Research Paper Chris Hamilton

docx

School

Liberty University *

*We aren’t endorsed by this school

Course

472

Subject

Economics

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by AmbassadorMaskToad35

Running Head: CONCEPT OF A FAIR LIVING WAGE 1 Concept of a Fair Living Wage Bus. 472-D13 Liberty University Professor Dr. Shawn Hussey

CONCEPT OF A FAIR LIVING WAGE 2 Introduction Living wages is a big controversial topic in the modern age of laborers and workers. In order to understand the impact of a living wage, one must understand why a living wage is necessary. Living wage - A theoretical wage level that allows the earner to afford adequate shelter, food and the other necessities of life. The living wage should be substantial enough to ensure that no more than 30% of it needs to be spent on housing. (Investopedia, 2015) The final goal of a living wage should allow employers to offer enough wages to meet their employee’s living needs. Fair wages is highly debatable and it seems as if no one has really gotten it down to a set number. The cost of living is higher in some areas then it is in other areas. Taxes are also higher in some areas and lower in other areas. Studies have shown positive and negative impacts on raising the living wage. The most debatable situation in raising the living wage is fairness. Some things to look at are the value of the minimum wage worker, the average cost of living, and the effects of raising the living wage. Some researchers say that raising the minimum wage will poorly affect the availability of jobs. Others would argue that the wage floor would not affect jobs negatively. The results have usually been puzzling regarding this topic. Usually, if the price of something is forced upwards, the demand for that certain something should fall (The Economist, 2012, para. 2). However, the trend of raising minimum wages has not reflected that decrease in demand. In some cases, companies have cut expenses out when the living wage has raised. For instance, if the minimum wage were to increase, some companies may skimp their employees on benefits or find a way to reduce the amount of hours offered to their employees. There has always been some kind of workaround for employers regarding the wage increases. The goal of this paper is to compare and contrast lasting effects, both positive and negative, regarding the increase of living wages.

CONCEPT OF A FAIR LIVING WAGE 3 The Positive Effects of Raising the Living Wage There are usually two sides to every argument. There is a positive side and a negative side. Sometimes a clear winner cannot be determined until both sides are measured and accounted for. Raising the living wage can have many positives. Some obvious answers would be that raising the living wage would give the worker or laborer more money to be able to live comfortably. Most people would argue that more money means better means of living. The more money a worker makes the more food they can afford, the better shelter they can live in, and the more clothing they can provide. If it were that simple, however, the debate for raising living wages would win every time. Some of the positives that can be related to increasing the living wage is: equal opportunity, economic stimulus, more opportunities, reduced expenses regarding social programs, and a decreased turnover rate. Equal Opportunity President Obama proposed raising the minimum wage to reflect living wages. His main stance was that America is the wealthiest nation on the face of the earth and its citizens should not have to live in poverty (Risher, 2013, para. 1). This mentality offers equal opportunity to all the citizens of the United States. In the wealthiest nation, it would be unfair to watch some rise in power and money while the others suffer to barely make it. Full-time jobs are harder to come by and the minimum wage is not sufficient enough to help support a family trying to prosper in today’s economy. With the minimum wage being at $7.25, a year’s salary would be at around $15,080, before taxes. According to some statistics, the average cost of rent in Charlotte, North Carolina is $725 (Rent.com, 2015). This amount comes to $8,700 per year, leaving only $6,380 left to budget for a car, gas, food, clothing, and other living expenses. Obviously, there would be

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CONCEPT OF A FAIR LIVING WAGE 4 a huge advantage to raising that minimum wage to reflect current living wages. This raise would promote equal opportunity for living in the wealthiest nation on Earth. Economic Stimulus The more money a worker makes usually means the more money that person will put back into the economy. This ripple effect has a positive influence through the economy as it encourages the worker to spend more money. A living wage allows the worker to consume the essential things in life. “It stimulates growth and allows jobs and prosperity for the nation at large” (Wills, 2009, p. 36). When employees are able to spend more, the economy profits. When the economy profits, jobs flourish. Raising the living wage could potentially cause an increase in spending; therefore, this spending increase would create a higher demand in some markets. This demand would increase the amount of skilled workers. The idea of the living wage raise is a good one that encourages economic growth and its motives are certainly supportive of this fact. Minimum wage increases puts more money into the pockets of lower-wage employees. In return, they have the opportunity to spend that money in their community. Some research shows that raising these minimum wages will increase spending and stimulate economic growth. A raise in the living wage can boost spending on essential items as well as luxury items. Retail stores will profit more and will ripple into more jobs. The food industry will also profit creating various jobs. The only confliction with this idea is determining exactly how much companies will profit and if the profits are worth it when the wages are increased. This confliction can only be answered with more demonstrative research. However, economic growth would be a gigantic advantage that cannot simply be overlooked. More Opportunities

