As a housing attorney in a legal aid program, I have represented many low-wage workers on the brink of being evicted because they could not pay their rent. To stop the eviction, tenants usually had to pay their current rent plus a monthly payment on the back rent.
Often they also had problems staying current with other bills—utilities, phone and car expenses. Unexpected car repairs caused some tenants, who needed a car to get to work, to breach their payment plan. Sadly, in several cases, my clients became homeless simply because they did not earn enough money to pay their rent.
Based on the challenges that my working clients had with keeping up with their rent, I became involved in a living wage social justice project in my congregation. This project led to the establishment of the Northampton Living Wage Coalition.
In 2009, the Northampton City Council passed a Living Wage Resolution proposed by the Coalition. The Resolution set a living wage based on a basic needs budget for a single person. Each year the living wage rate is raised based on increases in the consumer price index (CPI). This year the living wage rate will rise from $12.78 to $12.97 based on a 1.5 percent increase in the CPI. Employees who earn a living wage have much more money to feed their family, maintain a car, and keep a roof over their heads.
Paying a living wage is a good investment for employers. It boosts worker morale, effort and output. It also reduces employee turnover and absenteeism. Many of my clients had several court appearances, each of which took an entire morning. Employers who make the investment of paying living wages attract a more competent and better-educated work force. They also create more demand for their own goods and services.
The most costly impact of paying low wages is high employee turnover. Turnover costs include recruitment, lower productivity, and training. According to a study by the Center for American Progress, the average cost of turnover for employees earning below $30,000 amounts to 16 percent of the employee’s annual salary. A fulltime employee earning $10 an hour and working 40 hours a week would cost an employer around $3,200. Employee turnover in low-wage jobs is high. According to Bureau of Labor Statistics data, 37 percent of the employees in the hotel and food services industries quit their jobs in 2011.
Paying a living wage boosts the local economy. Workers who earn a living wage can afford to buy more goods in their community. This increases consumer demand and leads to economic growth. They rely less on government assistance programs and pay more in taxes. A broader tax base and a reduced need for government assistance helps local, state and federal governments invest more in the infrastructures and services that create jobs and help strengthen communities. Paying a living wage creates an economy that works for everyone.•
Kitty Callaghan is a steering committee member of Living Wage Western Mass, formerly the Northampton Living Wage Coalition. Contact her at email@example.com.