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The economic case for paying a living wage


 


A living wage should not be confused with a minimum wage. The Federal minimum wage is now set at $7.25 per hour. If you’re one of the millions of Americans that hold a minimum wage job, you would earn approximately $1,256 a month or $15,068 a year.  It is impossible to survive in the USA on a minimum wage job.


The minimum wage should be replaced with a living wage. Every American, with some exceptions, who works a full time job, should be able to make an income sufficient to adequately feed, house and care for a family. The social benefits would be immense.  With everyone making a living wage, there would be additional consumption, less crime, increased innovation and new opportunities. In addition, the federal, state and local government would be relieved of the burden of subsidizing underpaid laborers with food stamps, housing allowances, medical assistance, earned income credits and a host of other programs designed to permit lowly paid Americans to live at a subsistence level.


The many employees caught in the trap of minimum wages and the degrading need to obtain government handouts would have a new sense of fulfillment which is the very essence of the American dream. Once businesses are no longer dependent on the government to support their employees, they will be forced to develop a new business plan in order to properly pay their employees. This will not be a simple task, but it has been done in the past and it is very doable now.


Obviously, there will be a groundswell of opposition from business. Once again, they will have to be self-sufficient and will have to learn how to become independent of the government crutch that has insured their profitability. In order to keep good, productive and healthy employees, businesses will have to provide a living wage.  No doubt, businesses will fight back with fears of economic stagnation, declining income and possible bankruptcy. For some, this scenario will become a reality. But for those who are able to adjust, their success will be a tribute to American spirit of self- reliance and autonomy which made our country great.


Millions of businesses in the USA already pay a living wage or better to their employees. They understand that in order to attract and keep good help, it is their obligation to meet basic financial standards. It hasn’t always been this way. The struggle for equitable wages has been a battle for generations of Americans. The task may be daunting, but it quite possible.


 In January of 1914, Henry Ford made history when he voluntarily doubled the wages of his employees to $5 a day. He was berated by many of his colleagues, but he had a higher goal. Ford ascertained that his generosity would pay off in the form of loyal employees who would now be capable of buying his automobiles. Ford was right and he went on to become a leading industrialist of his age.            

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