Living Wage: Job Gentrification
The problem with “Living Wage” proposals is not that they are immoral. They are illogical! See for example, this, or this, which points to living wages that exceed $20/hour.
Government cannot mandate some prices in a market; it’s all or nothing.
Prices have two functions:
· they tell us how much things are worth (static)
· they give signals about the value of investment, effort, and entrepreneurship (dynamic).
The proposal of "living wage" zealots is this: governments, or corporation, would be forced to pay a “living wage,” based on a Living Income Standard, or LIS.
The problem is that economic forces are like hydraulic pressures: you can redirect them, but you can’t make them go away.
There are really two kinds of difficulties--
1. job gentrification
2. budget pressures
1. “Gentrification” happens in poor neighborhoods when an area is more attractive, because of location or amenities. Middle-class people move in, rents are driven up, and poor people have to move out. Demand effect.
Flip side, just as bad, on the supply side for marginal laborers. If you raise pay from $6.00 / hour to $14.00 / hour or more (why not abolish gravity, while we are at it?), poor people are going to be driven out. Right now, if a job opening is announced at a university for housekeepers, there are 10 or more applicants, and that is for a very low rate of pay.
But everyone who applies is economically marginal. History of firings, periods out of the work force, little relevant experience, that sort of thing. How about if the job paid $14 / hour? Hundreds of applicants, and many of them are NOT economically marginal. Over time, all of the economically marginal people, with problems with absenteeism, punctuality, health difficulties, will be squeezed out. “Living Wage” will not be enjoyed by those now working at minimum wage, but by those whose skills can command that wage in the marketplace.
So, if "gentrification" is so bad, for buildings, why is it okay for workers?
2. Budget pressures: schools, universities, local governments all want to provide better services that cost less. Pressures to contract out, substitute away from expensive labor. Problem with contracting out is that it substitutes a temp worker, with no benefits, for a full time worker with decent benefits. Much cheaper to the employer, and they can fire them anytime and sign a new contract.
If Things are so Bad, Why is Everyone Trying to Move Here?
North Carolina has experienced the largest population growth, largely as a result of immigration, legal and illegal. Since 1994, the state population increased 74 percent; Nevada, 60 percent; and Kansas, 54 percent.
Six of the 10 fastest-growing Hispanic populations in the United States are in North Carolina, including Hickory at No. 1. Charlotte is fourth, Rocky Mount sixth, Greenville seventh and the Triangle eighth. Those regions offer jobs in furniture factories, textile mills and farms that immigrants can step right into. ``I think it's just a very opportune place and word has gotten out,'' said Claudia Main, who helps run Hickory's Community Relations Council. Pouring a foundation or working a loom in the Triad is better than selling coffee beans for 15 cents a pound or working for a fruit company making a dime an hour somewhere in Latin America, said Rafael Ruano, who moved to High Point from Costa Rica four years ago. ``The growers live in poverty in those countries,'' Ruano said. ``The life expectancy is very low.''
Not true that we need to pay more because we have so many poor people. In fact, we pay so well that poor people come here from all over the world!