[PEN-L:4767] RE: Robert Pollin's LA Times article!

["Breen, Nancy (NCI)" <breenn@xxxxxxxxxxxxxxxxxxx>]

Attached as requested.  Good question, Bob!!





                                       Thursday, April 1, 1999

            COLUMN LEFT / ROBERT POLLIN
            Living Wage Gives a Boost to Demand
              Do we want higher minimum wages or more working
            people bringing their families to soup kitchens?
            By ROBERT POLLIN

                     	Amid the celebrations over the economy's
                  current performance, the New York Times
                  recently reported more sobering news: a dramatic
                  rise throughout the country of families who rely on
                  soup kitchens and food pantries to sustain
                  themselves. Perhaps most disturbing in the report
                  was that nearly 40% of the households using the
                  country's largest private network of food charities
                  included at least one person who was employed.
                       Why would employed workers take their families
                  to soup kitchens to eat? The basic cause is clear:
                  Working people earning the legal minimum wage do
                  not bring home enough money to support a family
                  above the poverty line. A family of three with one
                  worker earning the national minimum of $5.15 an
                  hour would have an annual income 30% below the
                  official national poverty line.
                       Beginning in Baltimore in 1994, a modern living
                  wage movement has spread throughout the country to
                  protest this situation. Living wage ordinances that
                  set higher local minimum wage standards for
                  workers employed by firms holding city contracts
                  have passed in 19 cities, including Los Angeles, San
                  Jose, New York, Chicago, Boston and Milwaukee.
                  Organizing efforts are pressing forward in 24 other
                  places, including Los Angeles County, Santa
                  Monica, San Francisco, New Orleans, Philadelphia,
                  and Manhattan, Kan. Though the stipulations vary,
                  the basic common factor is that eligible workers
                  earn at least $7.50 an hour, which, for a full-time
                  worker, would generate enough income to keep a
                  family of three just above the poverty line.
                       Should the living wage idea be broadened
                  beyond city-contracting firms alone, including
                  setting a $7.50 standard for a national minimum
                  wage? This is hardly an implausible idea. Indeed, in
                  1968, the minimum wage was $7.50 (in today's
                  dollars) in a period when the economy was 50%
                  less productive than it is today.
                       But opponents claim that such measures are
                  harmful to the economy, and even to the very poor
                  working people they intend to help. A higher
                  minimum wage, they argue, increases
                  unemployment, since the laws of supply and demand
                  tell us that when you raise the price of anything (like
                  low-wage labor), demand must fall (businesses hire
                  fewer low-wage workers). But this law holds only
                  when everything else is assumed constant, and it is
                  far more plausible that things are likely to change
                  with a minimum-wage increase, some of which will
                  have a significant impact on jobs.
                       The most important factor is that when demand
                  for products is high, businesses will normally push
                  hard to meet that demand. They will not lay off
                  workers or stop hiring, regardless of whether
                  minimum wages are rising. For example, because
                  demand was expanding strongly in 1997 when the
                  minimum wage was last increased, the hike did not
                  affect the unemployment rate. In addition, a national
                  poll found that only 6% of small business owners
                  changed their hiring or employment practices at all
                  after the 1997 wage increase. By the same token, it
                  follows that jobs will dry up when demand for
                  products is falling, as happens in a recession,
                  regardless of what recent changes have been in
                  minimum wages.
                       Another consideration is that workers give more
                  effort when they are paid decently. A higher
                  minimum wage should therefore mean lower
                  absenteeism and turnover, helping firms to compete
                  in local, national, as well as global markets, on the
                  basis of higher productivity and better product
                  quality. Surely this is a more desirable route for
                  promoting competitiveness than ratcheting
                  downward the living standards of low-wage
                  workers to where they increasingly resemble Third
                  World economies.
                       It is undeniable that higher minimum wage
                  requirements entail an interference in the market.
                  But because market economies are dominated by
                  greed and competition, they can survive over a
                  sustained period of time only if they are buttressed
                  by social institutions that support our inclinations
                  toward solidarity and mutual respect. Living wage
                  laws are one such supportive institution and soup
                  kitchens are another. Do we want higher minimum
                  wages or more working people bringing their
                  families to soup kitchens? This is the basic issue at
                  stake as living wage principles are debated around
                  the country.
                                     - - -

                  Robert Pollin Is a Professor of Economics and
                  Co-director of the Political Economy Research
                  Institute at the University of Massachusetts,
                  Amherst. he Is Co-author of "The Living Wage:
                  Building a Fair Economy" (The New Press, 1998)

                  Copyright 1999 Los Angeles Times. All Rights Reserved

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Nancy Breen, PhD, Economist
Applied Research Branch
National Cancer Institute
EPN Suite 313
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Bethesda MD 20892-7344

Express mail address:
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phone: 301 496-4675
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	Subject:	[PEN-L:4743] Robert Pollin's LA Times article!

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	Michael Perelman
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