Living Wage by AC, JF, TS

What Is The Living Wage?

The living wage is the minimum hourly wage necessary for a person to achieve some specific standard of living. The living wage comes from the basic premise that anyone in this country who works for a living should not have to raise a family in poverty. Unions, community groups and religious groups are all huge advocators of the new living wage movement.

Statistics

Description

• In 1997, there were 3.7 million families living in poverty.
  • 65% of these families had 1 or more members who maintained a job.
    • 22% of the families living in poverty in the United States have at least 1 member with a full time job.
• In 1997, with the minimum wage at $5.15/hour (which it still is today) the real buying power of the wage a full-time worker would earn in a year was $10,300.
  • This wage is below the poverty threshold considered to be $11,235/year for a family of 2: Thus, a person working full-time at minimum wage is earning an annual amount that technically puts them below the poverty line.

Costs

Description

• An estimated $40-$60 million a year would be spent by firms on costs of raised wages.
• About 1/2 the cost to raise minimum wage is made up by decreased turnover and increased productivity.
  • There are 3 types of firms that all experience different costs from living wage ordinances...

1. "Low-impact" firms

• Majority of firms fall into this category. These firms experience only around a 1% rise in production costs, which is so miniscule it can be easily absorbed.

1. 1. Middle-impact firms

• Relatively small number of these firms. These types of firms hold concession contracts with the city (ex: restaurant outlet in an airport). These will experience production cost increases around 10% of their total costs, which can be absorbed through modest price increases.

1. 1. 1. "High-impact" firms

• These types of firms perform city services (ex: child care service providers) and will experience significant cost increases. However these firms should be able to pass on a great deal of these costs to the city through better contract terms.

(Even when they do pass on costs to the city, the costs will represent such a minute share of cities' budgets that they too will be easily absorbed).

ALSO: These high impact firms should experience productivity gains, morale increases, as well as a decrease in turnover and absenteeism, which will offset some of the cost increases.

Who Benefits, And How Do They Benefit?

1. Workers and their families

• Their living standards rise when the ordinances become law.

1. Firms

• Workers are being paid more, thus morale increases and turnover decreases, leading to an overall increase in productivity.

1. Communities

• Brings increased spending power to the community through increased disposable income.