What If the Poor Earned a Living Wage

The Romney-ism of the 47% worthless lazy Americans who pay no taxes is making the rounds again. But the thing is, how could the poor pay taxes, when they don’t make enough money to pay for essentials? The Republican story is that they don’t make enough money because they are lazy. The reality is that they don’t make enough money because they are poorly paid. Being unable to survive on full time wages is an outrage.

How many Americans live in poverty? That depends on how you define poverty, but a good guess is that more than 94-million people do, some 30% of the population. This is a national disgrace, and a sign of our worsening inequality.

Rather than calling it “poverty”, for now think “inadequate income”, which is more meaningful. The upper limit of inadequate income is double the official poverty rate, or $44,000 for a family of four. Every dollar under that amount means a family is unable to pay for some portion of the essential costs that everyone in the richest economy in world history should be able to pay for.

How could the poor pay taxes
when they can’t pay for essentials?

Republican think tanks have somehow concluded that we pay people on welfare $168 per day, or some $60,000 per year. Very funny, guys, but it doesn’t happen. Some 1,600,000 Americans, many of them young, earned minimum wage of $7.25 last year ($15K/year), and the fact is that nearly half of the poor live in deep poverty, defined as under $2.00 per day per person, the price of a cup of coffee these days. That comes to $2,920 per year for a family of four, which is earned with some 12 hours of work at median income, and is the price of lunch for the very richest.

No Republican seems to have asked himself why someone (other than the ultra-rich) would pay no taxes. The answer is they don’t earn enough money to owe taxes on in spite of full time work. Here the Republican myth says they would rather collect welfare than work. This would come as a surprise to someone with two minimum wage jobs trying to decide whether to buy food or prescription meds.

No matter how you look at American poverty, it’s disgraceful and unnecessary. What would happen if everybody earned a Living Wage, which been true in Australia for more than a century?

What would happen if
everybody earned a Living Wage?

I maintain that about $25 per hour for adults is a realistic Living Wage for a family of four. It’s close to what Australia pays, and if every worker earned $25 or more per hour, 94-million additional Americans would have all the income needed for a decent life, including health care, savings, and education. The rolls of the poor would be a small fraction of what they are.

Living Wage would also have a salutary effect on the national budget. I estimate that there would be some $175-billion in increased tax revenue. Since all these people would no longer be collecting welfare, the total budget effect would be greater. How much greater is a harder figure to come by, but deducting the same amount from welfare yields a $350-billion improvement for the country.

Wouldn’t Living Wage be hard on small businesses, as some claim? No, it wouldn’t. It’s analogous to the environmental laws corporations fretted about decades ago. If everyone has to abide by the same rules nobody has an advantage, and the market will adjust.

Would that end the need for welfare? Of course not. Civilized society requires that we take care of people who truly are not capable of caring for themselves, the permanently injured, the aged and infirm, the chronically and seriously ill, and so on. But full time workers should earn enough to pay taxes on, not collect welfare, as poorly paid workers at Walmart, McDonald’s and other cheap-o corporations have found to be necessary.

Australia has survived quite handsomely
after a whole century of Living Wage laws.

Conservative Republicans will leap to their feet and proclaim the downfall of the economy. Not so. Adjustments there would be, but Australia has somehow been able to survive quite handsomely after a whole century of Living Wage laws.

And what about all those lazy welfare bums Republicans keep yammering about? Well, there are a few lazy welfare bums, and we have no moral obligation to provide for them, but their number is a very small fraction of the Republican mythology. The vast numbers of lazy black bums that conservatives claim are the sole cause of poverty are a fabrication.

Yet Republicans continue, year after year, to feed us the same crap about poverty: that people are poor because they choose to be and are lazy, and that the federal government provides them with huge cash benefits that are 8% higher than the national median income. What nonsense.

As long as we argue over a paltry $10 minimum wage, and believe that people can get big bucks from welfare and refusing to work, our national wellbeing and our international competitiveness will continue to be compromised. Living Wage would solve some of the most serious problems the country faces.


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