Articles

Why even the new minimum wage
is not a fair wage

Opinion by Doug Gatlin
Faith And The City e.Newsletter
August 13, 2007

On July 24, 2007, many people celebrated the first increase in the federal minimum wage in 10 years.

It increased from $5.15 an hour to $5.85 an hour, or approximately $753 take home a month. The minimum wage in 1950 was worth $6.47 in today’s dollars. In other words, this increase is a move in the right direction – but is not even enough to reach the 1950 level.

In fact, the debate about "minimum wage" is not the debate that really should be occurring among people of faith, people of goodwill, and people who believe that we are stronger as a nation when each individual and every family is stronger. Our debate should be about what constitutes a “fair wage,” a wage families can live on without public assistance.

Most of us probably think that "minimum" wage means a wage that will get you by financially at least at a minimal level – not comfortably, but minimally. It won't. It’s not even close. Families living in the Atlanta metro area on even $10 an hour in full-time jobs simply can't make ends meet. Not without public assistance. Which many aren’t even getting. They’re doing without necessities.

Consider a family of four in Dekalb County – two working adults, one preschooler, and one school-age child. Each of the adults, working full-time, would have to earn twice the new minimum wage of $5.85 to enable that family to get by without public assistance.

Here’s another example. A mother with one preschooler has to earn $17.21 an hour in Dekalb or $15.36 in Fulton County to provide decent housing, food and healthcare for her family. She would need $11.82 per hour in Savannah, $10.52 in Rome, and $10.37 in Valdosta. The new minimum wage doesn’t even come close.

If you think there aren’t many people at these wage levels: The U.S. Department of Labor reported that, in 2005 in the Atlanta area, 295,470 employees made less than $11.69 an hour, working in occupations like sales and related occupations, healthcare support, and others. That’s well over a quarter of a million people.

Now let’s fast forward a couple of years. The federal minimum wage is slated to increase a bit in July 2008 and then go to $7.25 in July 2009. For the family of four in Dekalb, with each adult earning a full-time minimum wage AND 22 hours of overtime at time-and-a-half each month, total monthly household income will be $3,030. This family’s monthly expenses total $4,064 today – and no doubt more in 2009. They are $1,000 short each month. They're either on public assistance or doing without something important, or in many cases, both. Should they skip their rent payment? Cut out childcare and healthcare? Do without food and transportation?

In effect, public assistance is making up some of the difference between what the family is earning at minimum wage (or more!) and what they need to make ends meet. Should taxpayers be subsidizing businesses whose profit comes at least in part from employing workers at minimum wage?

A writer in the Equal Time column of the July 17 Atlanta Journal-Constitution offered familiar objections to paying even the new minimum wage. “Since there will be no increase in production linked to this hike in employees' wages,” he wrote, “employers will have to look to other sources [to cover their increased costs]."

In fact, that sounds like a good idea. And employers don’t have to look far for the means to cover those increased costs. For years now, businesses have enjoyed considerable increases in productivity and profits – achieved at least in part by not giving real increases in wages adjusted for inflation.

• From 1973 to 2004, productivity in the United States went up 74 percent. The minimum wage, adjusted for inflation, actually went down 24 percent. Meanwhile, average workers – about 80 percent of the employed private workforce – saw their inflation-adjusted wages fall by 11 percent.

• From 1968 to 2004, inflation-adjusted domestic corporate profits rose by 85 percent. Profits for retail businesses – a major low wage sector of the economy – rose by 159 percent. Meanwhile, the inflation-adjusted minimum wage actually fell by 41 percent and the average hourly wage fell by 4 percent.

• In 1980, CEOs of major U.S. corporations made an average of 45 times the pay of typical full-time production and non-supervisory workers. By 1991, that had risen to 140 times the average worker’s pay. In 2004, those CEOs were making more than 300 times the average worker and 952 times the minimum wage worker.

• The writer also says, “In Georgia, for example, 78 percent of those who would be affected… are teens living with working parents, single earners without children or second earners.” Even if he’s right, don’t single earners deserve a fair wage? Second earners don’t deserve fair pay? About the teens: In the US, 75 percent of minimum wage workers are age 20 or older. So, if Georgia is like the US, only one worker in four is a teenager of the 78 percent he references.

• The writer concludes that minimum wage workers should develop more skills and work their way up to “well-paying jobs and careers.” However, he does not explain how workers who don’t earn enough to cover all of their basic needs can pay tuition for college courses, job training, or adult education classes to enhance their skills and upward mobility.

The figures cited above are not an attempt to bully business. My point is that good business should to be good for the entire community, including all of its workers and their families. Let's be fair.

There are a thousand ways to use formulas and spin statistics and most of us aren't economists and get lost in the arguments. However, I believe we all know "fair." And, I believe we can all agree, it is just not fair that, for example, in Dekalb County you would have to work 120 hours a week at minimum wage, just to be able to raise your child without public assistance.

A system that actually forces working people onto public assistance is not good for families, businesses, or the community. We can do better. Let’s be fair.

Doug Gatlin is founding executive director of Faith And The City.

Faith And The City is a member of Fairness for Georgia Families, a coalition of faith-based organizations in the Atlanta region concerned with promoting awareness of the need for a fair wage. The coalition includes: The Regional Council of Churches of Atlanta, Concerned Black Clergy, the Faith Alliance of Metro Atlanta, the Mayor's Faith-Based Roundtable, Atlanta Interfaith Broadcasters, and the Faith And The City Leadership Institute.

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