In a recent edition of his “Market View” column, local columnist David Moon argues
against living wage ordinances on the grounds that it is not possible to legislate wage floors since
the value of work is always and solely a function of market dynamics.  Specifically, he argues
that wages are solely a function of productivity as assessed in the market.  Because the living
wage issue is so important to the current city council elections, Mr. Moon’s claims must not go
unexamined.

 It’s true that for the most part wages are determined by market forces.  It’s not true,
however, that wages always rise with productivity.  The productivity of American working
persons rose steadily from the 1970's to the early 1990's, yet on average the real income (adjusted
for inflation) of American working persons, especially the bottom quartile, fell during those same
years.  During that same period the real income of top level managers doubled on average.  But
no one seriously claims that the productivity of those managers doubled.

 It’s true that market forces (supply, demand, risk, expected returns, etc.) are among the
forces that determine average wage levels for working persons.  But it’s not true that they’re the
only such forces.  Nor should they be.  For nearly 80 years now wage levels have been
determined in part by a complex and desirable network of governmental regulations, from child
labor laws (which by decreasing the supply of eligible labor tend to hold wages up) to minimum
wage and equal wage laws to fair labor standards provisions.  The labor market has long been
and ought to be a regulated market.

 Labor markets are properly regulated to insure that over the long haul they work to the
mutual advantage of all classes of participants, workers and employers.  At the level of
individuals, of course, there will always be those who do better and those who do worse in any
labor market, even a properly regulated one.  But in a properly regulated labor market, no class of
participants is permitted over the long haul to be regularly and systematically made worse off
while other classes avoid that fate.  Unhappily, however, notwithstanding some marginal gains
made during the Clinton years, the sad fact is that over the last thirty years labor markets in the
United States have steadily worked to the disadvantage of that class of workers constituting the
bottom quartile of the national wage scale.

 This problem has reached epidemic proportions, as anyone who studies seriously the
plight of the working poor in America knows.  Minimum wage laws, of course, are of little use.
Full-time, full-year employment at minimum wage falls well short of enabling one to earn
poverty level wages for even the smallest of families.  Furthermore, federal poverty guidelines
are, as is now almost universally acknowledged, fundamentally inadequate.  The reason for this is
that they are determined through a formula derived primarily from 1950's consumption patterns.
At that time, the average family spent roughly 1/3 of its after-tax income on food.  So, federal
poverty guidelines are determined by figuring what it would take to feed various sized families in
a minimally adequate way and then multiplying by three.  The problem is that today the average
family spends only 1/6 of its after-tax income on food, and spends a much higher percentage than
did earlier average families on housing, medical care, child care, and transportation (all costs
largely ignored in the determination of federal guidelines).  The upshot is that federal poverty
guidelines do not accurately reflect the costs of supporting one’s self or family in a manner that
meets minimally adequate standards.

 Living wage ordinances are a progressive response to current defects in the labor market.
They have been passed now in nearly 100 cities and counties across the country.  Where they
have been passed, their effects have been overall positive.  Mayor Ashe’s recent statement that
living wage proposals inevitably harm those they’re intended to help is simply without any
empirical support.  After careful study of their justification and effects, living wage ordinances
have won the endorsement of many highly regarded and impartial economists, from John
Kenneth Galbraith at the University of Texas to Michael Reich and Peter Hall at the University
of California-Berkeley to Robert Pollin at the University of Massachusetts.  As an empirical
matter, there’s no evidence that living wage ordinances actually hurt those they’re designed to
help.

 Knoxvillians deserve a debate over a local living wage ordinance far more serious and
informed than that initiated by Mr. Moon’s recent article and Mayor Ashe’s recent comments.
False and ideological platitudes about wages, productivity and unregulated markets, along with
shrill predictions that the sky will fall if such an ordinance is adopted ought to be set aside in
favor of more serious and accurate claims about the facts and values relevant to the task of
regulating labor markets so that they work to the advantage of all classes of participants over the
long haul.