The Living Wage Campaign

There are many harebrained schemes in the United States for the adjudication of income disparity with most of them emerging from a well meaning socialist sentiment. Unquestionably the most popular of the moment is the "living wage" campaign.

On its face the desire to pay employees a wage high enough to support themselves and their families may seem sensible. What this campaign ignores, of course, is that small business owners will be driven to bankruptcy if this plan is enacted shrinking the pool of available jobs and reducing opportunity for those entering the job market.

If San Francisco Mayor Willie Brown has his way it will be illegal for many employers to pay their workers less than $11 an hour. That, by the way, is the "moderate" proposal since the original idea would have set the minimum wage at $14.50 an hour. The "moderate" proposal is roughly twice the federally sanctioned minimum wage.

This living wage campaign is led by the Association for Community Organizing Reform Now (ACORN) and member unions of the AFL-CIO. What the organizing groups ignore is that when Baltimore passed the first "living wage" law in 1994 businesses started leaving the city in droves drying up opportunities for young people eager to secure their first job.

Although there is considerable ambiguity over the meaning of "living wages, they are generally calculated as the sum of money necessary to keep a three or four person family above the federal government's official poverty level. Needless to say, proponents of this idea contend they are defending basic human dignity.

What they are actually doing is creating an environment that becomes non-competitive for small businesses that are generally the best source for youthful employment.

To suggest that advocates of this notion are sensitive to economic realities, most of the proposed legislation allows for a "hardship waiver." However, the only way a business qualifies for the exemption is through public inspection of its financial records, including inspection by government officials and competitors.

Organized labor and church groups are generally promoting living wage ordinances because they see it as a prelude to comprehensive egalitarian "social justice" initiatives, such as higher minimum wage laws. The campaign is also a way to build solidarity for future political battles.

In the short term the "living wage" effort is a way to enhance union membership among those who have recently joined the work force from the ranks of welfare recipients.

The irony of this campaign is that those most hurt by it are low wage workers who are the casualties when employers cannot afford to pay the mandated "living wage." Moreover, many businesses operating at the margin are obliged to seek government subsidies in order to pay "living wage" rates.

With Republicans controlling booth houses of Congress, "living wage" legislation will not get to first base. That explains why the campaign has targeted city councils and county boards. At the city council level, where the influence of labor unions often exceeds that of business, such proposals are seriously entertained.

For many, "living wage" is merely a humanitarian gesture. Yet it is the kind of gesture that interferes with the free market and has a perverse effect on job creation.

It is useful to recall that most people do not remain in their first job. It is also useful to recall that most small businesses would be forced to close their doors if obliged to pay a mandated "living wage."

Yes, America is a rich nation and it has an obligation to create opportunity for all its citizens. But a free market is the best known way to achieve that result and an imposed wage standard is the most notorious way for destroying opportunity. Just ask our friends in the former Soviet Union.