Working for a Living

So, I’ve been hearing a bit about ensuring that the minimum wage is, in fact, a “living wage”. This idea of a “living wage” seems to have become another “argument from buzzwords” that have become so common in discourse. I mean, seriously, how can anyone be opposed to companies being made to pay a “living wage”? Shouldn’t they be paying people enough to live on? Why wouldn’t a company want to do that, other than their being money-obsessed utter jerks? So, of course the minimum wage should be a “living wage”; it’s just obvious. Isn’t it?

Well, things are, of course, much more complicated than that. The first question we have to ask — that I haven’t really seen asked — is why a minimum wage was instituted in the first place. Once we know why we have a minimum wage, then we can ask if that minimum wage should be the equivalent of a living wage. Note that arguments that show that the minimum wage has not increased at the same rate as inflation — a common argument used to demonstrate that the minimum wage needs to be increased — don’t actually have to ask this question. This is because it’s perfectly reasonable to say that for whatever reason we decided to set the minimum wage at a certain dollar value, we wanted to have it have that much dollar value in order to satisfy that reason, and inflation decreases the effective dollar value of that minimum wage. It is literally the case that a wage of $8 an hour in 1970 is not the same as a wage of $8 an hour today in terms of real effective dollar value. So if we thought that an effective wage of $8 an hour (say) was what we needed in 1970, we need it to be higher now because of inflation. So if those pushing for an increase in the minimum wage just wanted to adjust it as per inflation, they actually do have a pretty solid argument for that without asking what a minimum wage is for. If they want to go further, then that’s another story.

But let’s assume here, for the sake of argument, that we agree that the purpose of minimum wage is to ensure that all jobs pay at least a living wage. Hey, great, everything’s solved, right? After all, that would pretty much be true by definition, and so we can all agree to raise the minimum wage to what we consider a “living wage” and we’re all done here, and anyone who doesn’t would have to be arguing against even having a minimum wage, so that’s all settled: if you don’t support eliminating the minimum wage, you have to agree with increasing it to the wage we’re calling for, QED.

Well, except that we have two other questions about a “living wage”: Living for whom, and to what standard of living? The first is to ask just who — or, rather, how many — should be able to live off of a minimum wage job, because we have a wide range of households to consider. Everyone, I think, would agree that a single person should be able to live working a minimum wage job, and I also think everyone would agree that the household in “Just the Ten of Us” wouldn’t be able to, and would need at least another job, and probably two ones that pay more (or some additional assistance). That’s a pretty wide range. So, do we think that a family of four should be able to live off of a living wage, if that’s their sole income? A couple without children? A family of five or more?

The second is to ask what standard of living they should be able to have on that “living wage”. Pretty much everyone would agree that a living wage ought to include food, shelter and clothing at a minimum. And pretty much everyone would agree that it shouldn’t include a yacht, or a new car every year. But that still leaves a pretty big range. While many would agree that it should include at least some luxuries, how many luxuries should it provide? Is the Internet a luxury or a necessity in today’s world? Is a car? I think it obvious that we should expect people on the low end of the income scale to have to sacrifice some things to make their budget — there’s no reason they should be able to get anything they want, or even things that others have — but by the same token we don’t want to have to say what is and isn’t too much of a sacrifice for them. For me, I would find it much easier to drop cable and, well, almost anything else before the Internet, while for others the opposite is true. So what’s a reasonable standard of living?

These questions, though generally unconsidered, form the heart of many of the debates, and especially the debates over how nasty and greedy companies like Walmart and McDonald’s are for not paying high enough salaries. I think that most people and most companies don’t really think that you should be able to support a family of four on minimum wage or what they generally pay most of their employees. They expect their jobs to be reserved for secondary incomes, students, single people starting out, people taking early retirement who want a little more money, and so on and so forth. And their jobs are good for that because they are generally unskilled jobs — they don’t require a lot of education or experience to do well — and also tend to be reasonably flexible when it comes to hours since they are open seven days a week and include mornings, afternoons and evenings. Try getting that amount of flexibility in most manufacturing jobs. And I think that most of these companies would be perfectly happy to attract people who just want to make a little extra money, and aren’t trying to raise a family on it and aren’t trying to turn it into a career (even if some of them may work there for their entire lives); they don’t want someone who is using it to raise a family of four.

And so when the primary earner loses their job, and now that secondary income is now the only income, to them it looks like a rather tragic temporary circumstance: the family simply doesn’t have enough income to support themselves. And so as a reaction to these tough economic times, the company turns to the social programs of the society and says “Here, let us help you use them to get you through these tough times” … and then be totally shocked when they’re accused of being totally insensitive and looking at things from a privileged view and relying on taxes to support their businesses by underpaying their employees. Because it’s not like they asked anyone to try to support a family of four on what they were paying, and if someone was a sole breadwinner for a family of four and decided to get a different job that would allow them to support their family I don’t think these companies would begrudge them that at all.

Now, you might be reacting with outrage towards my characterization of the companies, most likely miffed that I made them seem, well, not greedy. Well, there is indeed some greed motivation here as well, or perhaps not so much “greed” as “cost efficiency”. Companies want to pay the lowest salaries they can to get the people they need who can do the job they need to get done. So companies that require rarer skills or more education pay higher salaries because without doing so no one else would do it. Also jobs that are more of a strain physically — or are at least perceived as such — or are considered more unpleasant in some way also tend to pay more because if you can make the same without having to deal with literal crap at times most people will choose not to deal with the crap. But if companies can hire the people with the skills they need at a certain low wage — say, minimum — they’ll pay them that. If they can’t, then they’ll naturally increase their wages as long as they can still make a profit doing so.

