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For a Living Wage

Arnie Graf and Jonathan Lange

Robert Haveman asks, "Must we simply decide between North American wage stagnation and Western European double digit unemployment?" His answer is "No, there is a third way." While the third way postulated by Haveman has some new notes, it sounds like an old song. The refrain goes: subsidize the private sector, thereby encouraging them to hire low-wage workers.

Haveman would have subsidies flow directly to the employers in the form of tax credits or to the individual worker in the form of wage subsidies. Either way the public subsidizes the corporate sector while millions of workers remain marginalized in a calcified low wage labor market. Credit Income Taxes, Negative Income Taxes, and Earned Income Tax Credits are all forms of public subsidy to the private sector. These subsidies are public policy acquiescence to the private sector's unwillingness to pay a living wage. If we accept Haveman's proposals, we surrender our belief in a wage economy, our belief that workers have dignity deserving, as John L. Lewis demanded, a "fair day's pay for a fair day's work."

Public subsidies to the private sector are a surrender to the belief in the hegemony of the market. They are an unwarranted acknowledgment that it is the market and the market alone that determines wage levels. This thinking discounts history, which teaches that power, organized by and on behalf of workers, has had a profound effect on wage levels. This is not to deny market forces. Some labor organizing aims at limiting the supply of labor to bid up its price. Guilds and the modern day craft unions have been successful in this kind of supply side strategy. Other worker organizing has created political clout that has led to higher minimum wages and worker protection. While competition and markets have a decided impact on wages, so does political power. Declining union power can explain low wages as easily as supply and demand.

In 1995 the Industrial Areas Foundation's affiliate in Baltimore, BUILD, in conjunction with AFSCME and the Solidarity Sponsoring Committee, an organization of low wage workers, was able to pressure the Baltimore City Council to pass, and the Mayor to sign, the country's first living wage ordinance. Four thousand workers have seen their wages rise from minimum wage to $6.60 per hour. By 1998 these workers will earn $7.70 per hour. The workers receive no subsidy. No business has left town. The market adjusted to political power.

In today's political climate there is precious little desire in either political party to deal with the growing income inequality in our country. A full-fledged campaign is needed to create the political will necessary to move a callous Congress and a poll-obsessed President, to force them to come to terms with this deepening crisis. If such a campaign is to be launched, as it should be, then the fight ought to be for "living wage" jobs and not further subsidies. While some of Haveman's proposals have merit we cannot imagine how to politically mobilize support for them. Lots of good ideas (remember national health care) die a lonely death because they are unnecessarily complicated. We find working people are clear on why wages are low. They understand; and they are angry. They want work at living wages. These jobs can be mandated by law or created in the public sector.

President Clinton's words of praise for FDR at the recent unveiling of the Roosevelt Monument are blatantly disingenuous in light of his welfare reform and low wage policies. A much more fitting tribute to FDR would be to put the unemployed and the underemployed to work at living wages, rebuilding our neglected and deteriorating communities.

Originally published in the Summer 1997 issue of Boston Review

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