Why Pay A Living Wage?

A living wage is defined as the minimum income for an individual or family group necessary to meet basic needs. Living wage standards vary, but all are based to some extent on local housing and food costs. Many also include other needs such as clothing, retirement savings, education; some standards include items such as minimal vacation costs, insurance, professional fees, elder/child care. Most standards are based on a ~40 hour work week for a worker with no additional income. In the U.S., a comprehensive living wage for any particular community is usually several dollars per hour higher than the pitiful federal Minimum Wage: $7.25 (imagine working for an hour, doing just about any kind of work, and after that hour you’ve built up enough income to possibly afford a fully loaded Starbucks beverage). The living wage movement aims to establish for particular localities a more reasonable and equitable minimum wage, and it turns out that doing so is a benefit to all concerned.

For most of U.S. history, the predominant business model and means of profit-taking have relied on state and federal policies which lock workers in predatory low wages. Implicitly or explicitly, we are told that business — and thus our entire economy — can only flourish by keeping wages low so that businesses can grow and be ever more profitable for investors and management. That accumulated wealth will then surely tickle down to the wage earners, at least when management/investors feel so inclined, or more likely when they are compelled to do so by workers and their advocates. Wage advocacy and politics is, however, another one of those areas that broadly fluctuates in waves and depends on the varying efficacy of workers advocacy groups, the tolerance of workers, and sometimes simply the good graces of management and investors. Instilling fear of job loss often plays a role in keeping wages low. In fact, one effect of the federal Minimum Wage is a reminder of “how great you’ve got it making $8.00 or even $7.75 an hour.” Workers’ rights and pay fairness advances by two-steps-forward, one-backwards (sometimes vice versa), but it seems that strides are currently being made.     

The effects of paying workers less than a true living wage are serious and contribute primarily to many of the ills facing U.S. society. A worker paid the minimum wage of $7.25/hour, or any wage below a living wage, cannot possibly afford basic necessities without assistance. This creates problems not only for workers, but for businesses and the local economy. One commentator (Fred Lundgren, a radio talk show host) recently said:   “The sinister trap of permanent poverty level wages is snapping shut on a growing number of Americans each year, causing the middle class to evaporate into poverty before our eyes, while these same Americans get blamed by conservatives and libertarians for falling into the trap.”

Along with the Occupy movement and the related ongoing period of enlightenment following the Great Recession, the idea of paying workers a true living wage and/or a reasonable minimum wage has become part of the daily news. Black Star’s wage policy has been part of that positive publicity since its opening almost 5 years ago. Along with the co-operative idea that distant and idle investors should not profit from local business activities, payment of a living wage is an important element of the democratization of our economy. From day-one, Black Star’s Ends Policies have included the following:

A.4 Black Star Co-op will provide an empowering environment for all workers through worker self-management. Specifically:

A.4.1 Pay a living wage and provide excellent benefits to all workers.

A.4.2 Promote worker retention.

A.4.3 Maintain a hospitable working environment.

A.4.4 Encourage high-quality work from our workers.

Part of Black Star’s success and its ability to keep high quality workers in the Workers Assembly relates directly to our dedication to fair worker pay and treatment. Members and patrons reviewing the service and quality of food and beverage at Black Star consistently praise our workers and rate them highly. WA members similarly rate the working environment at Black Star very highly. Not surprisingly, this seems to be a common result of worker fair treatment in any business. 

Studies have demonstrated the benefits to a business of paying a true living wage, many of which are amply shown at Black Star, such as the following: 

  • Paying a living wage leads to increased worker morale, worker health, and quality of service, as well as lower absenteeism, turnover rates, and recruiting and training costs.
  • According to a Fiscal Policy Institute Study, states with higher minimum wages experience more small business growth, both in number of employees and in number of establishments, than states with lower minimums.
  • Raising wages is affordable — employers are able to absorb the costs of a wage increases through higher worker productivity and lowered administrative and training costs, not to mention the possibility of reducing excessive management costs.
  • Moreover, multiple surveys have shown that most Americans are willing to pay more for living wage produced products and services.

There are also many distinct benefits inuring to the local community from paying a living wage: 

  • Having a living wage work force and related efforts to end poverty and inequity moves all citizens toward a more just, sustainable and engaged local economy.
  • Living wages reduce overall worker inequality by strengthening low-wage workers’ bargaining power in the job market.
  • Living wages enable working people to become self-sufficient and rely less on social services. Today, millions of full-time workers and their families receive food assistance and other forms of charity. Federal and state tax-based assistance for full-time workers is both counterintuitive and counterproductive — only a fraction of every tax dollar allocated to social services directly assists recipients of aid, while 100% of wages do.
  • Wage increases accomplish the above but do not lead to job loss. Repeated studies, usually relating to minimum wage increases, have failed to find any systematic, significant job loss associated with federal/state minimum wage increases. In fact, following most such increases, the low-wage labor market performed better than previously in that unemployment rates dropped, family income increased, poverty rates decreased and workers and their families were generally happier.
  • Living wages generally stimulate the economy through increased consumer spending and the money multiplier effect.
  • Businesses can demonstrate greater corporate social responsibility, and benefit from an increase in public recognition as leaders of the worker fairness movement.

As a co-op and a worker self-managed business, it is part of Black Star’s “DNA” to pay a living wage. The experience at Black Star has shown that this decision has absolutely been positive and broadly beneficial.