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Beyond the living wage

Observer Viewpoint | Tuesday, September 5, 2006

I have struggled to keep up with campus news since I moved to Washington in January, and other than the outcry surrounding Father John Jenkins’ approach to academic freedom, the emergence of the Campus Labor Action Project (CLAP) appears to be the big story of the semester.

The heart of the living wage argument is the claim that the best way of solving the great problems of poverty is to provide all workers with an hourly rate of pay that will allow them to fulfill their needs and those of their families. I think that we all desire to live in a world in which no working person would go without the means to survive and care for loved ones. Unfortunately, after careful study, I don’t think that the living wage is the right tool for the job.

Policy should be implemented through the proper use of the right tools. A screwdriver shouldn’t be used to clean a carpet, and a chisel should not be used to brush teeth. Likewise, a policy intended to help low-income wage earners with dependents should not end up harming those very people. According to the Employment Policies Institute (www.epionline.org), a foundation that funds independent economic studies in universities across the country, the living wage actually hurts many low-income wage earners.

Enacting a living wage raises compensation for a job without increasing job requirements. This is great for those workers who receive the benefits of a pay raise, but as workers retire, greater pay leads to greater competition for jobs. Logically, employers choose the most qualified applicant for a job, and doubling the pay for a certain position will result in workers of the original skill level being displaced by more skilled applicants. Just as urban renewal leads to low-income families being priced out of their homes by increasing property values, the ‘gentrification’ of the workforce will lead to fewer jobs for the very workers the living wage seeks to help.

While large institutions with three billion dollar endowments, like Notre Dame, may be able to absorb increased labor costs, most small businesses cannot. Adopting a living wage will force many small, mom-and-pop stores to close or cut employees. Many of the University’s contracted workers are employed by small businesses, and CLAP’s demands would exact a heavy toll on the people who lose their jobs due to cost-cutting.

Despite the problems that some low-income workers would face as a result of a living wage, not all would suffer. The employees who survived layoffs, labor gentrification and, not to mention, a higher cost of living, would likely experience a substantial increase in pay. The greatest problem with a living wage is not its negative effects on low-income wage earners, but its wholesale failure to actually target working families.

CLAP’s ‘Living Wage Report’ calculates its target hourly rate, $12.10 an hour, based on the income needed to support a family of four. The last clause is very interesting because UCLA Professor Richard Sanders’ study of a proposed living wage ordinance in Los Angeles states, “[A] majority of low wage workers are not the sole or even principle source of income in their household or family. Of those low wage workers who do not live alone, less than one quarter are the only wage earner in the family. As a result, most low wage workers do not live in families that are below the poverty line.” In fact, a U.S. Census Bureau study found that only 15 percent of workers affected by a proposed $6.15 increase in the minimum wage were single wage earners with kids. Forty-one percent of workers affected by a minimum wage increase live with a parent or a relative. Enacting a living wage raises prices, forces lower skilled citizens out of the workforce, assaults small businesses (which employ 52 percent of all private employees), and worst of all, is more likely to help an adult living with his or her parents than a single mother with two children. That is horrible policy – like using a hammer to chop firewood.

Our standard of living is closely related to the productivity of the American worker. The best way to give workers a fair wage is to increase their productivity through investment in human and physical capital. Education is an essential part of this equation, and Notre Dame is in a unique position to help working families earn more by targeting employees with families who are below the poverty line. The administration should allow these employees to attend selected computer and business classes for free and ‘on the clock’ so that they can gain the additional skills they need to obtain higher paying jobs that will support their families.

In the interim, the University should revisit its pay scale and investigate methods of ensuring that all employees of the University are able to have fair wages determined on an individual basis. All of the people who keep Notre Dame running should consider themselves part of the Notre Dame family. I can imagine no better way of demonstrating this than providing every member of that family with the opportunity to learn.

Jonathan Klingler is a senior management consulting major and the President of the Notre Dame College Republicans. He currently resides in Keenan Hall and enjoys Tolstoy and Matlock. He can be contacted via e-mail at jklingle@nd.edu

The views expressed in this article are those of the author and not necessarily those of The Observer.