So one of the issues with “McJobs” is that there are a lot of people who are willing to at least try to do them for that wage. And that demand might be increasing.

The reasons, it seems to me, are multiple. First, the economy is not doing well, and so a lot of the better jobs are full or are losing people. And people don’t want to leave them if they have them. Second, more and more jobs are moving towards actually requiring some skill to do; you probably need to have more education now to be a secretary administrative assistant than you did in the 70s. And as we move towards a more information-driven society, all of the new jobs will require more skill and education than the new jobs in the past did. Third, more people are getting an education, meaning that jobs where you might or might not have needed education now can select only from people who have one to fill those positions. Fourth, I keep hearing that manufacturing jobs are decreasing, and those were the jobs that often combined higher wages with a lesser skill level, at least initially (experience usually helped, though). And finally, with lower marriage rates and higher divorce rates, it seems to me that there are more single income households out there, and thus the income from the job has to carry pretty much the whole household, which it didn’t before.

And I’m sure there are millions of other factors as well. But the main point is this: service and “McJobs” are more and more becoming a main source of income for a household, if not the main source of income for a household … and they were never meant to be that. A couple both working “McJobs” can probably support a family of four, but if one of them loses their job they’ll be immediately underwater, especially since it’s unlikely that even a couple working two minimum wage jobs is going to build up much savings. And minimum wage jobs tend to have a lesser chance of advancement as well, so if you start there you’ll probably finish there. And since more people are relying on these jobs for their income, there’s more demand for these jobs, and so companies know that if someone leaves for any reason they’ll be able to find many people who will work for that wage, and so have no incentive to increase it.

At the same time, do we really want these jobs to all have to pay a wage that can support a family of four? Because that’s pretty significant, and can only cause companies to see if they can get away with less employees in order to maintain their profit margins. If labour costs are very low, companies don’t have to worry much about overstaffing, especially in service jobs where you can lose a significant amount of business if you don’t have someone available to serve someone and they get ticked off and leave. So it’s easier to hire an extra person than it is to risk ticking off customers. But if labour costs are higher, companies definitely want to ensure that they don’t have people sitting around doing nothing, unless doing that can generate more income to cover that. Yes, more people working helps the overall economy … but it might not help that company much. Thus, singles, people using it as a secondary income, and students might find it harder to them to find a job because the companies have to pay them more than they actually need or want.

I’m not sure how to go here. I think it’s fair to treat minimum wage jobs as jobs you take when you can’t get anything else, but I don’t like them being jobs that you take when you can’t get anything else and the alternative is starvation. But perhaps t’is just me.

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5 Responses to “Working for a Living”

  1. Hector Muñoz Says:

    I don’t think it’s a good idea to let the market decide how low can a person be paid just because offer and demand, there must be a threshold of corporate responsibility because the situation tends to be a vicious circle, once you are stuck doing this kind of jobs poverty prevents you from reaching anything better.

    • verbosestoic Says:

      But by the same token, we don’t want to force companies to pay more for labour than it’s worth to them, because that won’t work either; they’ll just stop hiring people. As an example, a department store chain is having financial problems, and I’ve noticed a sharp decrease in the number of people they have in various departments at various times. Sometimes it’s almost impossible to find someone — in slack times — and when it’s busy you have one person running around trying to service many customers. It hurts the company, and it would just make more sense to hire more people … but if labour costs too much, they won’t do that.

      I’m not in any way opposed to a minimum wage law, but we really need to make sure we know what it’s for and what the consequences of it will be.

      • Hector Muñoz Says:

        It’s a reasonable preoccupation but the idea is a decent increase only in the lowest wages, not all along the pay scale. Labor is far from being the heftiest of costs for a corporation.

        Henry Ford managed to dominate the automobile market paying the best salaries. Maybe if people wasn’t so miserable in low paying jobs they would provide more value to their employers and then going to McDonalds wouldn’t suck so much.

  2. Crude Says:

    Henry Ford managed to dominate the automobile market paying the best salaries.

    Henry Ford pioneered the automobile market itself, along with some serious innovations in production. Did Ford’s domination of the auto market last?

    Maybe if people wasn’t so miserable in low paying jobs they would provide more value to their employers and then going to McDonalds wouldn’t suck so much.

    It doesn’t suck so much. McDonalds is a tremendous success story even now with the bad experiences it’s having.

    What are the duties of the employee in your equation? What must they do to earn a decent wage?

  3. verbosestoic Says:

    It’s a reasonable preoccupation but the idea is a decent increase only in the lowest wages, not all along the pay scale. Labor is far from being the heftiest of costs for a corporation.

    First, that won’t happen. Jobs that pay above minimum wage now pay that for a reason … the reason being that they need to draw workers in who will demand more than minimum wage. Inside the same company, you WILL have to increase wages across the board, as people at higher levels can’t be paid the same as those on lower levels. Outside, you still might if the competition and jobs are such that people would only take the job you’re offering if they are paid more than they can get at a minimum wage job.

    Second, labour overall is a huge cost for a corporation. It’s a fixed cost that you have to overcome before you can make any money at all, as opposed to a cost per product. It’s also theoretically the easiest to control; you can’t lower your rent or your material costs, but you can always reduce labour if you can do so and still produce enough to offset it. It’s a pretty big deal most of the time.

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