CONCEPT OF A FAIR LIVING WAGE 5 More opportunities can be dependent upon the economic growth. If the workers are making more and spending more, more opportunities for jobs can be a deciding factor for a living wage increase. Opportunities are essential to combat poverty. In New Zealand, the number of working families living in poverty is unimaginable. “The 2012 Ministry of Social Development Household Incomes report found that 40 percent of poor children in New Zealand came from working families.” (Wait, 2013, para. 4). Opportunities that would arise from a living wage increase would help situations like this one. Families could survive better and provide food and shelter with higher wages and, in return, this might help grow more opportunities in low- wage situations. Reduced Expenses Regarding Social Programs A major advantage of raising the living wage would be a decrease in social program expenses. Employees who work at a minimum wage are often the same people who use the government services for additional support financially. Raising the minimum wage would support workers more financially and would take that pull of the government. According to Cooper (2014): “Americans who work hard should be paid enough to make ends meet.” (para. 1). Since the late 1960’s today’s minimum wage workers make around 25 percent less in inflation-adjusted terms than they did 45 years ago (Cooper, 2014, para. 1). Raising the living wage would result in less expenses paid to social programs. Being able to live independently without government assistance would be a big plus for the low-wage working society. The low- wage working society would be highly in favor of raising the minimum wage if it meant getting them off of government help. A Decreased Turn-Over Rate

CONCEPT OF A FAIR LIVING WAGE 6 Workers who make more have a higher retention rate compared to those who make less. With jobs such as lawyers, bankers, and management, the turnover is a lot lower. This is because the pay is better than that of fast-food workers, retail employees, and other minimum wage workers. A large body of research suggests that raising wages leads to lower turnover and better customer service. This in return results in higher sales and lower expenses (Weber, 2015, para. 5). A decreased turnover rate would definitely help companies be in favor of raising the living wage. Turnover is a huge obstacle where employers offer lower wages. “Turnover in retail averaged around 66% for part-time hourly sales associates in 2014, according to the Hay Group, a management consulting firm. For full-timers, who are more likely to be tethered to a company with benefits like health insurance, turnover was 27%.” (Weber, 2015, para. 7). The Disadvantages of Raising the Living Wage There are quite a bit of advantages to raising the minimum wage, but there are many that would say the disadvantages are far more. When the living wage increases, less full-time positions can be offered and there can be fewer hiring attempts. More money does not always mean better work environments. “More money will help pay the bills, but it doesn't guarantee a good workplace” (Bell, 2014, para. 6). The workplace does not necessarily change when pay increases. People might be expected to take on bigger responsibilities and perform multiple tasks they had not previously performed. Companies could hire less and look to cut costs and still boost profits. This could cause a change in product and service costs. There are many negative effects that could potentially happen if living wages were to be increased. Some negative effects of raising the living wage may include: layoffs, increases in price for products and services, less hiring attempts, increased competition for jobs, and inconsistency nationwide. Layoffs

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CONCEPT OF A FAIR LIVING WAGE 7 A major concern of raising the living wages would be the concern with layoffs. When a living wage increases and companies are required to increase the minimum wage, companies with tighter compensation budgets might not be able to accommodate these changes. This may force those companies to reduce staff to cut costs. Unfortunately, this also has a poor effect on the economy and will create a higher demand for social programs and financial support resources. “Wal-Mart has argued that if it were forced to implement a living wage, a crippling two-thirds of its profits would evaporate” (Jacobs, 2008, p.6). If this were to be the case, companies such as Wal-Mart would face a horrible realization that they would need to lay off many employees. This would be a major concern and could discourage the idea of raising the minimum wage. Price Increases When wages raise, there is usually a ripple effect related to prices for products and services. Employers raise prices to generate a sufficient amount of income to counteract the higher wages they pay employees. This could also result in higher costs of living causing a circular idea of raising the living wages once again. Some research would argue that Wal-Mart would just accept the loss in profit margin if Wal-Mart were to raise the living wage (Jacobs, 2008, p. 9). However, Wal-Mart could not afford to do this for too long and would eventually have to increase the prices for their products. This could defeat Wal-Mart’s competiveness in the market and cause consumers more damage to their wallet which in return would boost the costs for necessities and needs of the consumer. Price increases would cause a lot more damage than to the consumer alone because it would affect the economy and job market on more levels. This disadvantage would cause a higher average living expense and a lower employment rate at retail positions such as Wal-Mart.

