Minimum Wage vs. Living Wage
Every time there is a national election somebody will bring up raising the national minimum wage. Despite numerous raisings of the minimum wage, people still work full time and cannot get out of poverty. The working poor are hard working honest people that have done things the right way but still are left struggling to survive. Is it possible that the national minimum wage is outdated?
An alternative to the minimum wage is a living wage which is based on cost of living for the areas people work and live in. The thought behind a living wage is fairly simple; a loaf of bread in Kentucky does not cost the same as a loaf of bread in California and therefore wages need to be based on cost of living instead of a one-size-fits-all national minimum amount. This not only benefits people in the workplace but business as well. If you try to set the national minimum wages to accommodate the cost of living in more expensive areas then companies are forced to pay higher wages than necessary in lower cost areas. If you base the national minimum wage on the lower cost areas then you underpay workers in higher cost areas. The only logical way to be fair to both workers and business is to set a national standard for how wages are calculated but base the minimum pay rate on the actual cost of living in the areas where the workers live and work.
The basic acceptable standard for a living wage should be that a worker earning a minimum living wage will earn enough money to:
1: Pay average rent for a one bedroom apartment
2: Pay average utility costs (including phone and basic internet service)
3: Pay for three healthy meals per day (not fast food but actual groceries to make healthy meals)
4: Pay for transportation costs (gasoline and maintenance for an average car or public transportation costs within the area)
5: Allow for the saving of at least 10% of income over and above monthly expenses.
6: Pay for childcare for one child.
These guarantees would allow people to work one job and still make ends meet without making business pay exorbitant salaries that make them unprofitable. It would undoubtedly make profits lower in some areas but would also increase the number of people employed due to a reduction in the number of people working two jobs and thus increase the number of viable consumers buying in the marketplace. The living wage is good for the economy and good for the people. It would improve housing occupancy, savings, spending, and employment and put more of the benefits of work into the hands of the actual workers instead of giving them a disproportionately small percentage of company profits.
To make the living wage really work though, you also need to couple it with tax equity. The standard for minimum taxable income needs to be set to be in line with the living wages and all taxes above the tax set for minimum income tax need to be based on percentages of income over the minimum living wage for the area the people work and live in. That means that the tax code needs to be revised to be based on locality as opposed to dollar income tiers on a national basis. Obviously for people who live in multiple locations there would need to be averages set to equitably tax them so that millionaires couldn't all establish residences in certain areas for the sole purposes of evading taxes. With the capabilities of modern software it would not be an undue burden on the IRS to process the taxes under the more equitable code. By basing taxes on local reality instead of national averages they become fairer and serve the majority of the people.
The job of government is to serve the interests of the people as a whole. When legislation is passed that sets wages and taxes to only meet the needs of a small minority of workers it is not serving the people overall. To serve the people government must make sure that the majority are served adequately by the laws that are written. It is time to bring the cities and towns into the equation when it comes to minimum wage and taxation standards in America. National standards for how to calculate minimum wages and taxes is appropriate but the wages and taxes themselves need to be set on a local level. Costs are different from city to city even within states. By having wages and taxes based on local area costs of living we allow workers to actually earn an honest day’s pay for an honest day’s work without fear of losing too much of their hard-earned money to undue over-taxation.
Troy Wilson-Ripsom - Staff Writer | Give your feedback on this article.
