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Jun 17 / thomas.krafft

Lower wages cost America more

Several stories in the news about Walmart and other large companies paying their workers salaries that are too low to cover even the minimum cost of living. Those workers, of course, don’t miraculously suddenly stop needing to buy food, clothes and shelter, just because Walmart pays them less. People will go to the government, and taxpayers for assistance. By raising minimum wages and benefits, perhaps Walmart won’t want to hire as many people – but every one of those who do work there will be able to put money back into the economy, rather than needing to extract money from it. These employees will not only spend more (which is kind of important in a consumption based economy like ours), but they might even find themselves able to open more businesses of their own – businesses which employ the workers Walmart claims it can’t afford to hire. On a related note, Walmart made $16,000,000,000 (billion) net income (profit after expenses) last year.

As someone living in an area with an absurdly high cost of living, and a person familiar with new technologies able to solve problems¬†previously thought “impossible” due simply to the massive amount of data crunching that would be required, I’d be the first to propose a living wage rate that is calculated on a regional basis – either at a city, county or other regional level – rather than raising the national minimum wage.

Say, for example, we raise the federal minimum wage to $12 per hour. This wouldn’t be enough to cover the cost of living for someone who works a minimum wage job in San Francisco or virtually anywhere on the peninsula. At the same time, a minimum wage worker living in the midwest could take that same hourly wage and have the means to buy a 5,000 square foot home on a few acres. I’ve been working over 20 years, and have an executive level job title – and I can’t even afford a house like that, simply because of where I live. My relatives who live out east or in the bible belt always joke with me about how much I had to pay for my 1,005 square foot barely 3 bedroom, 1 bathroom house here in the Bay Area. One of my cousins bought a mansion on 20 acres for 30% less than what I paid for our 60 year old apartment size home.

So, how about this more rational, reasonable proposal for minimum living wages: Calculate the minimum cost of living for someone living in or near (within a reasonable commute distance) a certain region. Regions would be defined with more granularity in densely populated areas, while rural areas would likely have less variance over large distances. Note that if someone works in a “wealthy” area, but lives in a poorer neighborhood, a living wage calculation should also factor in an ability for that worker to save money and achieve some upward mobility in their life. Minimum wages have, for too long, been calculated based on some random cost of rent + utilities. Period. A living wage is something that allows a person to save for their kids’ college education, cars and transportation, and an ability to save roughly 20% of ones salary. Workers anywhere would be paid the living wage that has been calculated for the region where they live. And yes, it would be possible for two people working at the same company to earn different wages based on where they live, and other factors including the size of their family and current age.

Just think about it. Nothing is impossible unless you don’t even try.