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EspañolLIVING WAGE
'Living wage' is a term used by advocates to refer to the minimum hourly wage necessary for a person to achieve some specific standard of living. In the context of developed countries such as the United Kingdom or Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation. This concept differs from the minimum wage in that the latter is set by law and may fail to meet the requirements of a living wage.
In the United States, several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum for the purpose of requiring all jobs to meet the living wage for that region. These ordinances often only apply to certain types of businesses, such as those receiving government contracts. However, San Francisco, California and Santa Fe, New Mexico have notably passed very wide-reaching living wage ordinances. (The city of Chicago, Illinois also passed a living wage ordinance in 2006, but it was vetoed by the mayor.) Living wage laws typically cover only businesses that receive this type of assistance or have contracts with the government.[1]
In Australia, the 1908 Harvester Judgment ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community," regardless of his capacity to pay. Justice Higgins established a wage of 7/- (7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers. The judgment was later overturned but remains influential. In 1913, to compensate for the rising cost of living, the basic wage was increased to 8/- per day, the first increase since the minimum was set. The first Retail Price Index in Australia was published late in 1912. The basic wage system remained in place in Australia until 1967. It was also adopted by some state tribunals and was in use in some states in the 1980s.
The national and international living wage movements are supported by many labor unions and community action groups such as ACORN.
In the United Kingdom, many campaigning organisations have responded to the low level of the National Minimum Wage by asserting the need for it to be increased to a level more comparable to a living wage. For instance, the Mayor of London's office hosts a Living Wage Unit which monitors the level needed for a living wage in London (which has considerably higher living costs than the rest of the UK). Other organisations with an interest in living wage issues include the Living Wage Campaign[2] (again London-based), Church Action on Poverty[3] and the Scottish Low Pay Unit. The Guardian newspaper columnist Polly Toynbee is also a major supporter of the campaign for a living wage. The charity London Citizens is campaigning for a living wage to be implemented across London.
Critics argue that basic economic theory suggests a mandated minimum price for labor, a "living wage," is harmful to low-wage workers and increases unemployment. Artificially fixing a price for labor above the market price causes a decrease in the overall demand for labor, leading to increased unemployment and a deadweight loss. Workers who lose their jobs would not receive the living wage. Furthermore, such wage increases can cause inflation, increasing the cost of living and decreasing the relative buying power of the living wage, which leaves the minimum wage earner no better off.
Critics of living wage ordinances assert that the government should not intervene in the marketplace because even well intentioned interventions are usually detrimental to the economy as a whole. Living-wage advocates respond that governments intervene in the market to help businesses through subsidies, tax breaks, and other assistance. While this is true, those who oppose government intervention in the marketplace would also oppose government subsidies, tax breaks, and other assistance to business as one bad economic policy should not be used to justify a second bad economic policy.
The concept of a living wage also varies within and between countries. Controversy over exactly how much a living wage should be in any particular place could be used as a reason not adhere to that wage.
Critics also argue that there are alternative ways to deliver income to the poor, such as the Earned Income Tax Credit or a negative income tax, that don't have the large unemployment and deadweight loss effects of a living wage law. For example, research has shown that "living wage laws are vastly inefficient when compared to localized Earned Income Tax Credit (EITC) programs." [1]
★ Supply and demand
★ Minimum wage
★ Wage slave
★ Labor market
★ Ten Thousand Villages
★ Positive rights
★ Working poor
1.
★
| Contents |
| Implementations |
| Criticism |
| Policy Alternatives to a Living Wage Law |
| See also |
| References |
| External links |
Implementations
In the United States, several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum for the purpose of requiring all jobs to meet the living wage for that region. These ordinances often only apply to certain types of businesses, such as those receiving government contracts. However, San Francisco, California and Santa Fe, New Mexico have notably passed very wide-reaching living wage ordinances. (The city of Chicago, Illinois also passed a living wage ordinance in 2006, but it was vetoed by the mayor.) Living wage laws typically cover only businesses that receive this type of assistance or have contracts with the government.[1]
In Australia, the 1908 Harvester Judgment ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community," regardless of his capacity to pay. Justice Higgins established a wage of 7/- (7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers. The judgment was later overturned but remains influential. In 1913, to compensate for the rising cost of living, the basic wage was increased to 8/- per day, the first increase since the minimum was set. The first Retail Price Index in Australia was published late in 1912. The basic wage system remained in place in Australia until 1967. It was also adopted by some state tribunals and was in use in some states in the 1980s.
The national and international living wage movements are supported by many labor unions and community action groups such as ACORN.
In the United Kingdom, many campaigning organisations have responded to the low level of the National Minimum Wage by asserting the need for it to be increased to a level more comparable to a living wage. For instance, the Mayor of London's office hosts a Living Wage Unit which monitors the level needed for a living wage in London (which has considerably higher living costs than the rest of the UK). Other organisations with an interest in living wage issues include the Living Wage Campaign[2] (again London-based), Church Action on Poverty[3] and the Scottish Low Pay Unit. The Guardian newspaper columnist Polly Toynbee is also a major supporter of the campaign for a living wage. The charity London Citizens is campaigning for a living wage to be implemented across London.
Criticism
Critics argue that basic economic theory suggests a mandated minimum price for labor, a "living wage," is harmful to low-wage workers and increases unemployment. Artificially fixing a price for labor above the market price causes a decrease in the overall demand for labor, leading to increased unemployment and a deadweight loss. Workers who lose their jobs would not receive the living wage. Furthermore, such wage increases can cause inflation, increasing the cost of living and decreasing the relative buying power of the living wage, which leaves the minimum wage earner no better off.
Critics of living wage ordinances assert that the government should not intervene in the marketplace because even well intentioned interventions are usually detrimental to the economy as a whole. Living-wage advocates respond that governments intervene in the market to help businesses through subsidies, tax breaks, and other assistance. While this is true, those who oppose government intervention in the marketplace would also oppose government subsidies, tax breaks, and other assistance to business as one bad economic policy should not be used to justify a second bad economic policy.
Comparison of historic unemployment among low skill workers and the minimum wage relative to the average wage in the U.S. The two lowest points are for the years 1999 and 2000.
The minimum wage has little apparent effect on higher skilled workers.
The concept of a living wage also varies within and between countries. Controversy over exactly how much a living wage should be in any particular place could be used as a reason not adhere to that wage.
Policy Alternatives to a Living Wage Law
Critics also argue that there are alternative ways to deliver income to the poor, such as the Earned Income Tax Credit or a negative income tax, that don't have the large unemployment and deadweight loss effects of a living wage law. For example, research has shown that "living wage laws are vastly inefficient when compared to localized Earned Income Tax Credit (EITC) programs." [1]
See also
★ Supply and demand
★ Minimum wage
★ Wage slave
★ Labor market
★ Ten Thousand Villages
★ Positive rights
★ Working poor
References
1.
External links
★
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