CONCEPT OF A FAIR LIVING WAGE 8 Less Hiring Attempts It is bad enough that employers would not be able to keep the employees they have because of a living wage increase. To top that all off, there would be less recruitment. There would be some to account for the replacement of overpaid employees, but it would not really replace employees lost due to the raise. “10 percent increase in the minimum wage lowers low skill employment by 2 to 4 percent and total restaurant employment by 1 to 3 percent” (Aaronson & French, 2006, p.1). This is an unfortunate statistic because this means fewer companies will be looking to expand and may cause smaller businesses to remain uncompetitive. This would discourage a free enterprise system and may cause more job seekers to suffer through a long drawn-out process. Increased Competition for Jobs Another issue that might arise would be an increasingly competitive job market. This correlates to less hiring and layoffs. Unfortunately, with more layoffs, people will be searched to replace those assets at a lower cost. A living wage increase will push more qualified individuals to accept lesser wages, this would cause more inexperienced workers to miss out on opportunities to grow and gain experience in the work field. This inability to build a work resume may negatively affect the younger workers ability to ever really establish themselves and may cause future generations to be unable to attain higher paying jobs. This disadvantage should discourage the youth of America to stand for a living wage increase, but unfortunately, money may talk louder than statistics. The increased competition for jobs is not an advantage either the younger workers or the more experienced workers may want to experience. This would cause less opportunities for skilled laborers and an employment scarcity for the younger generation.

CONCEPT OF A FAIR LIVING WAGE 9 Inconsistency Nationwide The minimum wages across the States are distinctly different. States with higher living wages reflect that with higher minimum wages. States with a lower living wage usually have the minimum wage to reflect the living costs. Nationwide a set living wage could be hard to determine. The necessities a worker may have should reflect an appropriate minimum wage. The argument of a living wage is that no one should live in poverty. Unfortunately, there is much argument at what is an acceptable living wage. The inconsistent opinion of an acceptable living wage varies with opinions. This would be a disadvantage because no set number would stick and it would cause a circular reasoning effect on why the minimum wage should increase. This could happen over and over again without much stagnation. Conclusion As time progresses, living expenses will increase. It is just a proof of history. Unfortunately, there will always be debate on whether or not the living wages match the necessities of a minimum wage. The studies presented before, in this paper, should establish a good foundation on why this topic may never fully be understood. There are so many factors that go into the economy. Lower wages help create more jobs. Unfortunately, those jobs do not offer enough supplementation to support a family or even an individual. Higher wages create more spending and boosts the economy. However, higher wages may force smaller companies to lose money resulting in more lay-offs and less hiring. This would also create more competition on the job market. To determine what a better fit is, the risks of both methods should be considered. Is it better to raise the living wage and suffer the risks of losing employees or consumers, or is it better to keep the living wages to ensure the job market stays in a flourishing state? The downfalls accompany both. There will be a time when the living wage absolutely must change to

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CONCEPT OF A FAIR LIVING WAGE 10 reflect the poverty levels. Knowing the exact amount that it must change is a whole different story and carries a vast amount of research. To take a side on this issue does not mean either party is wrong, it just means that some people prefer certain risks over the other risks.

CONCEPT OF A FAIR LIVING WAGE 11 Works Cited Aaronson, D., & French, E. (2006). Product Market Evidence On The Employment Effects Of The Minimum Wage. Journal of Labor Economics, 167-200. The author explains the effects of the minimum wage on business and the public. This article mainly reflects statistics relating to the restaurant industry. The authors will help understand disadvantages of increasing the living wage. Anonymous. 2012. Wage flaws; the living wage. The Economist, 405, 31-n/a. Retrieved from: http://search.proquest.com/docview/1151071963?accountid=12085. The author takes a stance on the minimum wage increasing. Studies showed that the last increases did not hurt the employer and jobs still continued to grow. This information and study also proved to echo in America. The author states that “turnover of low-paid staff often falls in places where minimum wages go up, reducing hiring costs. Higher wages might also make workers more productive.” This article will help point out the benefits of raising the minimum wage to reflect a living wage. Bell, R. (2014). The age of living wage? Workforce, 93(10), 54. Retrieved from: http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id=GALE %7CA387059233&v=2.1&u=vic_liberty&it=r&p=AONE&sw=w&asid=38b0a6b9ff5a9 67b283b8041ebbf89a3. Bell writes an article that is in favor of a living wage. He is in favor of any willing worker to earn enough to make a living with necessities. However; he is not in favor of a set $15 an hour wage. Bell states: “there is more to work than the paycheck. More money will help pay the bills,

