Minimum Wage Debate Is Really About Affordable Housing

The arguments against minimum wage center on its impact on employment — a forced increase in wages will only result in further reduction of jobs — or the cost increases that will be passed through to the consumer. The common argument, especially coming from fast food establishments, is that the consumer will ultimately pay the increased wages through the cost of the happy meal. If the government forces an increase in the minimum wage, we all ultimately pay for it.

Many studies have been done on the impact minimum wage has on unemployment, but the impact on consumer prices are nearly impossible to quantify. In the restaurant industry it could be argued that the costs of beef, eggs, milk, etc. have a much greater impact on profitability than labor. Inflation statistics have shown that the former has increased at a much faster pace than the latter.

Regardless of whether or not these arguments have merit, it misses the bigger picture of how we provide support for the working poor. If we don’t increase pay through minimum wage mandates, we have to bridge the living standard gap through food stamps, SNAP, Earned Income Tax Credit, etc. So we’re already paying for these supportive programs through our taxes or indirectly through cost increases in our products. In fact, it could be argued that these programs are subsidizing the labor costs for companies that rely on minimum wage employees.

The minimum wage debate tends to resurface when costs of living increase. Housing remains thesingle highest component of living costs for the working poor. Most are paying over 50% of their pay towards rent. Unfortunately the press tends to focus on home prices, but rent in most cities has seen double digit increases. Affordable housing has been replaced by luxury apartments and condos, putting further pressure on the working poor. Housing subsidies have not increased to address this.

If we looked for ways to improve our housing policy across the country, I believe we will better address the needs of the working poor than pushing for minimum wage mandates. The Low Income Investment Fund (LIIF) has even introduced a method to calculate the social impact of affordable housing investments. Many of our housing programs can benefit from better public/private participation without government mandates. Let’s address the root problem and not risk our employment recovery.