FRONT PAGE CONTRIBUTOR
Syracuse workers find out the hard way that converting the minimum wage to a “living wage” is an economic fallacy
It\'s true, even if Barack Obama *did* promise a pair of chickens in every pot
The “living wage” debate has been ongoing for far longer than it should have been at this point, with feel-good liberals demanding that minimum-wage workers be paid twice or thrice their current rate so that they can “afford to live” without rising above their bottom-of-the-line jobs (or, I suspect, rising above what those same liberals consider their “station” in life), and with folks who live in the real world (where consequences are a natural result of every decision) warning that, with a finite resource pool, raising workers’ compensation across the board will result in fewer hours and/or fewer jobs.
The mathematics behind this is so simple one of my mother’s third grade students could do it. Let’s look at the wage pool as a large pizza. Cut into twelve slices, that pizza can hold over twelve individual people while they’re between meals or looking for a snack to provide them energy while looking for another, bigger meal.
The argument made by the pro-”living wage” crowd is that the folks among that dozen who have families can’t adequately feed themselves and their dependents with that size a slice of pizza – an assertion which is most likely true. The answer, though, is not for those with the power to do so to mandate that, in the interest of seeing that families can be fed without the provider actually moving up in life, every person should get one and a half slices of pizza. As any third-grader can tell you, if you take a large pizza that is currently feeding twelve people, and redistribute it so that every person getting pizza receives a slice and a half, you suddenly run out of pizza once you’ve fed the first eight folks.
So, as a result of your feelgood policy, you’ve frozen four people out altogether.
To take this a half-step further, consider this question: can a person who subsists on a single slice of pizza feed himself and however many more people he may have at home with only a half-slice more (or even a full slice more, meaning that six of the original twelve would now be frozen out of the wage (or pizza) pool) than he originally had?
Of course not. This is why the idea that increasing the minimum wage by 50% (or even 100%) would allow more people to be able to provide for their families more effectively is facially absurd.
That’s also why heads of households, if working extremely low wage jobs at all, should be doing so as they work themselves toward better opportunities, not as a permanent job.
Workers in Syracuse, New York have recently found this out the hard way. According to the Syracuse Post-Standard:
Ten weeks after a Syracuse City Court judge found that Murbro Parking was required to pay a “living wage” to workers who staffed city-owned garages, the employees are tired of waiting for answers.
In November, they started earning the $13.11 per hour required by the living wage law enacted in 2005 to keep workers under city contracts out of poverty.
But a week later, the employees experienced a less welcome change — their 40-hour workweek was cut back to 35 hours. Managers’ hours were cut, too. One manager said the result was a reduced paycheck, after overtime was eliminated and regular hours were cut below 38.
“How is that helping us get out of poverty?” one garage employee wondered. “It’s giving us one thing and taking something else away. Why are they hurting us?”
Let’s go back to the question I asked a moment ago, about whether a person who subsists on a single slice of pizza can feed himself and however many more people he may have at home with only a half-slice more than he originally had, because it’s incredibly apropos here. In Syracuse, $13.11 per hour is considered a “living wage.”
With no money removed for taxes, that wage – assuming full-time work – comes out at just over $27,000 per year. Can anyone actually raise a family on that? Not likely.
Further, the reason for the cutback in hours is obvious. Murbro Parking didn’t suddenly come into more money — a bigger pizza, if you will — which it could then spread around evenly. In order to raise managers’ salaries by about $3 and other workers’ by about $5 (the article notes that “[p]ay is now consistent among all Murbro workers,” something which may reflect the communist ideal, but which does not reflect any kind of a market (or reality) based scale), Murbro had to reallocate that money from within that same wage pool – thus, the trimmed work schedules, leaving the workers’ paychecks looking roughly the same.
The other option, of course, was to pay a smaller number of people more, and to trim staff accordingly.
The Syracuse workers are hoping to receive back pay for the time worked since the 2005 living wage law was passed — though they don’t see their current employment as being a long-term proposition.
The employees, some of whom have worked for Murbro more than a decade, said they’re particularly worried about getting the back pay quickly because they may soon be out of a job. Nearly all city-owned garages will change management within a couple of months.
Murbro, which runs Onondaga Tower, AXA Towers, Sibley, Washington Street and Fayette Street garages, will lose all but Sibley to other management companies. Murbro will take over Madison-Irving and Harrison Street garages from Central Parking. From the Post-Standard:
New management companies are urged by the city to retain the current employees, but they are not required to do so.
“We’re all probably going to be out of a job anyway,” one garage attendant said. “I don’t understand why they won’t just give us the back pay and give us our 40 hours.”
Because the money just doesn’t exist, Mr. Garage Attendant. Because the money just doesn’t exist.