CONCEPT OF A FAIR LIVING WAGE 12 but it doesn't guarantee a good workplace.” This article will help look into the necessity of a fair living wage and pinpoint to exactly where it should be. Campolieti, M., Gunderson, M., & Lee, B. (2014). Minimum Wage Effects on Permanent Verses Temporary Minimum Wage Employment. Contemporary Economic Policy, 32: 578–591. doi: 10.1111/coep.12036. These authors focus on the effects of minimum wage on permanent and temporary workers. This allows a broader perspective and will distinguish the difference of effects. “Importantly, the adverse employment effects are substantially larger for permanent compared to temporary minimum wage workers; in fact they fall almost exclusively on permanent minimum wage workers.” This article will help pinpoint issues with permanent workers and the effects of minimum wages. Cooper, D. (2014, October 16). Raising the Federal Minimum Wage to $10.10 Would Save Safety Net Programs Billions and Help Ensure Businesses Are Doing Their Fair Share. Retrieved from: http://www.epi.org/publication/safety-net-savings-from-raising- minimum-wage/. Cooper explains that raising the living wage will help with social programs. This in return would help boost the economy and save the government billions of dollars, helping provide an example of an advantage of raising the living wage. Gitterman D. (2013). Remaking a Bargain: The Political Logic of the Minimum Wage in the

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CONCEPT OF A FAIR LIVING WAGE 13 United States. Poverty and Public Policy [serial online].5(1):3-36. Available from: EconLit with Full Text, Ipswich, MA. Gitterman explains why the minimum wage law is in effect and how it relates to pay. He also explains, “the minimum wage has often lost ground to inflation between increases, and it has always been subject to political uncertainty.” This article mentions how the minimum wage topic is often neglected and undermined. This article will establish a solid definition on what minimum wage is and how it got to where it is now. Jacobs, K. (2008). Living Wage Policies and Wal-Mart. Social Policy, 38(2), 6-10. Retrieved from: http://search.ebscohost.com.ezproxy.liberty.edu:2048/login. aspx? direct=true&db=a9h&AN=33115111&site=ehost-live&scope=site. Jacobs takes a stance on living wage policies and how they would affect the quality of big box retail industries. This article should allow an insight into the retail industry and how it relates to minimum wage and living wages. Rent.com, 2015. Retrieved from: http://www.rent.com/north-carolina/1-7. This statistic will help tie in some positive effects of raising the living wage. Risher, Howard. (2013). Compensation & Benefits Review January/February 2013 45: 7, doi:10.1177/0886368713485034 Retrieved from: http://cbr.sagepub.com.ezproxy. liberty.edu:2048/content/45/1/7.

CONCEPT OF A FAIR LIVING WAGE 14 Howard Risher writes about how the minimum wage should be enough to not make full time workers live in poverty. “There were 280,000 college graduates in minimum wage jobs—or 7% of the total.” This article will help determine who the minimum wage effects and how a change in living wages will affect the current economy. Wait, D. (2013). Working for a living wage. Kai Tiaki: Nursing New Zealand, 19(4), 33. Retrieved from: http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id= GALE %7CA336286856&v=2.1&u=vic_liberty&it=r&p=AONE&sw=w&asid=c472568bced57 7650b6a0813f3510ade. Author Wait brings attention to the insecurities that accompany low pay. Workers who do not earn enough have to stress about the necessities of life while working to provide what they can provide. This also relates to negative health outcomes and more stress. This article will help build on why an increase in living wages can be beneficial. Weber, L. (2015). One Reason Wal-Mart Is Raising Pay: Turnover. Retrieved from: http://blogs.wsj.com/atwork/2015/02/19/one-reason-wal-mart-is-raising-pay- turnover/. Weber writes an article reflecting the idea that raising the living wage would result in less turnover and more profit, which in return would reduce expenses. This article will help explain the benefits of raising minimum wage. Wills, J. (2009). The living wage. Soundings (13626620), (42), 33-46. Retrieved from:

CONCEPT OF A FAIR LIVING WAGE 15 http://search.ebscohost.com.ezproxy.liberty.edu:2048/login.aspx? direct=true&db=a9h&bquery=IS+13626620+AND+TI+(%26quot%3bThe+living+wage %26quot%3b)+AND+DT+%26quot%3b2009%26quot%3b+AND+AU+%26quot %3bWills%26quot%3b&type=1&site=ehost-live&scope=site. Jane Wills introduces the reader to the origin of minimum wages and how it reflected living wages. Living wages flourished in the 1870’s and 1920’s and people were suffering from not being able to live on a minimum wage. This article will help introduce the origin of a living wages and expound upon the necessity of work and personal life.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Research Paper Chris Hamilton

Related Documents