Restore Opportunity with a Living Wage

By Richard R. Troxell

America, the land of opportunity. That expression is strong and inviting. It gives one the impression that anything is possible. It is an idea that appeals to Democrats, Republicans and Libertarians alike.

But the very base of our socio-economic foundation is in danger of crumbling because the backbone workers of America, the minimum-wage worker, comprised of construction laborers, child-care workers, elder-care aides, security guards, restaurant workers, retail sales workers, landscape workers, ambulance drivers, are all in economic danger of falling out of the system and into homelessness.

According to the last several US Conference of Mayors reports, a full-time, minimum-wage worker cannot get into and keep basic rental housing anywhere in this country. That means that, in order to afford an apartment, a full time minimum-wage worker must work a second job or double up with someone or find some other way to subsidize their income or suffer the consequences.

Again this year, the National Coalition for the Homeless reports that 3.5 million people will experience homelessness. Many of these people — the day care aides, the store clerks, the janitors, the hotel workers, the bank tellers, the fast food workers, the dry cleaner operators, and so on — are minimum-wage workers. They all have three things in common. They all comprise the socio-economic base of our nation’s economy, their jobs cannot be out-sourced, and they are all minimum wagers, who lack the opportunity to afford basic rental housing.

The Federal Minimum Wage, presently $7.25 per hour, was established in 1938, following the Great Depression, when millions of people wandered our country looking for work to put food on the table. Both halves of Congress decided that we needed to set a minimum wage amount that ensured that if a person worked 40 hours in a week, they could afford basic food, clothing, and shelter. They set the wage at 50 cents. This worked fairly well, with the price being adjusted along with the cost of living, until about the mid 1980s, when America started experiencing economic “booms.”

During these times, the cost of everything inflated.

These times of economic prosperity are always followed by economic retraction where prices recede — what goes up must come down — except for the cost of housing, that is. Landlords usually hold on to their original asking price.

You might be offered one month free or a free microwave or free utilities for a couple months, but the rents tend to remain elevated. In fact, the most expensive item in the budget of every American, be they single or coupled, is housing. It is that cost of housing that is knocking our minimum wage workers out of the workforce and into homelessness. We are experiencing an ever increasing divide between the federal minimum wage and what that wage will afford.

Our figures indicate that living wage should run from $7.96 in Dothan, Ala., to $13.35 in Austin, Texas, to $21.63 in Santa Cruz, Calif. We propose that these increases in minimum wages be phased in over 10 years to make the higher-end numbers more palatable.

Stabilizing the minimum-wage worker will not only help the individual, but it will also help small businesses. According to a report on the Small Business Administration website, 64% of all small businesses fail by the end of four years.

Our research shows us that while business plans may focus on manufacturing, development, warehousing, advertisement, transportation, and employees, the employee link in the chain is indeed the weak link. When the worker is economically destabilized as a matter of course, this leads to exorbitant retraining costs that in turn destabilize the business.

We look to Henry Ford and his failing efforts to gain market share in the fledgling auto industry that led him to seriously look at the question of economic worker instability. He was facing significant retraining costs and high employee turnover. He recognized that even with an excellent employee training program, he was being forced to replace every employee four times a year.

He found that absenteeism was at an equally unacceptable level. To address their concerns, he almost doubled the wage to $5 per day. The immediate result was: significant reduction in employee turnover; significant reduction in retraining costs; significant reduction in unscheduled absenteeism, and almost complete stoppage of internal theft.

Roughly 50% of today’s retail theft is committed by disgruntled employees. A Wal-Mart in Hearn, Texas, closed due to internal theft.

Henry Ford created a true economic stimulus because his workers put discretionary funds right back into his company as purchasing consumers. In other words, they bought the very cars they were making by using their new found wages.

All of these results are possible today with the adoption of what I’ve described and what we call the Universal Living Wage. Consider that 98% of all minimum wage increases are spent right back into the economy. Also consider that we are talking about putting the difference between the existing federal minimum wage and the Universal Living Wage (see City/State link at www.UniversalLivingWage.org) into the pockets of people who all need the same thing: affordable housing.

By just tweaking the existing Federal Minimum Wage and indexing it to the local cost of housing, over a ten year period, we address the income inequity strangling our minimum wage working poor, change the immigration paradigm, stabilize small businesses, stimulate the economy, and provide opportunity to our workers allowing them to work themselves off of the tax-payer dole and off the streets of America.

Richard R. Troxell of Austin, Texas, is president of House the Homeless. See housethehomeless.org.

From The Progressive Populist, March 1, 2012