Opinions
A Case for Abandoning the Living-Wage Movement
SOURCE:
Ever since Congress enacted landmark welfare reform in 1996, which focused heavily on so-called “welfare-to-work” programs, activists across the country have been lobbying for increased government involvement in the transition from reliance on welfare to the labor force. Much of this effort has centered upon what is known as the living wage movement, which seeks to press local governments into requiring that all hourly workers be paid a sum that adequately provides for their expenses. This initiative has gained particularly strong momentum on American college campuses, resulting in incidents like a 2006 protest at the University of Virginia, which culminated with 17 students, who were seeking higher wages for some of the university’s staff, being arrested after occupying an administrative building for four days.
Yet although the movement’s actions have been powerful demonstrations of solidarity with the working poor, its specific policy objective—increased wages—is unfortunately an ineffective way to attack poverty. With Congress scheduled to reauthorize crucial components of 1996’s welfare-to-work law at some point during 2010, it is imperative that activists shift their support away from living-wage fights and toward a more comprehensive set of anti-poverty measures, ones dedicated to enhanced assistance for child care, health care, and housing.
One of the most obvious drawbacks to raising wages for low-skill workers is that doing so benefits many individuals with little or no need for economic aid. Although it is true that the majority of minimum wage recipients are poor adults, a 2001 study by the Economic Policy Institute estimated that 31.8 percent of those who would have been affected by a proposed federal minimum wage hike were teenagers, many of whom belonged to middle class families. A more recent report by the Bureau of Labor Statistics estimated that 22.9 percent of those being paid at or below the minimum wage in 2009 were between the ages of 16 and 19. While these percentages sound small compared to the hyperbolic numbers trumpeted by conservative commentators, they nonetheless signal that somewhere between a fifth and a third of the money that employers would be forced to spend on increased wages as a result of living wage ordinances would be given to middle-class teenagers.
Even if those wages were getting into the neediest of hands, however, it is impossible to mandate a true living wage for low-skill workers without detrimentally impacting employment. According to the movement’s own numbers, wage levels that would be considered “livable” in most communities not only significantly exceed the present minimum wage but are also much higher than those being sought by activists.
For example, recently, students at the University of Virginia reignited the living wage campaign by asking the Charlottesville city council for a resolution supporting a minimum hourly wage of $11.44 an hour for all university employees. That’s about $7 less than the $18.66 living wage level for a single adult raising one child in Charlottesville, according to the Economic Policy Institute’s basic family budget calculator. Penn State University’s living wage calculator produces similar results, estimating that an adult and child can survive in Charlottesville on $16.59 an hour. These numbers are even higher elsewhere, such as in the Washington, D.C., metropolitan area, where the living hourly wage is estimated at $26.96 by the EPI and at $19.98 by Penn State. If local governments were to set wage floors at these levels, which are more than twice the current federal minimum wage, there would be unavoidable reductions in employment and production.
Given the problematic nature of using living wages as a means of fighting poverty, activists should instead support a variety of targeted policy tools that could reduce the burden life’s necessities place upon the working poor. In particular, a substantial increase in the amount of money available for state and federal child care subsidies is needed to prevent low-income single parents from having to drop out of the workforce in order to take care of their children. Additional funds must also be appropriated to Medicaid so that its pitifully low reimbursement rates may be raised to levels that might no longer cause doctors to reject the plan’s enrollees.
Perhaps most important, the dire lack of affordable housing afflicting the nation must be dealt with in creative ways, through a combination of local initiatives and federal policy restructuring. Municipal governments can act to increase the supply of affordable housing by providing tax incentives to developers, as well as by relaxing restrictive zoning laws. Activists should also encourage the enlargement of the Earned Income Tax Credit, which wipes out a significant amount of the tax burden faced by low-income individuals and has proven to be a very successful wage subsidization program.
This new approach to anti-poverty activism will undoubtedly be more difficult than the present living wage movement. Activists will have to delve into a world of complex policy mechanisms that many individuals will have a hard time understanding. The movement’s new style will also lack the raw moral appeal of the living wage campaign; activists will no longer be able to tell voters and politicians that they merely want all workers to be paid what they deserve. Instead, they will have to convince them that stronger anti-poverty programs will justify the higher levels of taxation that will be necessary to sustain them.
Nevertheless, as the nation has discovered from debacles like the Iraq War, policies that seem simple and possess great moral appeal are not necessarily the most effective at bringing about better outcomes for the suffering. Activists should remember that as they move forward with their fight to improve the livelihoods of America’s working poor.
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