The Living Wage

Poverty. This one word elicits powerful manifestations. African children orphaned by AIDS, crammed into insufficient orphanages that lack the resources to care properly for them. “Untouchables,” the lowest caste of Indian society, where members are forced to work in conditions so unsanitary, the health of the members are often at great risk. China, a nation with such an incredible population surge, that its families have resorted to killing female babies. Situations like these trouble our conscience; however, we subsist in one of the world’s wealthiest nations. In the land of I-Pods, paparazzi, and camera phones, the United States often appears far removed from the problems plaguing the rest of the world. The United States survived, even flourished, despite The Great Depression, the Gas Crisis of the 1970s, and even the threat of recession in the most recent decade. Our nation is truly thriving!

How unconceivable then, that in the beginning of the new millennium, 26.8% of workers in the U.S. workforce, earn poverty level wages, up from 23.7% just twenty years earlier! (EPI 2002). According to the U.S. Department of Health and Human Services, just over one in four working Americans leads a life of poverty. Both the Federal and individual State Governments have created minimum wage requirements, dictating the minimum employers must pay workers for an hour of labor. Minimum wage applies to nearly all workers, with few exceptions.

The current minimum wage in Maryland is $6.15 per hour, which gives earners an annual income of less than $13,000 (MD Division of Labor and Industry 2004). The U.S. Poverty Line is an annual income of $17,690 to support a family of four, which averages an hourly wage of $8.20 (EPI 2003). Clearly, a family subsisting on minimum wage in the State of Maryland is unable to survive above the poverty line.

The costs of housing a family alone incorporate a myriad of expenses, far beyond that of basic shelter. Energy costs are at a record high in the State of Maryland, and not every home is equipped with electrical heating and cooling systems. Some homes have systems that use gas instead of electricity and therefore energy companies charge a �gas commodity’ fee on the monthly bill. Even water, a basic need, is not free. Clothes and food are a necessity; children must have school supplies; items for basic hygiene like soap and toilet paper all add to the monthly grocery bill. Covering these basic needs does not even allow finances for health insurance, and poverty level families cannot afford the high costs of basic healthcare without it. Take into account transportation to and from a job; whether public transportation is available; or if it is not, the cost of owning, registering, and insuring an automobile; and the family living on minimum wage cannot possibly survive without government assistance.

In order to solve this urgent crisis, a three-part plan is necessary. To start, fostering an awareness and understanding of the �living wage’, an hourly rate adjusted to incorporate the needs of the impoverished family is imperative. Recognizing the need and instituting the living wage, as a means of reducing government dependency, is crucial to the state government. Secondly, in order to implement a living wage effectively, the government must take into account various other expenses such as health insurance costs and retirement benefits. Lastly, the living wage must provide more assistance than hindrance to the economy, supporting the wage, in order to prove successful.

Traditionally, the accepted definition of a living wage is a wage that will meet the basic needs of an employee that a minimum wage may fail to meet. This wage applies to an unskilled worker working 40 hours a week with no additional income. A living wage takes into account the needs of a citizen in the developed world, such as the cost of shelter, nourishment, utilities, basic health care, retirement benefits, etc. The idea behind a living wage is to assist unskilled workers in meeting their basic needs. Although, not necessarily living a comfortable life, a living wage will protect an unskilled worker more than a minimum wage would be able to protect the worker. For the purpose of this paper, consider an unskilled worker one that may not have basic education or a marketable skill.

According to traditional вЂ?job gap studies’, “… [A] living wage… allows a family to meet its basic needs without government assistance” (Brown 2007). The Federal Government sets its living wage based on the Federal Poverty Guidelines for a specific family size. Federal poverty guidelines for its living wage, factor in a full-time, full-year worker that single-handedly supports a family of four at the current poverty line. The Federal Government considers full-time to be 40 hours per week and full-year to be 52 weeks per year (EPI 2003). The Federal Government still expects this worker to collect food stamps to feed his/her family. In order to maintain food stamp eligibility, there are only two requirements- the family’s gross income cannot exceed 130% of the poverty line, and the net monthly income cannot exceed 100% of the poverty line. Currently the Federal Government sets the poverty line at $20,650, for a family with four members (Federal Register 2007).

Australia enacted the first law concerning the living wage in 1908. The law determined that employers must provide employees with a wage that would allow them to live “…as a human being in a [civilized] community.” Australia established its living wage law, specifically to aid the unskilled workers among its population, as employers often exploited unskilled workers at this time. An Australian judge later overturned this law, but it paved the way for an entire movement.

A recent development in the United States, the city of Des Moines, Iowa, implemented the first living wage in January of 1988. Des Moines’ set a minimum compensation of $7 per hour for all city-funded urban renewal projects. The city most recently amended its ordinance in January 1996, changing the rate to $9 per hour and including both health and retirement benefits (Living Wage Campaign 2003). Gary, Indiana developed its own guidelines in January 1991, and then Baltimore, Maryland became the next pioneering city.

In December 1994, the Baltimore City Council passed an ordinance requiring all companies with city service contracts to pay employees $6.10 per hour. The Baltimore City Council also implemented a plan to increase this living wage over a four-year period, in order to adjust for inflation. The city of Baltimore continues to amend its ordinance and in June of