2/1/99

KUFM / KGPR

T. M. Power

The "Job Gap" and "Living Wage" in Montana

Earlier this month the Northwest Policy Center and the Northwest Federation of Community Organizations released a study that compared the cost of raising a family in each of the northwest states with the wages being paid in the region. The point was to figure out how many of the hundreds of thousands of jobs created during this last decade paid a living wage in the sense of allowing families to meet their basic needs.

As one might expect given the ongoing discussion of low pay in Montana, half of the job openings in Montana did not pay a living wage for a single adult, calculated at about $9 per hour. Worse still, over three quarters did not pay a living wage for a single adult with two children, which was calculated at about $15 per hour.

These results were reported without any public policy recommendations. As a result, they primarily helped energize the bandwagon already rolling towards the establishment of a variety of business subsidy programs being proposed in the name of economic development.

This is unfortunate because some of those "economic development" proposals are very likely to make workers in Montana worse off, not better off. Using a regressive sales tax to fund subsidies and tax cuts for businesses will certainly make a living wage even more unattainable in Montana. Yet that is where our economic development boosterists would carry us. It would be a shame if the advocates of a living wage were used in this way.

It is very important to realize that the living wage problem is not a local problem that has developed primarily in Montana. It is a national problem. Over the last 25 years, the blue collar path to a middle class lifestyle has been systematically eroded by a variety of public policies. Until the mid-1990s real wages at the lower end of the pay distribution were in free fall across the nation.

The Northwest Job Gap study documents the national character of this problem. In Washington, Oregon, and Idaho, the percentage of job openings that did not pay a living wage were quite similar to what was found in Montana: about three quarters of the jobs would not have supported an adult with two children and about half would not support a single individual. Average income in the state of Washington is 31 percent higher than in Montana, yet in that "high income" state, the living wage problem was almost as great as in Montana.

How could this be? After all, Washington is dominated by the Puget Sound and Seattle areas with Boeing, Microsoft, and other national corporations paying very high wages. The answer is partially that the cost of living is higher in the more metropolitan states. The Job Gap Study estimated the cost of living in each state. In Washington, for instance, it was as much as 17 percent above that in Montana. In Oregon it was as much as 14 percent above. Just those differences in cost of living wipe out three quarters of the apparent income advantage Oregon has and 60 percent of the apparent income advantage the state of Washington has over Montana. This is a valuable warning that the numbers being thrown around in the Montana economic development debate may be misleading. There may be a reason why most of us have not moved to Seattle despite the higher pay!

To say that the problem of a living wage is a national problem, not a problem unique to Montana, is not to dismiss concerns about the inadequacy of wages at the lower end of the job distribution. There is a real and serious problem here. Since the Job Gap Study did not outline the public policy measures that would help solve this problem, let me do so. It will become clear why the sponsors of the study chose not want to pass these policy recommendations on to our conservative Republican legislators.

1. A higher minimum wage protected against inflation: 30 years ago, the minimum wage was the equivalent of $7.70 per hour in today’s dollars, almost 50 percent higher than today’s $5.15 per hour. Small wonder that wages at the low end have slipped as far as they did. Minimum wages work: Montana workers at the lower end of the pay scale get paid about what similar workers do elsewhere in the country; it is folks in the higher paying jobs in Montana who make the sacrifice to live here. That is largely due to the minimum wage.

2. Public support for organized labor: It is perverse irony to hear conservative Republicans bemoaning the loss of Montana’s good jobs. Those good jobs were good because they were unionized jobs. It was the unions that transformed what were lousy exploitative jobs into good jobs. It was the decline in those same unions that helped undermine living wages. Of course, it was also the decline in union power in Montana in the last quarter of the 20^th century that ushered in the Republican majority that now decries the loss of "good jobs."

3. Supportive welfare and unemployment compensation floors. One of the impacts of reasonable levels of welfare and unemployment support was to reduce the supply of labor at the lower end of the distribution. If pay was absolutely miserable in a lower end job and did not cover the expenses of raising a family, there was at least a temporary alternative available while the worker searched with a little less desperation for a better job. Now, as a matter of public policy, we are chasing these people out into the labor market, desperate for any job available. That certainly puts downward pressure on already low wages.

4. Limited inmigration by unskilled workers: For most of the 20^th century, immigration policy focused upon skilled and professional workers where the competition for jobs would not have a major impact on most workers. Our business leaders, however, hungry for cheap labor, lobbied for special exceptions so that large numbers of desperate, unskilled workers could be brought in to work the fields and fill the factories. They encouraged a largely open border. This may well have been good for the overall economy, but it certainly was bad for workers at the lower end of the job distribution and for living wages.

One could go on and talk about our enthusiasm for unregulated international trade and meager programs to help workers adjust when they lose their jobs as a result. Similarly one could talk about the conservative hostility to governments and government agencies being required to pay living wages and require those they contract with to do the same.

My point is that many of those wringing their hands about the lack of living wage jobs in the state are the very people who enthusiastically dismantled the social wage setting institutions that opened the middle class to working people in the first half of this century. It is hard to take their concerns seriously now that they have been successful in driving an increasing proportion of the population back into a lower class status. It is even more distressing to see the advocates for a living wage being used by these interests.