12/13/2006

Utah needs a living wage

I have read several articles and blogs concerning minimum wage propositions, both for a minimum wage increase and against it. Both sides of the table have good reasons for their decision. I would like to introduce a living wage increase for Utah. There are several reasons why employees want to make more money. I will only cite a few that I feel are more relevant. First, we want to make more money,whether this increase is for toys, savings, furnishings, education, or clothinng. Second, there is this little thing called inflation that is knocking on the financial door each year. While Governer Huntsman collects his report that says that less only 19,000 employees in the state earn minimum wage, he then discounts the remainder of the report that tells of the many employees that are working within $1 of minimum wage. The link to an article in the Salt Lake Tribune on this report, which is due out tomorrow, is http://www.sltrib.com/news/ci_4823586. When a person starts at minimum wage, thier increase after 90 days, or whatever probation period that the company has set, is very minimal. And lastly, there are many people that need to support families.
As far as being against a mimimum wage increase, there are many good supporting reasons as well.
But rather than argue about the minimum wage, I would like to purpose a living wage for Utah. While we argue that the minimum wage should not be increased, many well trained employees have had to pack up and leave our beautiful state due to wages. Before you say that we do not need them here if they cannot "hang," or that it was something they should have known before arriving here; I would first like to point out that these people were teachers, police officers, and firemen. And that is just to name a few of the occupations that are suffering from lack of sufficient income to live, no survive in Utah. Utah needs to focus on a living wage, an income for public servants that will allow them to survive in our burgeoning metropolis-to be. The proponents are simple, review the cost of living for that demographic area and pay the wage that supports the people there. There will be incrimental differences between those who support themselves, and those who have others who depend on them for their support.
In closing, minimum wage is just that, a minimum that employers should pay. If there are some people that think it is fine where it is, or that we do not require it, try living below that "suggested" hourly amount (without food stamps, medicare, and without living at home under mom and dad's roof). You may change your mind.

9 comments:

Dr. Tufte said...

Where exactly is the money going to come from?

If you do not have an answer at the ready for this question, then all the "reasons" amount to nothing.

No one has any objection to paying workers more if they produce more. It is fine to "want" a living wage, but there is no discussion in this post of producing more to justify paying more. Can you imagine the outcry if Governor Huntsman announced that he wanted everyone to produce more every day? We don't hear this because it doesn't make any sense. But, when someone says we need a living wage, some of us turn off our critical thinking skills - since this sort of proposal amounts to pushing for everyone to be paid more every day.

Having said that, there are concerns about being able to afford a certain lifestyle with commonly available wages. But, is it the job of an employer to ensure that you can afford what you want or claim to need? It isn't currently, but what would happen to your willingness to pursue a business opportunity if this was one of the things you had to do in order to be in business?

squirrel said...

One answer to the problem of salaries came today in the report that Gov Huntsman received, at http://www.sltrib.com/ci_4833566. The Gov's planned budget is to increase the average per student funding with an increase of 7 percent.
In response to the living wage, by increasing the hourly pay to an incentive pay per performance that would equate more to a living wage the employer would get a higher productivity level out of the employee, and would decrease the companies turnover costs. The employee would be able to live within the cost of living for that area. This would decrease the companies profit margin, but in the long run the company would have well trained employees that would be efficient at their jobs.

econstudent said...

Good points in the above posts. I believe that companies need to treat employees as an investment instead of an expense.

If companies hire the right person in the first place and stop treating people like machinery then I believe wages will naturally rise.

I am against a living wage because I don't believe every business should be forced into paying more for less productive workers. Like Dr. Tufte said.

I believe the root problem is the business associations that effectively lobby against new businesses coming in just to keep the wage low.

Dr. Tufte said...

Squirrel's comment is fine, but it illustrates my point.

No one who talks about a living wage talks about the workers actually working harder. They need to though.

Think about it: do you know anyone who is paid piece-rate who needs a living wage? If you can control your productivity, you can can also control your compensation. Most proponents of a living wage want to tell other people how to compensate their workers without any connection to how they are going to make them more productive.

Dr. Tufte said...

Econstudent has stepped over the boundary into a conspiracy theory: no one is lobbying "against new businesses coming in just to keep the wage low".

