM found that due to its living wage ordinance, the city has experienced a 16% increase in the unemployment rate and a loss of 540 jobs, affecting the retail and hospitality/leisure sectors of the work force the most severely.

According to Dr. David McPherson, Florida State University economist, when Arizona increased its minimum wage, a correlation became evident between job loss among the most vulnerable employees, and wealthy teens displacing unskilled employees.

Although movements are appearing all over the country at city halls and on college campuses in favor of wage increases, critics make a strong argument for keeping the status quo raising concerns about increased labor costs negatively impacting the economy, employers moving their businesses to areas of the country that do not embrace “living wage laws”, or the possibility that if labor costs too much employers will stop hiring or become unprofitable. They attempt to conclude that the poor will not benefit from these increases, but rather will loose their jobs.

Although the title of this report made it look like we would be exploring the pros and cons of Living Wage considerations vs Minimum Wage considerations, it actually just explored wage increases. The greedy don’t want increases of any kind, the poor and the people who genuinely care about the poor do want increases, but nobody wants them at the expense of a strong economy or good job market.

Given the varied experiences with living wage increases cited in the report, it appears that many statistics and demographics need to be considered as each area of the country prepares to tackle this important issue.

Source by Sharon L. Green