We're working for a 'living wage'

Idea exchange
November 2003

Not taking what they're giving;
we're working for a 'living wage'
The idea of a "just wage" has been an interest of Catholic Social teaching since the tradition began with Pope Leo XIII's encyclical Rerum Novarum. In recent years, as the real buying power of the federal minimum wage has declined catastrophically for the most vulnerable of American workers, vibrant localized campaigns have cropped up to establish a so-called living wage at the state and municipal levels—perhaps in response to long-term congressional inaction.

The federal minimum wage does not include a cost-of-living adjustment; Congress must act to raise it. It last did so in 1997 when the wage was increased to $5.15. Since then the minimum wage has declined 12 percent in value; 35 percent since the late 1960s. If the minimum wage were to retain the buying power of the $1.60 standard of 1968, it would have to be raised to $8.24.

Across the country, religious, labor, community development, student, and social-justice groups have joined forces in grassroots campaigns to advocate increases in local and state wage minimums. The movement has achieved a number of notable successes. Living-wage coalitions have pushed ordinances in St. Louis, St. Paul-Minneapolis, Boston, Oakland, Denver, Chicago, New Orleans, and New York City. Today, more than 70 living wage campaigns are underway in cities, counties, states, and college campuses across the country in what has been called the most underreported social movement of our times.

Four months after a grassroots coalition proposed creating an $8.50 city minimum wage, San Francisco voters on November 4 approved the measure by a 60 percent to 40 percent margin. When it takes effect in February 2004, the new ordinance will apply to almost all businesses in the city and will raise pay for 54,000 low-income workers. With the recent vote, San Francisco joins Santa Fe and Washington, D.C. as the nation’s third city with a local wage law applying to most private businesses, not just businesses under municipal contracts as in many other "living wage" municipalities.

Living wage campaigns typically push local ordinances requiring private businesses that benefit from public money to pay their workers a "living wage" computed according to local cost of living standards. Commonly, the ordinances cover employers who hold large city or county service contracts or receive substantial financial assistance from the city in the form of grants, loans, bond financing, tax abatements, or other economic development subsidies.

The concept behind any living wage campaign is simple: limited public dollars should not be subsidizing poverty-wage work. When subsidized employers are allowed to pay their workers less than a living wage, tax payers end up footing a double bill: the initial subsidy and then the food stamps, emergency medical, housing and other social services low wage workers may require to support themselves and their families even minimally. According to living-wage advoates, public dollars should be leveraged for the public good—reserved for those private sector employers who demonstrate a commitment to providing decent, family-supporting jobs in local communities.

Many campaigns have defined the living wage as equivalent to the poverty line for a family of four, (currently $8.20 an hour), though ordinances that have passed range from $6.25 to $12.00 an hour, with some newer campaigns pushing for even higher wages. Increasingly, living wage coalitions are proposing other community standards in addition to a wage requirement, such as health benefits, vacation days, community hiring goals, public disclosure, community advisory boards, environmental standards, and language that supports union organizing, moving the issue closer to Catholic Social Teaching's understanding of a just wage.

At the Association of Community Organizations for Reform Now's (ACORN) Living Wage Resource Center, visitors can find much of the material they'll need to organize their own local efforts to improve wages. The site includes a brief history of the national living wage movement, background materials such as ordinance summaries and comparisons, drafting tips, research summaries, talking points, and links to other living wage-related sites.

The U.S.Conference of Catholic Bishops suggests Four Reasons To Increase The Minimum Wage:

$5.15 an hour is not a livable wage: A single earner working full time on the current minimum wage earns only $10,712 per year—nearly $4,000 below the poverty line for a family of three.
According to the U.S. Department of Labor, about 40 percent of the workers who would benefit from an increase in the minimum wage are the sole wage earners in their households. Minimum wage workers not only prepare and serve our food at local restaurants, they take care of our children, our parents and our grandparents. They should be able to provide for their own families as well.
An increase in the minimum wage would positively affect nearly 9 million of low-wage workers: According to the Economic Policy Institute (EPI), 6.9 million workers (5.8 percent of the workforce) would directly benefit from an increase in the minimum wage to $6.65 per hour in 2003. Moreover, because employers often like to maintain wage differentials between entry-level workers and those who have advanced beyond entry-level status, several million more workers who already make more than the new minimum wage would still benefit from the increase.
An increase in the minimum wage would disproportionately benefit women, minorities, and the nation's poor: A 1998 EPI study found that households in the bottom 20 percent of the income spectrum, who receive only 5 percent of total family income ($15,728 per year, on average), received 35 percent of the total benefits of the last increase in the minimum wage.
Most of those affected by the last minimum wage increase (72 percent) were adults aged 20 and over, and more than half of all teenagers earning the minimum wage are in households with below-average incomes. An increase in the minimum wage would disproportionately benefit African Americans and Hispanics, and almost 60 percent of the benefits would go to women.
An increase in the minimum wage will not increase joblessness: opponents of the minimum wage often argue that it increases unemployment for entry-level workers, thereby hurting the very people it is meant to help. Numerous empirical studies, however, have found that the minimum wage has had little or no effect on job levels. When Princeton economists David Card and Alan Krueger studied the impact of a minimum wage increase in New Jersey on fast food workers in the early 1990s, they found that employment actually increased. Moreover, Card and Krueger found that higher wages resulted in better-motivated, more stable workers with higher productivity levels and lower turnover rates. Additional empirical analyses by other economists have produced similar results. The widespread evidence prompted Robert Solow, an MIT Nobel Laureate, to write in a 1995 New York Times article that the "main thing about the research is that the evidence of the job loss is weak.... And the fact that the evidence is weak suggests the impact on jobs is small."

For more information:
Brennan Center Living Wage Project
Economic Policy Institute
National Interfaith Committee for Worker Justice

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