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News Analysis: 'Greedy businesses' and the 'living wage': popular policies, disputed outcomes

Published: Saturday, May 19 2012 7:51 p.m. MDT

Ann Coulter. No photo credit. (Submission date: 09/15/2003)

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If politics make strange bedfellows, Ann Coulter and ACORN are among the strangest. A feisty conservative, Coulter writes red-meat books with titles like "If Democrats Had Any Brains, They'd Be Republicans." ACORN is a leftist community action group best known for mobilizing low-income voters for President Barack Obama.

One thing they seem to agree on is the "living wage."

"Cheap labor is cheap only for the employer," Coulter recently wrote in a column defending Mitt Romney's stance on illegal immigration. Coulter excoriated business interests for, she said, supporting illegal immigration to keep wages low on the farms, factories and fast-food restaurants. Or as she put it, "greedy businesses making the rest of us support their underpaid employees."

Citing estimates that 70 percent of illegal immigrant households collect government benefits, Coulter argued that the real costs are borne by society in food stamps and other anti-poverty programs. The public is burdened when "employers don't pay them a living wage," according to Coulter.

Intent on defending Romney and opposing illegal immigration, Coulter may not have known that the "living wage" is a rallying cry for liberal anti-poverty activists like ACORN. Essentially a minimum wage on steroids, some form of a "living wage" law is now on the books of more than 140 U.S. municipalities. In most cases, such laws only affect companies that receive direct subsidies or government contracts.

A few cities such as Santa Fe, N.M., and San Francisco impose the rules across the board. These two have of late dueled for the honor of the highest legal wage in the country. Santa Fe this year regained the edge at $10.29 an hour.

The laws are controversial. Some argue a high minimum wage heightens unemployment, while others see the laws as poorly targeted, shifting subsidies to workers who don't need them (teenagers) while doing little for those who do (working moms).

Whatever their actual effects, the living-wage agenda has proven politically durable and potent. It has, as Coulter knows, strong visceral appeal.

Gut-level appeal

In New York, a Sienna College poll released on May 14 found that 78 percent favored increasing the state minimum wage. "Nearly nine in 10 Democrats support it, as do three-quarters of independents and 58 percent of Republicans," said Sienna pollster Steven Greenberg.

In Connecticut, a recent Quinnipiac poll found that 70 percent favored a minimum-wage hike, including 88 percent of Democrats, 69 percent of independents and 48 percent of Republicans.

The Connecticut poll suggests that many of those favoring a minimum-wage hike also suspect that it will result in fewer jobs. When asked if raising the minimum wage would lead small businesses to reduce hiring, 50 percent of respondents agreed.

Disputed jobs impact

"Employers can benefit from paying higher wages," said James Parrott of the Fiscal Policy Institute in New York, who argues that higher minimum wages do not drag down employment. "Longevity and productivity increase, and employers don't need to hire and train as many new workers." Parrott also argues that in low-wage industries such as retail establishments and restaurants, most of the costs are the costs of goods. "Labor costs are just a small fraction of the total," he said.

This relatively new notion that minimum-wage levels can climb without sparking unemployment runs counter to standard economic theory. A landmark 1992 study conducted after New Jersey raised its minimum wage compared fast-food outlets there to those in eastern Pennsylvania. The study found no employment loss. In 2010, a team of prominent researchers compared adjacent counties on state borders where wages differed within a narrow region. They likewise found that higher minimum wages did not hurt employment.

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