Over Spring Break, I went on a service-esque trip to Milwaukee through St. Olaf Intervarsity Bible Study.
While we were there, we were exposed to the massive segregation and poverty that exists in the city, Milwaukee is actually the most segregated city in the United States (by class and by race).
I was researching Milwaukee further when I got back from break, and read an article by James Causey on the Milwaukee-Wisconsin Journal Sentinel called “Another hit on Milwaukee, we can do better than this.”
The article cites a Cities Journal study that named Milwaukee #11 on “top fifteen cities you should move away from.”
The study cites high crime right, property taxes, and a thirty percent poverty rate as support for their claim.
Causey brings in another study from 24/7 WallSt., where Milwaukee was ranked #10 in “Worst run cities in America,” for high poverty, poor education, high crime, and high unemployment.
Causey states that the Mayor of Milwaukee wants to focus on job creation and public safety to get Milwaukee off of these lists.
Causey argues that, in order for these changes to occur, the Milwaukee government should highly consider enacting livable wages as a method for solving these issues; as well as an increase in minimum wage throughout the country.
According to David Cooper from the Economic Policy Institute: “ At the federal minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year yields an annual income of only $15,080…which is below the poverty line for a family of two or more.”
Increasing the minimum wage or, even better enacting a livable wage of approximately $10.10 would bring a minimum-wage income back above the poverty line for a family of three, according to Cooper.
So why not do it?
Well, according to economic theory, an increase in minimum wage or livable wage creates a surplus of jobless workers; there a lot of people out of jobs.
Theoretically, enacting a livable wage would improve the wages of those workers who can find work, but hurt those who cannot do so.
It also might hurt those firms who are supplying the jobs because they must pay the workers more, increase the cost of production, and hurt consumers because higher product prices.
Economists worry that by enacting these wages, there will be an increase in layoffs and a decline in unemployment.
It seems as though the costs outway the benefits, right?
However, in a scholarly article put out by Bill Barclay called “The Economics of a Living Wage,” it seems as though these perceived costs in the world of theoretical economics do not exist.
As of 2012, 125 local governments in the United States had passed living wage laws ranging from $10.29-17.00.
Results show that the empirical effects of raising wages are extremely minimal and—in most cases—have not resulted in layoffs within businesses or relocations of businesses to places where there is not a minimum wage.
Living wage expenses in a company account from 2-3% of total revenues which is not significant enough to generate layoffs.
Businesses have raised prices of their goods produced in some cases, but the prices are not so large that they hugely affect individual taypayers.
Firms have also cited an increase in productivity—both in the organization and efficiency as well as employment morale.
It seems like livable wage might be the way to go for Milwaukee.
If their results are similar to those in the study, Milwaukee’s climate might completely change—and I’m not talking about the weather!
However, this was a very small study and the findings are not representative of the United States as a whole.
What do you all think? Is a livable wage the way to go?