Income Inequality and living wage

In recent months the Occupy Wall Street Movement has received a lot of media attention. Though the goals of the movement haven’t always been crystal clear, one idea—“We are the 99%” has resonated with large segments of the American society. Who are these “99%” and what does the movement want for this group? The major sticking point is income inequality. For them, who is the 1% might be a better question. The one percent is CEO’s, hedge fund managers, and top executives who account for 31 % of our nation’s income. This group, for the most part, has not suffered from the recent economic downturn. In a recent University of California at Berkley study revealed that from 2007-2009 Wall Street profits, representing many of the corporations for whom the top one percent work, have risen 720%, while at the same time unemployment has more than doubled, and American’s home equity has diminished by 35%. This last statistic is particularly troubling since most of middle class Americans wealth is tied up in their homes. So, while most of America has been suffering, the wealthiest one percent has actually improved its economic standing. A Yale University study also reveals that during that same time period, 2007-2009, the top one percent has an average of $600,000 more per year to live on, while middle class Americans have experienced a drop in income of nearly $8500 per year. Are these trends fair? Should the government intervene to make income distribution more equal? The opinions of Americans are mixed. President Obama recently stated, “We can’t leave our values at the door….great reformers in American history did their work not just because it was sound policy, or good analysis but because our faith and values dictated it.” I agree with Obama. Our economic policies should be subject to moral judgment. As a recent editorial from “Protestants for the Common Good” stated—“morality and policy should be synonymous. If not we will lose our souls as individuals and our stature as a nation”. One suggestion to bring fairness and morality to our economic system is a proposal to institute a “living wage” as law. A living wage is defined as the bare minimum wage needed to sustain a life above the poverty line. Presently that figure is roughly $10 an hour. Ten states are already discussing such proposals. The benefits are obvious. With food prices going up (5%) over the last year and gas prices dramatically rising (32%), lower and middle class families are struggling to make ends meet. The extra wage would be more money to pay for necessities and could increase consumer spending and government tax revenues. Others counter however, that since such a wage increase would lead to a significant rise in the cost of production, businesses would have to fire workers and outsource more American jobs to cheaper overseas labor markets. Other business leaders argue that a mandated living wage would also lead to higher prices and lower demand, which would make our current economic situation worse. Can American business “afford” to be moral and pay their workers a “living wage”? I believe so. Another study by UC-Berkley involving Walmart—a well-known corporation that hires minimum wage or below living wage salaries, revealed that neither Walmart prices nor profits would be significantly impacted by a living wage proposal. The study projected that the average Walmart customer would pay 36 cents more per visit and only $10 more per year if wage increases were passed on to consumer through higher prices. I would gladly pay that much, if every Walmart worker could receive at least a living wage. I know some smaller companies would have more difficulty meeting that wage standard. However the larger companies, the ones whose profits have soared in recent years, certainly can afford to do the morally right thing. As President Obama said –“we can’t leave our values at the door” when we make policy. It is time to dignify all jobs and guarantee all Americans a “living wage”.