The “Living Wage” Argument is Back…As a Presidential Campaign Issue

Last week Salon’s Joan Walsh ran an editorial titled “Scott Walker’s Sleazy New Low.”  What did presidential candidate and Wisconsin Gov. Scott Walker do to earn such scorn? He signed into law the 2015-2017 budget for the state of Wisconsin, which included a rewording of Wisconsin State Legislature Chapter 104.

  • Previously chapter 104 § 02 stated, “every wage paid or agreed to be paid by any employer to an employee, except as otherwise provided in s. 104.07, shall be not less than a living wage.”
  • A living wage was defined in chapter 104 § 01 as meaning “compensation for labor paid, whether by time, piecework, or otherwise, sufficient to enable the employee receiving the compensation to maintain himself or herself under conditions consistent with his or her welfare.”

The new budget replaces all references to a living wage with minimum wage.  The rewording effectively takes a hand-wavy clause devoid of any objective meaning and replaces it with something concrete. The outrage is because this alteration all but thwarts an attempt by a labor group, Wisconsin Jobs Now, to sue Walker and force the convening of a commission to set a new minimum wage.  Instead of having the elected legislature, local governments or (gasp) market forces determine minimum wages, Wisconsin Jobs Now would have a centralized group of unelected officials determine wages.

Meanwhile, presidential candidate Hillary Clinton outlined her economic policy today, saying, “[T]he defining economic challenge of our time is clear: We must raise incomes for hardworking Americans so they can afford a middle-class life.” Well, perhaps outlined is a misnomer, she made some vague promises with respect to the nation’s economy.  One of the policies she alluded to was an increase in the minimum wage, as she has previously with her vocal support of the Fight for the 15 movement. Although she has been and again today was very careful about explicitly making economic policy statements, it is clear that she is in support of a very substantial increase in the minimum wage.

The goal of proponents of a “living wage,” whatever that means, is to increase the incomes of the poor. However, the poor largely aren’t the ones that will benefit from minimum wage increases. The 2013 March supplement of the Current Population Survey (CPS) shows that 87 percent of individuals making below $10.10 an hour in 2012 lived in households that were not in poverty.  Moreover, 61 percent lived in households making more than double the poverty threshold and 41 percent were over three times the poverty level. Three-fifths of the working age individuals living in poor households had worked fewer than five weeks in the previous year.

If the goal is to actually help poor households an increase in the minimum wage is a terrible policy approach.  Increasing the minimum wage reduces employment for the most at risk of living in poverty portion of the population, young people with low levels of education.

Those that support “living wages” are looking to put the onus of supporting the working poor on someone else. Instead of looking at supporting a minimum standard of living through conditional cash transfers that shift incentives and strengthen families, and policies that increase employment, supporters of the minimum wage look to pass the blame on to someone else, mainly those “evil” corporations.

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  1. Jacob Kohlhepp says:

    The left is quick to point out quick BandAid solutions that are not only ineffective but often make the problem worse. Thanks for pointing out how the world really works!

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