The Urban County Council recently decided it would consider a minimum-wage ordinance, which would gradually raise the wage to $10.10. While this moderate wage increase is desperately needed by working-class families trying to make ends meet, let's not lose sight of economic reality.
Even raising the wage to $10.10 is still short of what it actually takes for families to get by, much less prosper. It is not a living wage.
Professor Amy Glasmeier of the Massachusetts Institute of Technology has defined a living wage in its simplest sense as "the wage needed to cover basic family expenses... plus all relevant taxes." In other words, she states, a living wage is "the minimum income standard that, if met, draws a very fine line between the financial independence of the working poor and the need to seek out public assistance or suffer consistent and severe housing and food insecurity ..."
Using this definition, Glasmeier constructed a calculator that determines actual living-wage levels for every county in the U.S. considering the costs of the basic needs of food, child care, insurance and health care, housing, taxes, transportation costs, as well as other basic necessities such as housekeeping supplies and clothing.
The calculator assumes that workers are working full-time jobs, a very large assumption in an era increasingly characterized by "flexible," to be read as cheaper and easier to exploit, part-time labor.
Nevertheless, for Fayette County the basic family unit of two working adults and one child, would require $10.62 an hour per adult in order to achieve a living wage. Single parent with one kid? You'd need to be making $19.10 an hour to make it work. For each additional kid, tack on another $2 to $5 an hour.
The only people the $10.10 increase will bring above a living wage in Fayette County are single adults working full-time with no time off, whose living-wage calculation comes out to $9.81 an hour.
Oh goody, you know what that means? A whole 29 cents an hour left over that you can put into savings, just a smidgen over $600 for the year. Don't invest it all in one place.
I jest, but there are no savings considered in the above living-wage calculation, it's solely the meeting of basic needs.
In a recent op-ed published here, Tom Underwood, the Kentucky state director of the National Federation of Independent Business, laid out his biased fabrication of a supposed "economic reality" in which raising the minimum wage will allegedly result in small businesses across the board being forced to downsize their employees whom they can no longer afford to pay.
According to him, "The research backs that up." That research he cites is a single economic study by the University of Georgia and San Diego State University. Single studies never give the full picture; instead you need to review a large body of literature on an issue to begin to understand it.
Lucky for us the experts at the Kentucky Center for Economic Policy did just that in their Lexington Minimum Wage Brief published in March, which concluded that modest increases "have little to no effect on employment."
Backing up this claim, the report cites "an analysis of 64 minimum wage studies containing 1,500 estimates of the impact of minimum wage increases (that) found that the bulk of the estimates clustered around zero or near-zero employment effects."
Additionally KCEP cites a "statement signed by 600 economists, including seven Nobel Prize winners and eight former presidents of the American Economic Association" that states "... the weight of evidence now (shows) that increases in the minimum wage have had little or no negative effect on the employment of minimum wage workers, even during times of weakness in the labor market."
In an April 1 op-ed, I laid out reasons for, and implications of, the thoroughly researched fact that raising the minimum wage will have a negligible effect on employment.
The gist: Business owners, and small-business owners especially, are smart. They make the wage-increase work and are assisted by the cost savings from decreased worker turnover and increased efficiency.
Further, raising the wage puts tens of millions of dollars in the hands of workers who then spend that hard-earned cash in those very businesses.
If tied to inflation, minimum wage increases are permanent solutions to chronic working-class problems.