Minimum Wage vs. Living Wage

Controversial wage proposals called "living wage laws" are popping up all over America these days. Earlier this year, the Chicago City Council passed a living wage law aimed at big-box retailers, which would have required stores such as Wal-Mart and Target to pay wages of at least $10 an hour plus $3 in fringe benefits by the middle of 2010.

Wal-Mart and other mega-retailers objected and Chicago Mayor Richard Daley subsequently exercised his first veto in 17 years, vetoing the living wage measure. Mayor Daley said the measure would have unfairly kept big-box retailers out of predominately black city neighborhoods, which need jobs.

How much more is $10 an hour vs. the current minimum wage? In Illinois, the minimum wage is $6.50 an hour, so $10/hour would have been more than a 50% raise, and is almost double the federal minimum wage of $5.15. Beyond the legal minimum, are you being paid the average wage for your job? Find out with our salary calculator.

You might be surprised to learn which jobs can pay a minimum wage, or just a little above.

Economics and Minimum Wage

To understand which jobs would be affected by a living wage law, I looked through the PayScale database for workers whose hourly wage is between $5.15 and $7.00. PayScale’s data tends to skew more white collar than the population as a whole, but we still had a lot of data at the lower end.

Of course, a big factor is each state’s minimum wage. For example, the Washington State minimum wage is $7.63 an hour. PayScale has no data for people earning less than $7 here. This contrasts strongly with Indiana and Tennessee, similarly sized states which use the federal minimum wage: our database has hundreds of profiles of low wage earners from both states.

Average Wage for Medical Care?

The most common jobs on the bottom of the hourly wage rung are service positions such as Cashier, Janitor, Childcare Worker, and Waitress/Waiter. The fact that these jobs are at the bottom is not surprising.

What is surprising? A significant number of Pharmacy Technicians are paid $7 an hour or less. Keep in mind, this is the person mixing and assembling prescription medications, which can decide life and death. While their average wage is significantly higher, $10 to $15 an hour depending on the state, the fact that some are earning under $7 an hour is surprising. Let’s hope the one filling your next prescription is not too tired from working two jobs to make ends meet…

Patient Safety in Nursing Homes

Another surprise is Emergency Medical Technician (EMT) pay. Call 911 because you are suffering a drug reaction from the wrong pills, and the guy running the defibrillator may be earning only $6 an hour. In fact, many EMTs are under a living wage of $10 an hour: the median wage is only a little above $10 in some states. Some EMTs make up the gap by working a lot of overtime. Hum, so the EMT is at the end of a 14 hour shift when he is making the call…

If you do survive, but end up in a nursing home, you can look forward to having a Certified Nurse Assistant (CNA), who may be earning only $5.15 an hour, taking care of you. Interesting side note: the lowest paid CNAs seem to be working mostly in elder care at nursing homes (employers figure litigation isn’t likely?), but none are well paid. The median CNA pay runs from $9 to $11/hour, depending on the state.

Minimum Wage and Cost of Living

Supporters of living wage laws say that the current minimum wage simply does not keep up with the cost of living. Allowing employers to pay less than a living wage is just cost-shifting to the public at large, forcing the government and private charities to fill in the gap between low pay and survival.

Opponents of living wage laws insist that raising the minimum wage will eliminate many jobs and lead to dire consequences.  According to a recent article in the New York Times, the Denver Metro Chamber of Commerce sponsored a TV ad featuring "Moses" telling "God" about the minimum-wage initiative on the Colorado ballots this November. As ominous storm clouds roll in, "God" pronounces the proposed initiative “a catastrophe."

Pros and Cons Minimum Wage Hikes

While biblical catastrophes are unlikely, a higher hourly wage mandated by a living wage law will eliminate some jobs, but how many? The New York Times’ article says that "researchers… have generally found that modest changes have only minor effects on employment levels. Some have found no net effect. Higher wages may end up lifting employee morale and reducing turnover…"

Still, outsourcing jobs to foreign countries is a reality that no one can deny. However, both the PayScale and the United State of Bureau of Labor Statistics data agree that nearly all the jobs at the low end are service jobs. How can CNA, EMT, Pharmacy Technician, Cashier, Childcare Worker, Janitor, or Waitress jobs in America be outsourced to India?

As states like Washington and Oregon have shown, service jobs do not vanish just because the minimum wage is $7.50 instead of $5.15. Our economy is unlikely to fold if the bottom 1-2% of workers get a raise.

Fortunately for more than 95% of the people who visit PayScale, even a $10 an hour minimum wage would not be a raise. How does you salary measure up? Is it minimum, living, or above? Use the PayScale salary survey to find out.


Dr. Al Lee