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Human Resources - The Living Wage Concept: Is Determining Pay by the Cost of Living Justifiable?

Updated on July 11, 2012

The living wage concept states that businesses should pay a wage to employees which will ensure that they do not fall below the poverty line. It suggests businesses should adhere to this rule regardless of the financial situation of the company or desired profitability. There are positive and negative aspects of this concept; my belief is that the need for a living wage is not as much of a necessity as many assume it to be.

Why We Need it.

Those advocates that feel there ought to be a wage standard in order to keep people above the poverty line have many reasons to support their claim. First and foremost, it will reduce employee turnover. If one is paid above a certain amount, wage issues will not be a reason he will ever consider leaving his job. This will financially benefit the companies employing these individuals as well. It also helps the morale of workers. They are not depressed working at a job that cannot even pay the bills. Another benefit of the boosted morale is that absenteeism is likely to be lower than it currently is. From an economic standpoint, one could make the argument that people being paid higher wages will have more disposable income to pump into the economy. It will also aid the economy because of the fact that jobless numbers will eventually drop. That in turn will lower the burden on the American taxpayer. People will be less likely to accept welfare and food stamps with a wage that allows them to not need them. These are the main reasons that advocates of a living wage standard give to support their position. They are very thought provoking and strong reasons in my opinion.

Why We Don't Need it

Now, those that don’t see the living wage as a necessity have their reasons too. One of the big reasons is the idea that when one is given a living wage, he or she loses their opportunity to advance or learn new skills. In other words, motivation to learn and better ones self becomes non-existent. Another issue that the living wage raises is a business’s ability to pay its employees such high wages. This may be remedied by the subsidies and social services that local governments provide when they require a living wage ordinance. Yet, those who disagree will tell you that tax burdens will increase because of the increased subsidies being given by these local governments. One strong suggestion the opposition of living wages give is that many people refuse to be satisfied. If the minimum wage goes up, they will eventually dust the picket signs off and get back to the demanding of a higher wage. It becomes a bottomless pit because people’s needs become insatiable. Lastly, many employers will tell you that the minimum wage that they pay their employees now is really already too much. Many could be replaced for someone who is able to live frugally and work for less. They will tell you our standards are set too high.

Taking Sides

It is a bit difficult to take a definite position on this issue. If I had to, I think I would take the side of those that do no not support a living wage. The main reason is because I do not believe this will in any way aid the economy. Businesses will inevitably find a way to reduce their workforce if they must pay higher wages. Governments will raise taxes to make up for the many subsidies they say they will pay these businesses. If Wal-Mart is to raise their wages, they will raise their prices. Thus, people’s cost of living will rise. They will once again be in poverty. It is a vicious circle.

I also do not think that many of the people who receive low wages know how to handle much of the money they receive now. I do not mean this in a way that sounds rude or ill-mannered. But this is one of the reasons many are in poverty. People spend far beyond their means. Governments would be better off paying financial advisors to offer free services to those in poverty. Many will say that minimum wage is geared toward teens and young adults, and that they will accept this because it is all they can get. They say that is wrong. Yet, do teens really need more than a minimum when they are at home living with parents? I think much more statistical analysis needs to be done to support that claim. Lastly, I agree that we have a standard of living that is much too high. That is the other half of the reason many of us are below the poverty line. We charge up credit cards and live above our means. Then we wonder why we have no money to pay for the necessities. So I think rather than a living wage, we can do things as a society that will get us above that poverty line faster. Yes, that means frugality. But even the rich once had to live frugally (I by no means am a rich person). If we can motivate ourselves to work harder and get ahead, we can help ourselves succeed rather than demanding others help us. There are countless people who will give you their success stories. America was built by people willing to work to get ahead and live a simple life. Adapting that mindset will help us all out a lot more effectively than a living wage will.

Do you think there needs to be a living wage

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    • Sethughes profile imageAUTHOR


      6 years ago

      I wish more would understand that. Many companies have the financial ability to hire more and pay more. They choose not to so that they can add the bottom line. But they will undoubtedly hire someone with a work ethic and determination. Even in rough economic conditions, if they can be convinced you will generate higher profits for their company, they will hire you. Sometimes it doesn't take very much convincing, as in the case with your ex-coworker. Glad I'm not the only one who opposes the concept!

    • American Romance profile image

      American Romance 

      6 years ago from America

      You do understand this, Many will not, I could spend an hour proving the living wage wrong. We lost a bad employee yesterday to our competition, they offered him 100K a year, that is 10 grand more than he makes working for us. Now if a bad employee can make that much money then I think we should all take the lesson to heart. Ambition, motivation, etc. Employees have a supply and demand side to them just like products. People will pay for the best and brightest........and sometimes for the worthless.


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