Wages, Part II

Last updated on: July 18, 2017 at 2:12 pm by William Droel

Wages, Part II 2017-07-18T14:12:20-06:00 William Droel

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Back in 1992 New Jersey raised its minimum wage. Social scientists David Card and Alan Krueger studied its effects. Specifically, they compared fast food restaurants in New Jersey with others in adjoining Pennsylvania, where wages were not raised—a total of 410 restaurants. Their findings, published in the September 1994 issue of American Economic Review (www.aeaweb.org), showed no decrease for fast food employment and no loss of profit in New Jersey. This study is frequently used to bolster an argument for a higher minimum wage.

Now there is a study from Seattle. The municipal minimum wage there was raised from $9.47 to $11 in 2014. Earnings increased only slightly, the study shows. There was a small drop in employment. Subsequently, as called for in the original legislation, the municipal minimum went from $11 to $13. In consequence, the independent study says, employers cut back the weekly hours of minimum wage workers. The $2 hourly increase for affected workers was wiped out by their lost hours.

What to conclude? Well, first a little more data. There is another independent study of the Seattle wage increase. It, however, only looks at fast food. It predictably finds increase in food service wages. Yet employment in food service remains the same. This is about the same conclusion as the early 1990s study in New Jersey.
Possible conclusions:
 Fast food tolerates wage increases better than other minimum wage sectors?
 A gradual wage increase is better than a sudden jump?
 A state-wide increase is better than a municipal increase?
 The global economy is so fluid that wages and employment vary year-to-year?
Both research teams looking at Seattle note that the matter is not settled. In fact, per the original legislation, Seattle’s minimum will go from $13 to $15. Studies are sure to follow.

There is meanwhile an intriguing experiment occurring in and around Ithaca, New York; located at the bottom of Cayuga Lake and home to an Ivy League school. The Tompkins County Worker’s Center (www.tcworkerscenter.org) has a Living Wage Employer project. It calculates that at the moment a living wage in their area is $14.34. (There are plenty of expert economists and mathematicians around town to keep the figures up to date.)
Any employer in the county can sign the Center’s pledge of $14.34. The employer gets a decal for its window and positive local publicity. So far, 102 employers are in the program. Some are churches, non-profits and public agencies that are sensitive to popular opinion. Others are private employers who are sensitive to their customers and their owners.
The program—here is its unique feature–is voluntary. Of course, just as the Center gives favorable publicity to the participants, it can lobby those employers that do not participate. A related feature of this program is not so much the $14.34, but the process of getting the decals in the windows. The process, The Working Catholic believes, is the real goal. Or say it this way: The process is what creates the favorable outcome.
Ideally the process of the living wage campaign is about nurturing community. Center leaders meet with, let’s say, the trustees of a congregation or the board of an agency or the managers of a private business. The Center explains its program and once the decal is in place, it encourages those trustees, board members and managers to meet and patronize others in the program. Plus, the beneficiaries (the $14.34 workers) are encouraged to shop at stores that are living wage certified. The program is effective to the extent that people feel they are part of a commonweal.
Just as a community is important among those who live, shop and work in the area, so too an internal community is crucial to a worker center. The leaders of a worker center must grow in perseverance and competence, sustained by reflection on their success and failure.
A worker center is somewhat new. It borrows from the old settlement house model, but it is not a place for comprehensive social services. It borrows from the labor movement, but a worker center does not and cannot engage in collective bargaining. It is not a legal clinic, though it knows labor law, immigration policy and more. It is not a multi-issue community organization with institutional members, though it networks with many community groups. Though it helps individual families, a worker center is an aggressive advocacy group around issues related to family life and work. Interfaith Worker Justice (www.iwj.org) here in Chicago serves as a hub for many worker centers.

Droel edits INITIATIVES (PO Box 291102, Chicago, IL 60629), a newsletter about faith and work.

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