The living wage legislation is a feel good law instituted by well intending politicians and voters that as a whole will detrimentally affect low skilled workers it was intended to help. Data and arguments for Pro Living Wage advocates do not withstand close scrutiny and are inevitably countermanded by data and arguments which are rooted in The Law of Supply and Demand. The loss of benefits and the reduction in number of jobs available for low skilled workers is the unavoidable result of living wage legislation.

Smith (1989) accurately defined the relationship between employee and employer over two hundred years ago when he said,

“What are the common wages of labor, depends everywhere upon the contract usually made between … two parties, whose interest are by no means the same. The workman desires to get as much, the master to give as little as possible” (p. 74)

Smith (1989) went further by saying that these two parties, and the market as a whole is guided by an “invisible hand” that is kept in equilibrium by mutual self interest. Smith (1989) also inferred that the outside sources should not

“New York University professor Daniel Shaviro told Congress that the working poor could lose most, or even all, of the higher earnings accompanying their wage increase. That is because mandatory wage hikes trigger changes in Federal wage and housing subsidies, food stamps and even welfare payments” (Employment 2002, p. 3).

There are always at least two sides to every issue, other wise it wouldn’t be a controversy. The advocates for living wage legislation define the living wage as follows: The living wage idea is to raise an individuals income above the federal poverty level for a familys of four. Thus, individuals would not have to raise their family in poverty (Pollin & Luce). The challengers of living wage legislation look at this question in the following light: The living wage movement is an organized effort to force certain employers to pay wage rates based on a classification of “need” rather than “skill” (Employment 2000). In this instance, both sides of the controversy are right. To put this in economic terms, the living wage legislation would be a “Price Floor”(Smith). Local, State, or Federal government would establish a wage, for certain employees, and not allow them to be paid less than that amount (See Figure-1).

Does The Living Wage Help Those It Was Intended To Help?

interfered with the“invisible hand”. This and other principles laid out by Smith (1989) have helped guide the United States of America (U.S.) to become the highest Gross National Product (GNP) producing nation of any country on earth. Why then, after over two hundred years of the United States following this edict, do politicians and social activist groups want to change this proven formula by proposing and, in some instances, passing Living Wage legislation? Economic experts on both sides of this issue draw different conclusions when answering the following questions:

However, the living wage legislation that has passed has just been mandated for companies doing business with Local and State governments according to Pollin, & Luce (1998). However, Robert Pollin, economist and proponent of living wage legislation stated,

What Is The Living Wage And What Is Its Scope?

Some topics in this essay:
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