I have attended the meetings of Sacramento’s minimum-wage task force convened by the mayor, and as I listen to the testimony of economists, researchers, local business owners and workers, this question is emerging as the central unspoken point of debate:
Should businesses be allowed to pay less than a livable wage to workers and expect that taxpayers will make up the difference through public assistance and food stamps?
It is fact that the current minimum wage is insufficient to support even a single worker, never mind one with children. A researcher with United Way told the task force that a family of four with one day-care-aged child and one older child needs $50,595 a year to live, based on Sacramento region prices for rent, food, utilities, child care and other expenses. However, 29 percent of local families – 120,000 households – make an average of only $26,849 a year.
The Massachusetts Institute of Technology’s minimum-wage calculator, a living-wage model that uses a market-based approach, backs up that research. It estimates that a family with two working adults and one child needs each wage earner to make at least $12.94 per hour to pay for basic needs.
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Sacramento used to be a town of working families, where you could get a good job and support a family without the constant fear of poverty. But we are increasingly becoming a place of the working poor. Fifty percent of Sacramento residents are classified as low income, and 40 percent of Sacramentans living in poverty are women with children.
When President Franklin D. Roosevelt pushed to create a minimum wage (then 25 cents an hour) in 1938, he was clear that it wasn’t about creating a base pay, but about ensuring that workers were given fair pay – a wage that allowed them to cover the basic necessities of life.
But as income inequality has spiraled out of control, we have created an entire publicly funded system that not only allows businesses to pay less than a livable wage, but helps them do it.
Opponents of raising the minimum wage are fond of saying that we should leave it to the market to decide what fair pay is. But the truth is that companies depend on food stamps and other government assistance to let them pay artificially suppressed wages. In fact, some employers help their workers apply for assistance because it’s such an integral part of their business model. That’s not free market; that’s an abuse of workers and taxpayers.
A UC Berkeley economist testified that an analysis of other cities that have raised the minimum wage – including Albuquerque, N.M.; Santa Fe, N.M.; Los Angeles; Oakland; and San Francisco – shows that the impact on consumers is not nearly as drastic as opponents would like you to believe. During a three-year period after an increase, restaurant prices can be expected to increase by 4.1 percent – not the 20 percent or more that some industry associations claim. But a wage hike also could put $291 million into our local economy by allowing 92,000 Sacramentans to take home a much-needed raise.
Most residents of our city understand that a minimum-wage increase needs to happen. A recent poll found that 70 percent support raising the minimum wage to $13.50 immediately, while 58 percent back raising it to $15 an hour over three years.
As we pour millions of taxpayer dollars into a revitalized downtown, the urgency of the matter is growing. The restaurants, retail shops and other businesses that we are hoping to lure to the area with our public investment will likely hire predominantly low-wage workers.
Are we going to create thousands of new jobs that put those workers on public assistance? Or are we going to rebuild Sacramento as a family town, where hard work is payment for a secure future?
Lino Pedres is president of the Sacramento Central Labor Council.