Living wage meets the real world

[William Thornton]

My mod/lib friends often advocate here for gummit to set a living wage for hourly workers, one that will lift individuals and families out of poverty. The living wage for my area is $10.10 for an individual, $15.15 for two adults (a couple), and $18.14 for a couple with one child. The figure I see often demanded by libs is $15 per hour, so I'll use that. Not insignificantly, my mod lib friends here often call a living wage a morality issue, something Christian employers should do as an expression of their Christian values. There is little chance of a living wage being passed here but, suppose one were?

I am associated with a small, family business that has two owners, two employees that work on commission, and six or so hourly workers, three of whom are full time (30+ hours weekly), and the others part time. What would a $15/hr minimum wage do do this business?

The owners and commissioned people would be unaffected in regard to employment.

All hourly workers are paid less than $15/hr. One FT worker makes about $12, the next two at about $10. The part time workers all make around $8. None receive insurance but the business gives Christmas bonuses to all and is flexible enough to allow extended periods away for the workers to travel to their home (Mexico). There is a family atmosphere at this business.

The FT hourly workers do a simple, tedious job that adds value to a common relatively inexpensive product which is then resold. A $15 minimum for the three FT workers would increase labor costs about 40% making the resultant cost of the finished product non-competitive. Buyers would find a more competitive price out of China or Mexico. The business could still be viable with two FT hourly workers instead of three with some adjustment to work loads and schedules. The third job would be cut.

The PT hourly workers would be cut back to one or two at $15/hr. Two jobs lost.

As is common in small businesses, there is family involved. Two of the three FT workers are husband/wife. The wife would be the one released. Among the PT workers is the child of the couple. He lives at home and spends his $10/hr earnings on clothes, games, car, car insurance, fancy wheels for his car. He's a teenager. These are important to him. He would likely be cut back in hours or let go so he could get his $15/hr at McDonald's or somewhere.

The living wage is a sledgehammer that would indiscriminately smash businesses. This small business has workers and owners alike that are satisfied with the arrangement.

The living wage ignores family income. The two adults both work and make about $22/hr combined, considerably above the living wage for a couple. The teen would bring that up to over $30/hr for the family. If the goal is a living wage for a household, why aren't living wage proponents proposing laws that would adjust wages downward if more than one household member is employed?

Are these owners immoral in their pay scales and employment practices? Is there some Christian morality missing here?

Every business isn't a demon like Walmart and McDonalds but the anti-demon labor and wage laws aimed at these mammoth businesses will snare the ma and pa businesses as well.

[Dave Roberts]

William, I don't know who started the $15 expectation. I started the other thread and named no figure (purposefully) because whatever is done needs to be scaled, needs to be done over a period of time so businesses will have time to adjust, and needs to be indexed to inflation so it ceases to be a political issue that ends up taking years to pass regardless of which party is in control of Congress.

[William Thornton]

[Haruo]

$15 was voted in by the electorate in the city of Seatac, Washington, back in January, at least for those workers who work in the hospitality and transportation industries (Seatac is where the Seattle-Tacoma International Airport is located, and has lots of hotels and restaurants and transportation businesses related to the airport). I have yet to see anything that looks like a neutral analysis of the effects (jobs and/or benefits lost or not, etc.). Starting next year, Seattle will be phasing in $15 min. for all hourly workers. It will definitely, I think, benefit me (assuming my health remains good enough to do my job), since I currently make less than $11/hr. and my benefit package is part of a five-year union contract. But if I were marginally employable to begin with, or if I were looking for work instead of working, I'm not sure what the effect would be. Short term, that is.

Long term, I think the strong correlation between minimum wage standards and standards of living will make a higher minimum wage here good for all concerned.

[William Thornton]

My point was that a living wage would be disastrous for some businesses and employees here. If they are collateral damage for the LW carpet bomb approach, we should just say so.

Also, I'm trying to wring from my mod/lib Christian friends an admission that it is not evidence of a lack of Christian morality to NOT support a LW.

[KeithE]

[William Thornton]

Keith:

1. My topic was on living wage, not minimum wage.
2. I know you are a numbers guy but you don't get to make up numbers. This is one of the few cases where you manufacture numbers to win an argument. Trust me, a 40% increase in labor costs (unless workers are dismissed or hours cut way back) will be a deal breaker for this business.
3. You presume some income for owners and commissioned salespeople. If the product becomes unprofitable the commission people will probably be cut in half. The owners take little salary, more than the hourly workers but only enough to get by. The goal is to grow the business to have value of its own beyond nominal inventory. A living wage req may make the business less valuable, perhaps unsustainable.

You need to start a business and experience this stuff, be responsible for employees, meet a payroll, anticipate change, endure downturns. It's easy to make sterile assumptions from a distance.

My question was about the Christian standing and morality of these business owners. They don't pay a living wage by local standards. Are they immoral?