For whatever reason, this particular view is given a lot of creedence in southwestern Utah. It has no basis in fact.

In Cedar City in particular, there has been a shortage of workers who are willing and able to work a full-time job that starts at $10-15 per hour with benefits. Go talk to the managers out on Route 56: they advertise as far away as St. Louis to fill their jobs, and they can't get a full crew. But, that's the limit that they can pay because the jobs only produce so much stuff.

econstudent said...

I do not have any concrete evidence that businesses are lobbying to keep others out, but I have heard from reputable people (professors) it is the case. Also, old businesses in the area have motivation to keep new ones out, don't they?

If I was running a factory paying $8 an hour to my employees and a new company wanted to move in next door paying $10 an hour, I would like to keep them from moving in. Especially because labor is scarce as it is. There is a chance that I could lose employees to the other factory, why wouldn't I want to lobby?

Dr. Tufte said...

Hmmm.

Professors can be crackpots too. I have never been presented with evidence of this that is remotely concrete, so I maintain that it is an urban (or in this case, high-desert) myth.

Having said that, yes there is an incentive for an employer to lobby against a new employer that will pay higher wages - provided that the circumstances are correct.

The thing is, it isn't enough to say (hypothetically) that someone might enter the market and offer a higher wage.

Why would they do that? To "screw" the existing business? Do you really believe that?

The most important "competitor" for a manager trying to figure out how much to pay people is how much they can produce. Is this new firm going to offer a higher wage for the exact same amount of work? Why would they do that? More than likely they are going to offer more pay for more work. If that is the case, then your example falls apart.

I'll stick to they idea that this is a conspiracy theory: a lot those persist because people arbitrarily stop their logical progression before fleshing out all the consequences.

Motyogo said...

Are non-class members allowed to comment?

To me it seems as if Dr Tufte's position would be correct if we lived in a world with maximum flexibility to move jobs, to trade work time for leisure time, and if all work was compensated.

But take a single parent from a poor background (no assets to start with and fewer skills/lower education gained than their privileged peers). They are not getting paid for raising children, although this is not simply a personal leisure choice: if people didn't have children there soon wouldn't be enough taxpayers and society would collapse. The time spent on this, however, greatly limits the time at their disposal to invest into work. Furthermore, there are not only limits on human productivity per time unit, but increased productivity is not necessarily rewarded with increased pay in practice - especially if there are other people lining up for the job. It also takes time and monetary resources to look for other, better paying jobs, not to mention constraints such as schooling in the area, housing etc.

I don't think this is such an extreme example, and there are many other ways in which the real world doesn't fit Dr Tufte's model.

I doubt many people argue that "it is the job of an employer to ensure that you can afford what you want or claim to need". I would have thought the argument is about providing enough to live on, not to satisfy any random aspiration. And it is the job of society to ensure that, whether through the money coming from the employer directly (after all, the employee is benefiting the employer through their work), or indirectly via taxes to the state that would then pay for benefits.

Dr. Tufte said...

Yes, absolutely. (Obviously I'd ban someone who was rude, but that hasn't happened yet).

In fact, this is one of the best comments I've had in ages ... I wish you were one of the students :)

Anyway, there are two big points here: kids and flexibility about which I'd like to add 3 things.

1) If flexibillity were such a big issue, why don't we ever have calls for government mandated severance pay? There are reasonable reasons for firms to backload pay - one of which is to tie workers to jobs. Governmnet funded severance pay would mitigate that, and give people opportunities to move to better jobs. My guess is that the reason this is never offered is that it isn't in the interest of government (which wants to control where its citizens go), business (who would have more trouble passing on that cost to consumers), and unions (who have found a policy whose secondary implication is to make the unions, job easier).

2) As to flexibility more generally, I think there are a lot of people who ought to shift jobs more often. When corporations can steer employees careers, they do this at a much higher rate than the employees would otherwise choose to. My guess is that this increases value.

3) I think your general point is well-taken, but your specific point about a family is not. The reason is that children are a source of wealth, not a drain on it. They certainly cause your wealth to be less liquid, but if they didn't increase it, more people would sell their kids (in whole, or in part).