It was our impression that the Living Wage Forum last Wednesday was set up to open discussion on a delicate issue. As students in Dr. Klopfenstein’s Labor Economics class, we have studied this issue thoroughly and felt the economic side of the issue was well underrepresented.Economists are viewed, much like businessmen, to be for nothing but profit and void the human factor completely, but that just is not the case.
We believe we have some possible solutions, but first let’s take a look at the problems.
During the forum, we felt the arguments were very one-sided, normative and merely praised the idea of a living wage without concern for implications or problems possibly generated by a living wage creation.
Merely creating a living wage increases the costs to the university. Money is limited, as we all know, and that means that in order to afford giving workers a living wage, the money must come from somewhere. The university could increase tuition further, but would every student be willing to pay more in order to cover the staff? TCU could cut the salaries of professors by a specific amount, but would professors really want to cut their salaries to help the TCU staff? Should we take away some worker benefits, free tuition to their children or release some staff in order to afford the costs?
There are also past examples of employers hiring workers at higher wages above the market wage, commonly known as efficiency wages. These are designed to make workers more productive, but this still carries the negative consequences of wage increases.
In modern economics, increasing the wage without a near-equivalent increase in productivity would lead to layoffs, budget shortages and disproportionate funding. Then we would have less-accommodating facilities and staff shortages, and many staffers would no longer have jobs but would have been willing to work at the lower wage. Or we could cut the hours of all workers, which wouldn’t be efficient either. Creating a living wage without further insight or thought into alternatives or better solutions does not help much in the end.
The living wage is an important issue and as economists, we want a win-win situation for everyone. Just creating a living wage at TCU will not be an end-all solution. There are several alternatives, however.
One is that TCU could offer free childcare for workers. This cuts day care and transportation costs for staffers, or if parents are staying home with children, they can now find jobs, increasing family income. Also, the staff members can breathe easy knowing where their children are and who is watching them. But again, this is a cost to the university, and the money will have to come from somewhere.
A labor economics student, Steve Stroud, came up with a solution that could be the most efficient answer to the living wage issue yet. TCU has endowment funds for athletics, flowers and several things all over campus, so why doesn’t TCU offer a Living Wage Endowment Fund?
A fund such as this would serve as a financial source that would be unrelated or uncorrelated to actual worker productivity or worker output. Normally, increased wages can only be the result of increased output, but this would allow the rule to be altered.
This way, for all of us who feel strongly about supporting the TCU staff with a living wage, can create a fund that will not take money away from anywhere else and be solely for the living wage of the staff. Leftover money could be used for more health benefits, childcare or even stronger working conditions.
By soliciting to alumni associated with the living wage movement, or politically to those interested, this endowment could be a possibility. If the living wage movement was to initiate a moral campaign to alumni about what ethical problems are occurring, they may be able to generate a foundation from which to financially improve the workers’ living situations.
We were disappointed in last Wednesday’s living wage forum because the living wage was presented as a policy that is an economic fix-all for TCU’s staff, but as we explained above, that is not true. We would like these ideas to be discussed and taken into consideration among the TCU community and alumni.
Dr. Kristin Klopfenstein’s Labor Economics class.