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Lack of living wage is bad for workers, bad for business
by Nell Levin

They work forty hours a week. They empty bed pans in nursing homes, flip burgers at McDonald's, clean rooms at Opryland Hotel, care for kids in day care centers, and ring up sales at Wal-mart. They rely on food banks to help feed their children, have no pensions, live with relatives in cramped apartments and don't have a car.

Who are they? People in Tennessee working low wage jobs. Two out of three are women. Barbara Ehrenreich's bestseller, Nickel and Dimed: On (Not) Getting By in America paints a riveting portrait of how they survive.

A full time worker earning minimum wage of $5.15 an hour will earn $10,712 a year. As the cost of living has risen, the minimum wage, adjusted for inflation, has shrunk. Since 1968, corporate domestic profits rose 64 percent while average earnings dropped 3 percent and the minimum wage fell 35 percent.

The gap between minimum wage workers and CEOs has become a huge chasm. In 1980, CEOs made as much as 97 minimum wage workers. In 2000, they made as much as 1,223 minimum wage workers.

Productivity in America grew by 74 percent between 1968 and 2000, but workers did not share these gains. If wages had kept rising with productivity, the minimum wage would have been $13.80 in 2000 or nearly $28,000 per year for a full-time worker.

The Tennessee State Senate just passed an anti-living wage bill that would prohibit cities from passing any law that would require a private employer to pay wages higher than the federal minimum wage. Without a hint of irony, the bill claims that keeping wages low will help business "attract and retain the highest possible caliber of employees."

There are a number of problems with this bill. It hurts hard-working people. It takes away local governments' decision-making powers. It hurts business. It perpetuates Tennessee's reputation for being a low-wage, cheap labor state. And, in the long run, it will cost taxpayers money.

This bill would take away local government control and allow state government to mandate wage levels across the state. However, according to the Self-Sufficiency Standard for Tennessee report, the cost of living varies greatly from county to county (full report at www.tennesseeallianceforprogress.org).

The Standard measures how much income is needed for a family of a given composition to adequately meet its basic needs in each county without public or private assistance. Costs associated with employment such as transportation, taxes, food and childcare are calculated as well as housing. The average two-bedroom apartment costs $364 a month in rural Cocke County but $660 in Davidson County. The Standard reports that a mother with two school age kids in Davidson County needs to earn $11.43 an hour to meet basic necessities.

Higher wages are good for business. They make it easier for employers to recruit and retain entry-level workers, reduce turnover and absenteeism, and lower costs associated with training and recruitment. Paying decent wages results in improved products, higher morale, and better quality services. Workers who earn higher wages have more buying power and businesses profit from this multiplier effect.

Tennessee cannot compete today with China and Mexico for cheap labor. If Tennessee expects to thrive in the 21st century, we need to train people to move into the lucrative high-tech industries. Modern corporations want an educated workforce, not cheap labor. Tennessee's business community would do well to support education as tool for economic growth rather than continuing to sell Tennessee as a cheap labor state.

Low-income workers often need government help just to get by. They often don't get health care until they are sick and then go to emergency rooms where treatment costs are borne by local hospitals. Their children are more likely to drop out of high school and end up in low paying jobs or in the penal or welfare system. If they hit a bump in the road, like a medical emergency, they may become homeless or file for bankruptcy. In the long run, low wages will cost taxpayers money in government services.

Profitability and economic fairness can go hand in hand. Everyone who works full time in Tennessee should earn enough to feed her family and keep a roof over her head. The anti-living wage legislation has not yet passed the House. Please contact your state representative immediately and him or her that House Bill 421 is a bad idea.

This op-ed appeared in the Tennessean on April 2, the Chattanooga Times-Free Press on April 20 and the Knoxville News-Sentinel on April 22. Nell Levin is with the Tennessee Alliance for Progress (TAP). She can be reached at nellrose@earthlink.net.

 

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