Living Wages

Although at first glance a living wage might seem like a good idea to reduce poverty among full-time workers, mandating such a wage level on a national level would only prove to be detrimental. A living wage would address the wrong problem, increase overall unemployment and actually hurt the group it is attempting to help.

The real reason that people earn low wages is because they lack skills. Therefore, public policy should focus on educating those people who only qualify for minimum wage positions instead of raising the minimum wage for everyone. If skill levels were increased, low-wage earners would immediately qualify for and obtain higher paying jobs. Or, at worst, they would only have to earn minimum wage for a short period of time before attaining the skills necessary for a more highly compensated position. Those who desperately need the higher wages will be able to attain the skills necessary to do so, while teenagers and those who work minimum wage jobs as supplemental income will still happily perform their low-skilled jobs.

Besides being the wrong solution to the problem at hand, a living wage would also increase unemployment for the group it targets to help. In one study, three-fourths of the economists surveyed by the Employment Policies Institute said that living wage laws would result in employers looking for more-skilled employees, in effect crowding out the people with the least skills. Employers, as a result of having to pay higher wages, would try to reduce the number of jobs overall. They also might try to automate more so they could eliminate the low-skilled positions altogether. Both of these actions would ultimately hurt those currently receiving minimum wage jobs. Over 80 studies have demonstrated a link between an increase in minimum wage and a subsequent job loss. Obviously, proponents of the living wage do not want these results.

Living wage supporters also fail to realize how poorly targeted the living wage would be. A Bureau of Labor Statistics report found that only a few more than 20 percent of all household heads with below poverty-line incomes attributed their condition solely to low earnings. Instead, they mentioned factors such as unemployment or lack of hours. Furthermore, an Employment Policies Institute analysis showed that at most 13.3 percent of minimum wage employees were the sole breadwinners of a below poverty-line family. This means that even if the national minimum wage were increased to a living wage level, poverty would still exist because of other reasons and the people affected by the wage increase would in large not be the people who head poverty stricken families.

Living wage supporters clearly have excellent intentions, but their solution is one that will not work. Despite the living wage's success in certain cities with government contractors, a nationwide living wage is a naive and unrealistic idea. A living wage would merely reduce the number of available jobs and make the job market much more competitive for low-skilled workers. Instead, efforts should be focused on increasing the skill level of low-wage workers who have insufficient income to raise families. Otherwise, the people who need help will continue to suffer while those who do not need a wage increase will benefit.

Works Cited

Horowitz, Carl F. "Keeping the Poor Poor, The Dark Side of the Living Wage."

Policy Analysis. No. 493. October 21, 2003.

Shapiro, Jesse M. "The Living Wage Debate." A World Connected.

http://www.aworldconnected.org/article.php/528.html