A Living Wage

A Policy Statement Adopted by the House of Delegates, North Carolina Council of Churches, November 9, 2000

Overview

From the shadows of banking towers of Charlotte and Raleigh to the small towns and hamlets far away from the bustling Piedmont, the much-ballyhooed economy has not lifted all boats.  Many people are working hard but are not earning enough to make ends meet in today’s economy.  For this reason, a “living wage” movement is gaining momentum around the nation.  This movement seeks to educate policymakers and the community about the true costs of making ends meet and to require that local governments and their contractors pay a living wage to their employees.

Over 40 cities and counties across the nation, including the city of Durham, have adopted living wage ordinances.  Greensboro, Charlotte, Asheville, and Raleigh may also see campaigns for living wage ordinances.

Difference between minimum wage and living wage

The minimum wage is currently $5.15 an hour. Congress has been debating whether to increase it to $6.15 an hour.  Such an increase would:

• help the 70 percent of minimum wage earners who are adults.
• benefit the 46 percent of minimum wage earners who work full time.
• increase the 54 percent of family income that minimum wage workers contribute.

It would affect approximately one out of every five North Carolina workers.

But even a full-time minimum wage earner could not lift a family out of poverty.  Moreover, earning a minimum wage is not enough to pay the bills – for housing, for food, for child care.  A worker who works 40 hours per week, 52 weeks per year, takes no vacation, and misses no work because of sickness would have a gross income of $10,712.  If that worker has one child, the family falls more than $500 below the federal poverty line for a family of two–$11,250.

And the federal poverty figures, based on the cost of a “thrifty” diet more than thirty years ago, are widely conceded to be inadequate in today’s world.  So how much does it cost to live?  In recent years, several respected North Carolina groups have calculated the costs:

• In 1997, NC Equity released a “self-sufficiency standard” for each of North Carolina’s 100 counties.  This standard factored in costs of housing, child care, food, etc., and showed that the federal poverty guidelines were not high enough to reflect the true cost of living.  The standard described how much money various configurations of families would have to earn to make ends meet without government assistance.  In high-cost areas like the Triangle, the amounts reached almost $14 an hour.

• In September 2000, the NC Low-Income Housing Coalition released a study about the growing trend of unaffordable housing in North Carolina.  The Coalition estimated that a full-time wage earner would have to make $10.15 an hour to rent a two-bedroom apartment without spending an unaffordable share of his or her income.  Increases in costs for shelter, especially in the Triangle and Wilmington areas, have been among the highest in the nation, far outpacing the growth in wages.

• Also in September, the Common Sense Foundation, a Raleigh-based research and advocacy organization, released its State of the Worker report.   The Foundation urged an increase in the state minimum wage to $8.50 an hour, about enough to move a family of four above the poverty line.  More than one-fourth of North Carolina jobs are at or below this amount.

• In November, the NC Justice Center will release an update similar to the self-sufficiency standard.  The “Living Income Standard” will likely show that families even in rural areas have to earn at least $8 an hour to live.  Costs in urban areas, especially for housing, will be higher.

Is hard work enough?

Many Americans still believe that hard work is enough to support a family.  But is it?  The information in the previous section would suggest that it is not.  And, in fact, over three-quarters of North Carolina families living in poverty include a worker.  For them, work simply isn’t enough to provide basic necessities.

A disturbing trend contributing to the problem is that income is being distributed more unequally.  Since 1979, family income (adjusted for inflation) has:

• declined by 0.6 percent for the lowest-income families.
• increased by 5.6 percent for middle-income families.
• increased by 29.9 percent for the wealthiest families.

This unequal distribution of income, a mirror of opportunity, makes it more difficult to sustain a democratic society, to say nothing of a just society.

As a result, many are working more just to keep pace.  Married-couple middle-income families now work almost 600 hours more (or 20 percent) annually than they did in 1979.  Families at all income levels work at least 14 percent more than their peers did two decades ago.  However, there has been little change in North Carolina’s poverty rate in the last decade, despite low unemployment and much job growth.

While it is clear that families have tried to keep pace by having more of their members work outside the home and by working more hours, it is also clear that this trend can injure families.  Spouses have less time for each other; parents have less time for their children.   People are living to work, not working to live.

Why Should People of Faith Support a Living Wage?

We live in a radically different world, with radically different economic systems, from that in which the Bible was written.  Still, the Bible contains teachings which are relevant.  Consider these three points:

1.       Workers were to be paid fairly and quickly (Leviticus 19:13; James 5:4).  In a society in which people lived from day to day and from hand to mouth, to withhold a worker’s wages, even for a day, was unjust.

2.       Justice required assistance for the most vulnerable in society.  In Hebrew law, these were the widows, orphans, and immigrants, and there were special protections built into the law (e.g., Deuteronomy 24:17-22).  For Jesus, it was “the least of these,” and “all the nations” were to be rewarded or punished based on whether or not they had helped (Matthew 25:31-46).

3.       Wealth was to be distributed with some sense of equity.  The Jubilee Year provided that the ownership of land (economic capital in that day) was to revert to its original owners every fifty years (Leviticus 25:8-17).  The New Testament records that members of the early church shared whatever they had to help fellow believers in need (Acts 2:44-47).  While there is nothing to indicate that the Jubilee Year was widely honored or that this extraordinary sharing existed for long periods of time in the First Century, the message of these passages should not be too quickly dismissed.

Recommendations

Advocacy steps fall into two broad categories:  increasing workers’ wages and reducing their out-of-pocket costs.

1.  Strategies for improving wages include:

• Modeling good behavior. Faith-based organizations (of which we are members) should pay living wages and provide adequate benefits to their employees.  Governments (of which we are citizens) should pay their employees a living wage plus benefits, should require their contractors to do so as well, and should require businesses benefiting from tax incentives to pay living wages and benefits.

• Increase the state minimum wage. The state minimum wage is currently $5.15 an hour.  More than ten states have increased their minimum wage above the level required by the federal government, in part to recognize that the minimum wage has not kept pace with inflation or the cost of living in general.  These increases have had little or no harmful effect on employment.

2.  Families spend the majority of their money on housing, child care, food, transportation, health care and taxes.  To reduce the impact of these costs, we advocate:

• Affordable Housing Construction through a statewide bond issue and dedicated sources of revenue for the Housing Trust Fund, the only source of state dollars for affordable housing.

• Continued Support for Child Care. While the amount of subsidies for those needing child care has increased in recent years, there are still families on waiting lists for subsidies in many North Carolina counties.

• Health Insurance. While the state has been very successful at enrolling children in public health insurance programs, such as Medicaid and Health Choice, there are still many working North Carolina adults without health insurance.  Many employers don’t provide it, and workers can’t afford to buy it for themselves.  The state should extend the Medicaid program to help these adults gain access to health care.

• State Earned Income Tax Credit. Nearly 625,000 North Carolina working families with children benefit from the federal Earned Income Tax Credit (EITC).  The EITC was created to lower the federal tax burden and supplement wages for low- and moderate-income workers.   It lifts more people out of poverty than any other program except Social Security.  Fifteen states have created their own versions of the EITC.

The Bible teaches that the worker is worthy of his or her hire (Matthew 10:10).  Full-time workers should be able to provide basic support for their families.  North Carolina should take these recommended steps to reward work and to support working families.