I want an above-the-poverty-line life

Poverty-level minimum wages have been the focus of considerable debate across the provinces and among federal politicians. The debate has even made it south of the border with many United States municipalities experiencing grassroots and politicallly inspired campaigns to raise the minimum wage levels.

Proponents of living wage campaigns argue that poverty and inequality can be alleviated by raising the minimum wage. However, despite sporadic research, this argument has been countered by a strong voice of a few influential economists who argue that raising the minimum wage will kill low wage jobs, hurting the very people it was intended to assist by pricing them out of the job market.

Originally, minimum wage was created to protect women and children -- the demographic most vulnerable to exploitation. Now, however, the living wage debate affects 70% of the workforce in Ontario alone (workers that lack union protection). These workers are employed in the restaurant and retail industries and the so-called unskilled jobs; they are largely dependent on the minimum wage laws and other provisions found in the various employment standards acts across the country.

According to Harvard, the idea behind a living wage is that people who work in our community should be able to live decently and raise their families here. This requires a wage and benefits package that takes into account the area-specific cost of living, as well as the basic expenses involved in supporting a family. This definition precludes taht living wage standards will vary from region to region, but the ivy league school's definition also concedes that despite these variances, a living wage in North America would be considerably higher than any federal minimum wage. This rational is based on the fact that current minimum wage levels do not even begin to meet the needs of the working poor -- in fact, current minimum wage standards often put single parents below the poverty line. Hence, a living wage (as opposed to a minimum wage) aims to correct this inequity by establishing local level standards that reflect the cost of living.

But what about the argument that a raise in wages would price out the low-level jobs available to the working poor? Despite what notable economists have cited, research shows that the extent of any job loss is dependant on a number of factors -- not just the cost of labour. In fact, labour and capital markets work in conjunction to determine whether or not companies can replace low skilled labour with equipment and automation. This means that an increase in minimum wage (to a living wage) may result in job loss, but there are other effects as well. In fact, there may be benefits, despite job loss, to raising the minimum wage. In a study by Goldberg and Green (1999:8) it is stated that an increase in minimum wage could prompt companies to invest in their workforce which would result in more job stability (which benefits both worker and employer) as well as a higher wage. According to this study another potential positive effect of increasing the minimum wage comes from the increased consumer spending -- and this would stimulate the economy resulting in more jobs. Hence, Goldberg and Green argue that while the short-term effect may mean a loss in low-paying jobs, the long-term effects would mean a replacement of those jobs through stimulation of the economy.

For an economist this is the ultimate capitalist solution.

Yet, the debate over a living wage continues. In fact, recent provincial governments (think Tory) not only rejected the idea but actively opposed the long-term benefits of a living wage by freezing minimum wage levels to sub-standard rates.

Thankfully there is hope -- even if it is south of the border. A number of municipalities in the United States have begun to adopt living wage legislation. The most recent is Chicago. After much debate, the Chicago city council voted 35 to 14 to raise the minimum wage for workers employed for longer than 10 hours per week. While the by-law only effects workers in big-box stores, it is still a start towards ensuring that all workers can live a decent, productive, content life on the wages they earn.

For more information on the Chicago decision go to: http://www.bloomberg.com/apps/news?pid=20601087&sid=aVfrCkkMkxA8&refer=home
For more information on living wage Berkeley study go to: www.berkeley.edu/news/berkeleyan/1999/1013/wage.html
For more information on the history of living wage go to: www.socialjustice.org/pdfs/povertylivingwage.pdf