Sunday, April 15, 2007

Living Wage

Tomorrow we will be discussing living wage issues. The basic idea behind living wage involves paying workers a wage that sets them at a certain income level--in this case, above poverty.
Do you see this as a moral/ethical issue or simply an economic one?
Does setting a living wage seem idealistic or is it a necessity?

There are several arguments for each side. One one hand, many believe that artificially fixing a price for labor above the market price causes a decrease in the overall demand for labor, leading to increased unemployment. Many also think that goverment intervention, however well-intentioned, never bodes well for our economy.
On the other hand, studies like that of David Card and Alan Kreuger (What is a Living Wage? article) show that an increase from $4.25 to $5.05 did not cause any harm to employment. In some cases, an increase in wage increased employment as well.
Do you have additional arguments for either side?

You may also want to keep in mind that the living wage ordinances normally affect businesses that have contracts with the government or get taxpayer's money in some way. Do you think that this is the best policy or should it be expanded to include the private sector?

2 Comments:

Blogger Kelley said...

I know that I am idealistic and by increasing minimum wage, you can disrupt the balance between A LOT of things including higher taxes, but I can't help but wish these workers could get paid a little more. Personally, I haven't read it, but the book "Nickel and Dimed" is about this very issue. Isn't it the author's main objective to prove that one cannot get by by just performing minimum wage jobs? (I know someone in our class read this book for his or her book report, so please correct me if I'm wrong.)

I don't know, when you don't have enough to get by, other costs can increase for everyone, like health care for example. A husband and wife both working minimum wage jobs may be bringing in enough money that they are no longer eligible for Medicaid. Chances are they aren't on the group health insurance plan at their place of work either. In that case, its likely that neither will go see a doctor when they start to get sick. Instead, they will wait until they are REALLY sick and then go to the emergency room - where costs are out of control. As a result, those who are insured will have to pay higher premiums to cover the costs incured by those who wait because they have no other realistic option.

Okay, sorry, my dad and I have this argument all the time, so... :o)

Please let me know what you think?

12:54 PM  
Blogger mel said...

I think a living wage is an artifical fix to a naturally occuring problem, but one that is entirely necessary.

Looking at things from the overall economic perspective is great, but it gets a lot harder when you start looking individually at people and the state of their lives if they are not making a wage above the poverty line - I'm talking about those people who do not have the "scholar's luxury" to sit and ponder the implications of a hypothetical model increasing minimum wage, but who are instead, living in the model. I think the free market keeps the overall picture intact, yes, but at the expense of a large number of individual people who become statistics at the margins. So as a result, I think that the reason a living wage is such an issue is because it is both an economic and a moral problem.

I personally have a big problem with the large gap between the rich and the poor, but I think the issue there is deciding how much is "enough" because this differs from person to person. For one person, 40,000 is enough to satisfy their needs, and for another who grew up with wealthy parents, living with anythign under 400,000 dollars and not be able to afford everything that might come into their mind could feel like poverty to them. Personally, as I weighed options on my first "real job" for next year, I was amazed at how much money it takes just to pay for rent, and car insurance, and gas, and food, and all that. I don't consider myself to be a person who spends a lot of money, but even then, I realized I had a certain "comfort level" that I wanted to maintain as far as being able to afford and able to do certain things. I guess what I'm trying to say is that instigating a policy dealing with living wage becomes more difficult when you realize that any policy is colored by the biases and beliefs of the policymaker. Where is the line drawn?

2:01 PM  

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