Myths & Facts
“There aren’t that many people earning at minimum-wage levels or affected by it.”
According to City of Austin, Texas report, “Sustainable Communities,” the Preamble Center Study shows that 11.8 million workers are directly affected by the most recent minimum wage. This study says that three-quarters of these workers are adults and 40 percent of the larger group are the sole providers for their families. For example, the Texas Alliance for Human Needs has reported that fully one million Texans are earning at a minimum-wage level. Note- The 11.8 million minimum wage workers effected by the increase of the Federal Minimum Wage does not include the 10 million immigrants who are living and working in this country.
“Passing a Living Wage is bad for the local economy; small companies will go out of business.”
Paying a Living Wage is good for the local economy, because small local businesses rely on local dollars. More money for city dwellers means more customers for municipal businesses.
Additionally, minimum wage workers are “support” workers. For example, if a major tech company moves to town, its employees require an adequate increase in the number of dry cleaners, day care workers, restaurant workers, etc. As the core business expands, so does the number of “support” workers. Should the core business contract, so will the number of workers. The number of workers becomes relative to the needs of the core business/employer.
“Passing a Living Wage will hurt business.”
Paying a living wage will create new business as new revenue promotes commerce. Also, some economists argue that higher pay results in increased productivity by making jobs more desirable to both get and to keep, thereby reducing recruitment, training and supervisory costs associated with high rates of turnover.
“A Living Wage will prevent new business from locating in a municipal district.”
Businesses choose cities because of quality of life issues, tax incentives, and governmental considerations. According to the 1998, study titled “Next Century Economy,” issued by ICF Kaiser Economic Strategy Group of San Rafael, California and produced for the Greater Austin Chamber of Commerce, “… in order to maintain Austin’s economic success and high standard of livability, the region should focus on the business already here as opposed to attracting new business.” The report cited three elements of a Sustainable Advantage Economy, one of which is the need for “… a long-term commitment to protect the region’s environment, to improve quality of life, and to address social-disparity issues as the economy develops.” The cornerstone businesses that are locating to Austin such as Computer Sciences Corporation (CSC), Dell, and Samsung already pay their lowest-wage employees an amount well in excess of the federal minimum wage.
“Passing a Living Wage will cause other business to leave our municipality.”
The kinds of businesses inspired to move into a municipality pay a wage or salary far in excess of a minimum wage. It is the “support” businesses such as restaurants and laundries that pay minimum wage, and these are support business that will stay wherever the large employers locate. In fact, the support businesses are often fully dependent upon the success of the primary businesses. As the primary employers succeed and expand, they have greater need for the support businesses. The reverse is also true. Should the primary business downsize and employ fewer people, the support businesses have no choice but to follow suit. The wage paid to minimum-wage workers is irrelevant in this equation. The support business will hire the number of minimum-wage employees required to sustain the needs of the primary employer.
“Teenagers and young adults will be hurt by the increase.”
According to The Sky Hasn’t Fallen, a study by the Economic Policy Institute in Washington, DC, reporting on the results of the Federal minimum wage increase from $4.25 to $5.15 per hour, it was clearly shown that these workers were not adversely affected by the increase.
“The wage increase will lead to job loss.”
Once again, an increase in the wage of low-wage workers does not lead to job loss. In fact, the conclusion of “The Sky Hasn’t Fallen” report ends with, “Given the statistically and economically insignificant (and mostly positive) employment effects of the change, it might be more useful if the next debate spends less time focusing on the cost of the increase and more on the benefits to low-income families.” (The report was supported by grants from the Rockefeller Foundation, the Charles Stewart Mott Foundation, and the U.S. Department of Labor.)
“The minimum wage won’t boost the earnings of low-wage workers.”
According to the report, “The Sky Hasn’t Fallen,” the raise did increase earnings of low-wage workers which “primarily benefited low-income families.” According to the report, “Americans Well Targeted Raise,” also released by the Economic Policy Institute, 57 percent of the gains from the increase goes to working families in the bottom 40 percent of the income scale
“The typical minimum wage worker is a teenager working at a fast food restaurant who lives at home with parents.”
According to “The Sky Hasn’t Fallen” and the “Americans Well Targeted Raise” studies, both produced by the Economic Policy Institute in Washington, DC, those “typical” minimum-wage workers (teenagers) account for only 7 percent of the total minimum-wage work force. About two-thirds of minimum-wage workers are over 20 years old, about two-thirds are women, and about two-thirds do not live with their parents. The report confirms that 40 percent of them are the sole source of income in their households.
“Do teenagers living with their parents deserve to be paid at the ULW rate which is related to housing?”
Yes. The goal of the Universal Living Wage is to set a wage that ensures that all minimum-wage workers are able to afford basic housing. The basic concept is not discriminatory in nature. We believe that wages should relate to a “unit of work” also known as hourly wage, just as the U.S. Congress perceived it at its inception in 1938. Whether that work is performed by a black person, a white person, a male or female, an 80-year old or an 18-year old does not matter. If an employer believes that someone is capable of doing the job, and hires that person, then a ULW should be paid, regardless of who performs that work. If a few additional people benefit from the standard used to ensure housing millions of our nation’s minimum-wage workers, then so be it. (See Myth #9.)