A better living
A top editor at the daily newspaper in Sacramento has opposed increasing the pay of some employees who work for firms that do business with the city to a “living wage.” He is worried, in part, that such a change would boost the taxes of those who live in Sacramento.
In addition, the editor fretted that workers getting a salary hike to a living wage would pay more in taxes but would get fewer benefits from state and federal programs. He cited data calculated by a California State University, Sacramento, economist.
The economist’s analysis of the proposed living-wage ordinance for the city suggested it would be good for workers but bad for the economy. Her numbers indicate that federal and state governments would remove from Sacramento $3,676 per year for an adult worker with two kids who gets a living wage.
Annually, this worker would make an additional $2,824 in disposable income, with a $10-per-hour living wage plus health benefits (which are tax-exempt). Earning a living wage would mean $852 less in government benefits annually, or 41 cents per workday.
That’s a small amount on which to base a case against approving a living wage. Moreover, the difference between the living wage and government benefits may be even smaller because of an upcoming change in the federal Earned Income Tax Credit (EITC) program, which is available to low-income workers.
The IRS recently announced that, beginning this July, the agency will force the nation’s “working poor” to submit more documents to prove their EITC eligibility. This likely will cut the flow of tax dollars to low-income workers in Sacramento.
As these low-income taxpayers deal with the change, President Bush and Congress are busy cutting taxes for the richest Americans. A living wage would counter this redistribution of tax benefits to the wealthy.
If rich people are paying less in taxes, everybody else will either pay more or get less in benefits. The living wage would help boost local consumer spending as tax circumstances reduce consumers’ buying power.
Most working people, unlike the well-heeled, spend their salaries on necessities soon after being paid. Just ask local landlords and merchants.
The Sacramento City Council and Mayor Heather Fargo have been deliberating a living wage. Tell them that living-wage jobs should be a part of—not apart from—Sacramento’s economy.