[Bruce Gourley]

[William Thornton]

I am unaware of any living wage proposal that accounts for several family members working. Also, the hourly workers in this family happily do other things to supplement their wages with self-employment income, making them like the business owners, willing to work more than 35-40 hours to gain the income they would like to have. The owners are not swept along by any macro economic policies...unless gummit gets involved with a LW, in which case they will be forced to reduce employment.

I'm still waiting for one of my mod/lib friends to say if these owners are non-Christian because they pay wages lower than the LW.

[Bruce Gourley]

From Dictionary.com, the definition of "living wage":

a wage on which it is possible for a wage earner or an individual and his or her family to live at least according to minimum customary standards.

(emphases mine)

It seems as if your friends are providing a living wage to their employees.

[William Thornton]

Thanks, Bruce. Wonder if gummit would check the dictionary?

[KeithE]

[William Thornton]

In the past you have shown a openness to the variables that make a living wage nonsensical - age of worker, whether or not the worker is a primary wage earner, etc. I appreciate that.

The LW movement will not affect this business in my lifetime. If it did, I'm merely showing what is likely to happen. LW proponents, activists, academics, and fellow liberals, like to make business calculations an decisions for owners; hence, the blithe dismissal of increases labor costs as insignificant. Typical also is the target of big corporations. I maintain that small businesses like this one will be swamped by the movement.

We can't all be bureaucrats or gummit contractors where money is taken from one group, taxpayers, and given to favored groups. If costs artificially rise, just take more. Most exist in an economic world where being productive, adding value to a product that is in demand rules the marketplace. Making an unskilled laborer, by gummit fiat, as valuable as someone who has toiled to gain a skill or education that is in demand is unfair. If poverty is an issue, let gummit guarantee a threshold income and force laborers to gain skills, experience, or education to make themselves more marketable rather than rewarding the' for not doing so.

[Dave Roberts]

William, in the tradition of Ronald Reagan, you anecdotalize issues. We can all do that from all perspectives. And, anyone with an ounce of economics knows that there are places in this country where you can live on minimum wage--not well, but keeping life together. There are places like SeaTac where you could hardly get to work on it. LW will not be defined the same in all quarters.

[KeithE]

[Bruce Gourley]

[William Thornton]

We need a topic on the plutocrats. Too bad that small businesses get skewered by gummit policy aimed at big corps.

[KeithE]

[KeithE]

[Sandy]

In Texas, corporate control of the state legislature was so tight, that many of the bills authored by corporations and given to legislators weren't even edited, or had their language changed.

[Dave Roberts]

I live in a town where small businesses have been largely crowded out by two big box stores, one of which has now closed after putting long-standing local businesses. Both got tax advantages to come, and now one left an empty building that they use for occasional storage when their warehouses overflow. They were both the beneficiaries of government policy that shafted the small business owners. We have lost two chain grocery stores, two local hardware stores, all our TV shops that used to do repairs, and various small cafes and other business opportunities. There is no clothing store, jewelry store, shoe repair, or local drugstore in our area, all thanks to government policy that favored the big box folks. Need I say more. Some of them actually paid their employees a living wage, but not the big box folks.

[KeithE]

[William Thornton]

We have Walmart, Lowes, Home Depot, all the big box demons of the liberals. We even have a Kroger that has a jewelry store in it. My very small town has always had a pharmacy because insurance and gummit reimbursements put them on equal footing more or less with WM, Kroger, etc. I'm fact, the ma and pa pharmacy keeps getting bought out by Walgreens or CVS. Another just pops up anyway. Were on our third one in this fashion.

Competition means that WM will cause changes in the retail market in a community, to the benefit of consumers. Entrepreneurial small businesses succeed in these markets because of factors WM cannot control or with which they cannot compete - service, personal contact and relationships, niche markets. My friend's business easily has a competitive advantage over big boxes in some prices and is successful in markets either too small or too specialized for the BBes. The future looks good unless gummit tries to help and screws things up.

When my lib friends target the BBes, they should know that policies like living wage may do more damage to the ma and pa retailers but, since this is a moral crusade divorced from the real economic world, such isn't a consideration. Let the small businesses endure collateral damage without complaint while affluent liberals who have never met a payroll feel good.

[KeithE]

[William Thornton]

To your credit, you earlier supported some variations of living wage statutes that would address some of the gross inequities.

I have a nose for elitist blather and you, perhaps unintentionally, reek of the same. To call my "dive" into a real life example of a business and the potential impact of a LW on that business "amateurish" marks you as one who would rather sniff the rarefied air in wonkish gummit and academic circles rather than deal with real people and real problems. You show huge blind spots not covered by macro lib economic policy.

I get it. You want to save the world from global warming destruction, lift all the world out of poverty, and ride gummit to soaring heights of problem solving, all while declaiming your true Christian morality and smugly pronouncing others as lacking in the same. History isn't on your side, my elitist friend.

I wish Keith would meet the real world.