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A Three-part series on the Universal Living Wage as it relates to Globalization
By Richard R. Troxell
National Chairman
Universal Living Wage

(part 1 | part 2 | part 3)

Globalization and Labor - One Piece of the Solution

According to the 2002 Human Development Report of the United Nations Development Program of the 6.2 billion people on earth, 1.2 billion live on less than $1 a day for their hard work. This would be OK if they were able to afford basic food, clothing, shelter, and access to health care for their toil. Unfortunately, this is not the case. All across this planet, people are desperate to work, but the wage they are paid won’t afford them the basic necessities in life. According to Global Inc.: An Atlas of the Multinational Corporations by Medard Gabel and Henry Bruner, there were 63,000 multinationals in 2003 all of which are taking advantage of this impoverished situation with their 821,000 subsidiaries. They are globe trotters in the pursuit of the bottom line.

These companies attach themselves to no single country. Instead, they operate without ties and allegiance to any nation or any group of nations. While they stridently and unabashedly pursue maximum capitalism, some of their business application practices come into question. Their pursuit of riches coupled with their lack of allegiance leads them to make their businesses mobile. They locate their operations in the direct vicinity of the lowest paid workers around the world. Once it becomes cost effective to abandon one cheap source of labor or once workers start to organize themselves in an effort to improve their working conditions or raise those wages the parent organization picks up and leaves. Jobs starting in the United States have shifted to Mexico in pursuit of the $5.00 a day wage. Recently, those jobs have shifted from Mexico to Haiti and China where we witness a $4.00 a day wage. In Austin, Texas one in ten jobs is expected to be outsourced to countries like India by the end of 2004. At the end of five years, it is expected that this will no longer be cost effective and these jobs will move to China (as reported by KXAN News 36, February 12, 2004). The fact that these transnational companies are bringing employment to unemployed workers is applauded. However, we are quick to point out that these, the poorest paid of all workers, routinely live in abject squalor. Unless specific steps are taken to ensure living wages, little will occur to change that dynamic.

Wherever there are workers and employers, there exists a symbiotic relationship that is bordered by a delicate framework. The employer needs the employee for their labor and the laborer needs to make at least a minimal living through the employment. While the need is mutual, the power balance is not, and therefore, for the most part, workers must hope that the employer will embrace the principals of the Universal Living Wage formula. This formula ensures that if an employee works a standard number of hours, that employee should, as a result of the work, be able to afford these basic life-sustaining necessities (food, clothing, shelter, access to health care). This is consistent with the United Nation’s document, the Universal Declaration of Human Rights, which identifies these life-sustaining necessities as "definitive components of the right to a minimum standard of living and dignity for every (nation) state." Affording basic food, clothing, shelter, and access to health care is the core tenet of the Universal Living Wage.

In order to establish the basis for a Universal Living Wage, we have chosen the United States as the logical socioeconomic black board to begin the paradigm shift. Each nation throughout the world has its own greatest need among these life-sustaining necessities and an appropriate, measurable, central standard should be identified by each nation.

In the United States, we choose housing. Historically, however, food has been at the core of the Federal Poverty Guideline. In the 1960s during the Johnson administration, a political decision was made to choose food as the base standard because the "war on poverty" was aimed at ending hunger in Appalachia. The food staples: meat, bread, and potatoes were literally placed in a basket. Their cost was multiplied by three and then multiplied by the number of people in the household. This makes up the Federal Poverty Guideline that is still used today. It is important to note that, according to the Consumer Price Index, in 1963, food made up 23% of the monthly family budget and housing made up 29%. However, today, food makes up a mere 16% and housing makes up 41% (or more by other standards), so in this experiment we will choose housing as the most costly basic need in the United States and the basis of our standard/ formula. Besides which, the antithesis of housing is apparently homelessness. One of the principal goals of this experiment is to address the root causes of homelessness- poverty wages.

Building Economy with Higher Wages

This year, 3.5 million people will experience homelessness in the United States. The problem can be broken down into three major categories of need: affordable housing, health care, and livable incomes. Part of the livable income picture includes 42% of America's homeless population that the federal government says is working.

The problem is that the federal minimum wage is $5.15 per hour. According to the last several U.S. Conference of Mayors' reports, $5.15 per hour or $10,700 per year, is an insufficient wage for anyone to get and keep housing throughout the United States. While some employers are paying $6.00, $7.00 or even $8.00 per hour, the wage is still not enough to get or keep most folks in housing relative to where those wages are being paid.

Presently, there is proposed U.S. legislation to raise the federal minimum wage by $1.50 over the next two years. The problem is that the day that bill gets passed, not one minimum wage worker can then work themselves off the streets in the very city where it is passed.

Others wonder about the approach of paying a flat national minimum wage of say $10.00 per hour. Again, that would not afford any minimum wage worker an efficiency apartment in cities such as Washington, D.C. or Santa Cruz, California. However, at the same time, that flat wage would swamp small businesses all across America in cities like Biloxi, Mississippi or Harlingen, Texas. In fact, this is Congress's biggest problem; one wage size no longer fits all.

It is recognized that the single most expensive item in an individual’s budget is housing. Amazingly, families consisting of one wage earner, a spouse and two children, are often forced to live on the minimum wage. In response, we've devised a single national formula that relates to the local cost of housing across the U.S. The Universal Living Wage Formula (ULW) ensures that anyone working a 40-hour week will be able to afford basic rental housing (i.e., an efficiency apartment) wherever that work is done throughout the U.S. Using a single formula, each city and Fair Market Rent (FMR) designated area, has a wage relative to the local cost of living based on housing.The formula is based on existing government guidelines:

spend no more than 30% of income on housing,
use HUD Fair Market Rents (FMR),
work a total of 40 hours per week.

The Department of Housing and Urban Development (HUD) under its Section 8 housing rental program, annually determines what one can reasonably expect to spend on rental housing across the U.S. for an efficiency, one, two, three, and four bedroom apartment. They are referred to as Fair Market Rents (FMR).

Over the past ten years, due to the Herculean efforts of local initiatives, the concept of a "living wage" has swept across America. However, even with more than 100 local campaigns, less than 150,000 workers are represented. Between monied opposition and unorganized rural America, this won't bring wage equity for all 10.1 million minimum wage workers for about 3000 years (if then).

In 1938, the federal government answered this question by creating the Fair Labor Standards Act establishing the Federal Minimum Wage. Our goal today is to fix it . . . to everyone's benefit. We then wish to apply its basic tenets to our global situation.

The Universal Living Wage Formula is based on the moral premise that anyone working 40 hours should be able to afford basic rental housing. To this end, we have launched a national campaign that has garnered wide spread support across the United States. One aspect of the campaign has captured the imagination of unions (i.e., the Communication Workers of America International boasting 650,000 members) and businesses like American Apparel and HSR Construction. It is the idea that enactment will create a true Economic Stimulus Package as the local construction industry all across America responds to the millions of minimum wage workers' new ability to rent nonexistent efficiency apartments.

Based on federal government statistics, it is conservatively estimated that, with implementation; more than one million homeless people will be able to work themselves off the streets of America. The plan will prevent economic-based homelessness for all 10.1 million minimum wage workers, at the same time; it will offer businesses stable workers . . . thus avoiding costly turnover, repetitive retraining costs, high absenteeism, and internal theft.

In our next installment, we will examine what effect passage of the Universal Living wage will have on businesses while focusing on retraining costs.

Please Click Here for Part 2.

NOTE: Endnotes coming soon.