MORRIS: Demanding a Living Wage
Productivity is up. National income is up. But Americans are working more hours for less pay. Real wages have dropped by 15 percent since the 1970s. Over 11 percent of working families with children live below the poverty line, an increase of 50 percent from the 1970s. "America has never experienced falling real wages for a majority of its work force while its per capita GDP was rising", economist Lester Thurow writes in the New York Times. "In effect, we are conducting an enormous social and political experiment--something like putting a pressure cooker on the stove over a full flame and waiting to see how long it takes to explode."We are becoming a nation of working poor and at-risk households. Sixty percent of our households are experiencing falling incomes. But a few of us are doing very well indeed. From 1980 to 1995 those earning more than $1 million a year saw their real incomes double. Corporate profits are soaring. In 1979 CEOs made 29 times more than the average manufacturing worker. By 1988 they made 93 times more. The stock market has risen 35 percent in the last year but the richest 5 percent own almost 80 percent of all stocks. Less than 20 percent of households hold more than $2,000 in stocks or mutual funds outside of savings and pension plans with penalties for early withdrawals.What is the sensible response to this increasingly dangerous situation? Give labor a larger proportion of the wealth generated from increasing productivity. Raise wages. One way to do this is to raise the federal minimum wage, which has dropped in buying power by 30 percent since the late 1970s. President Clinton proposes a modest increase from $4.25 to $5.15 per hour. That would directly benefit at least 11 million workers. More than a dozen independent studies have shown that such an increase would have little or no negative impact on employment levels. Last fall 101 economists, including three Nobel prize winners, endorsed the Administration's proposal.But Clinton's modest proposal stands little chance. For it must be passed by a Republican Congress that proposes a far different remedy for falling wages: reduce taxes on the rich, abolish the progressive income tax, and eliminate the minimum wage.With Washington paralyzed, communities are taking responsibility for lowering the flame under the pressure cooker of rising social anger.Local actions take many forms. In Santa Clara, California, County Supervisors discovered that when companies refuse to pick up the tab for health insurance, local taxpayers bear the costs. The County's tab for health care for uninsured patients soared from $30 million in 1990 to $85 million in 1994. Last September the County Supervisors unanimously adopted a new policy. They will grant tax incentives only to companies that agree to provide health benefits to all new workers. In Indianapolis, Mayor Steve Goldsmith is trying to fashion an 8 county agreement not to provide tax incentives for employers who do not pay living wages.Baltimore's Living Wage law went into effect last summer. Companies working under city contracts must pay workers at least $6.10 per hour in 1996 and $7.70 by 2000. Last fall Milwaukee's City Council adopted a policy to pay $6.05 an hour for city workers and those working for city contractors. Living wage campaigns are under way in Los Angeles, Saint Louis, San Jose, Houston, Chicago and Washington.Twelve states already have minimum wage rates higher than the federal minimum. Last year many states either proposed a minimum wage law or an increase of the state minimum wage but only one, Massachusetts, actually approved a wage increase. Massachusetts raised its minimum to $5.25 an hour in January 1997. Petitions are circulating in California to put a long overdue hike in the state's minimum wage on the November ballot.Those advocating for a livable wage argue that if people do not earn enough to support their families the burden of meeting basic needs will fall on local governments and taxpayers. In Baltimore the initial reaction by city officials to a proposal for a living wage policy was concern about the possible adverse impact on the local business community. But after 8 months of extensive discussion with all sectors of the city, the mayor and city council came to believe that the benefits of such a policy far outweighed the costs. In Saint Paul a local referendum to require businesses getting public funds to pay at least $7 an hour was defeated. But the debate spurred the creation of a joint Minneapolis and Saint Paul task force to develop a livable wage policy.The debate about livable wages is now going on in dozens of communities. The conversation involves business, labor, community organizations and elected officials. Would it be more convenient if Washington were to lead the way on this issue? Of course. But a livable wage policy fashioned from the bottom up may be more enduring. A locally designed and locally debated policy can change not only laws and regulations but hearts and minds. And in the long run that is what we need.