During Franklin D. Roosevelt’s administration, the proponents of the 1938 Fair Labor Standards Act sought to create “the most far-reaching program for the benefit of workers ever adopted in this country” by establishing a federal minimum wage. The Act aimed to compel labor conditions that met a very basic standard of living necessary for the health and livelihoods of workers.
More than 75 years later, are we failing its cause? Today, in many cities and communities around the country, people are working full-time jobs that pay $7.25—the current federal minimum wage—and are still living in poverty.
In many ways, this economic crisis has reached its spotlight moment—everything from the viral Fight for $15 campaign to presidential campaign position papers are encouraging a re-examination of minimum wage laws, but not everyone agrees on the next best steps on a national or regional level.
However, at a recent discussion in New York at the Museum of the City of New York, presented by the Museum and New America NYC and moderated by Georgia Levenson Keohane, the overtones were decidedly local, and not without reason: In a city where you need a minimum income of $38 per hour to afford median rent, New York City is one case study making clear our current wage standards are lagging behind.
The economics of a living wage are still being fiercely debated amongst policy makers, business owners, and labor rights activists. The basic economic theory espoused by opponents of a higher living wage suggests that as wage increases, employment levels decrease. But Dorian Warren, an MSNBC political commentator, said there’s a growing consensus that the opposite is true: As wages increase, workers return increased levels of productivity and satisfaction with their jobs that surpass the expense of a higher payroll line.
Diana Furchtgott-Roth, a former chief economist for the Department of Labor, wasn’t as convinced. For many workers who have the skills and experience to already be earning incomes higher that the minimum wage, an increase has little to no impact. Where the increase is most felt is among young workers, often those looking for their first jobs. If a $15 federal minimum wage is legislated, she continued, “businesses will still do just fine. But they’ll make adjustments by closing stores and by hiring workers whose skills match the increased rate,” all at the expense of those looking to take their first steps onto their career ladders.
Painting the picture of the living wage debate as a young person’s problem, though, isn’t covering the entire canvas. Sarah Maslin Nir’s seminal reporting on New York City’s nail salon industry shows that some 5,000 nail salons in New York State are being staffed by predominantly Asian and Hispanic women, many of whom are older, expected to feel fortunate to be making any money at all. These are not high school teenagers looking for their first jobs; rather, they’re men and women supporting themselves and their families on poverty wages never penalized by labor laws.
Nir’s investigations made clear that where an enforced minimum wage isn’t the norm, a business model of fraud is. A nail salon task force convened earlier this year found that 46% don’t pay a minimum wage, and the impact goes far beyond the workplace. With less-than-adequate incomes, low-wage workers often feel they have no choice but to comply with salon owner and market demands just to keep what they do have—small studio and one-bedroom apartments housing as many as a dozen people in the most marginalized neighborhoods in the city.
Luckily, the story isn’t all doom and gloom: Hot Bread Kitchen, led by Jessamyn Rodriguez, is countering that narrative by actively intervening in the poverty pipeline. Her company is providing paid training programs that represent pathways to jobs that ensure significant wage boosts for their workers. But, Rodriguez added, the cause of equitable wages cannot only happen from inside businesses. She asked, “How do we push the consumer side to bear higher salaries for workers?”
In an economy where discounts are valued and competition is the name of the game, it’s not a question easily answered. But, as Nir said, “It costs to do business the right way.” Outside of the macroeconomic arguments of payroll margins and employment rates, the “right way” is sometimes, contrary to popular business opinion, the moral way. Warren noted, “It’s a moral issue to insist that no one should work full time and still live in poverty.”
The living wage is about money, but it’s also opportunity. It’s about supporting an economy that creates jobs and wages that lift people out of poverty, not keep them in it. Modeling those opportunities for everyone will make our workers and our cities—New York and elsewhere—all the better.