Living wage makes economic sense

In his April 7 column, “The case against a living wage,” Nathan Carleton contends: “The biggest problem with a living wage is that it prevents less qualified or uneducated workers from competing for jobs.” From this point-of-view, living wage policies effectively “strip” less qualified workers of their “only bargaining chip.” However, he leaves out an important factor in his description of what he sees as a valuable competition for low-wages: the race to the bottom.

A race to the bottom tends to occur when a labor source is willing to give, and companies are willing to take, labor for lower and lower wages. Eventually this competition for progressively lower pay hits “bottom,” a stage at which the wage becomes insufficient for workers’ basic needs. What Carleton favors as “less qualified” workers’ “bargaining chip” is, in fact, what condemns them to live below the poverty line.

Carleton argues: “If a university suddenly requires a business to pay its employees more money, the employees of the business will become victims.” He uses the hypothetical example of Duke asking Angelica Corp. to pay employees $13 an hour—a figure which is not on the table. Durham CAN, the prominent local living wage group, suggests that Duke pay about 9.5 percent above federal poverty level ($10.25 an hour). In Carleton’s scenario, he claims that Angelica would either “end their contract with Duke, or make cuts to compensate.”

It would indeed be problematic if Angelica fired workers to cut costs. Carleton’s hypothetical example is contradicted, however, by the economic reality of janitorial contractor SSC’s implementation of a living wage.

SSC publicly stated that a living wage would mean economic catastrophe for business and the county when the latter was considering a living wage policy. Durham CAN’s argument was that, since contracting companies make such large profits, implementing a living wage would not pose a problem to SSC’s bottom line as long as the market for their services stayed competitive. The county went ahead with its living wage policy. Economic catastrophe did not ensue.

When Durham Public Schools was thinking of outsourcing its janitorial work, Durham CAN pressured them to implement a living wage. SSC, the same company that once claimed a living wage was an economic impossibility, came forward to provide a living wage, health benefits that approximate those of regular school employees and retirement benefits. With these policies, SSC was still able to earn a healthy profit.

Though Carleton describes the “economic benefits” of a living wage as “few” and “abstract,” SSC’s decision made concrete economic sense. For example, paying workers less than a living wage may detract from a company’s economic efficiency because low wages tend to create high worker turnover, which forces employers to invest in hiring and training new workers.

In addition, it should be noted that, when workers do not receive adequate pay, they often turn to Social Services for help. The aid that some workers receive from Social Services comes from tax payers’ money.