The Gap Between Wages and the Cost of Living

I ran across an article the other day about Costco and its support for raising the minimum wage. The giant retailer is building a new facility in Hamburg.  Costco has employed a different model than most large retailers to save the company money.  It pays higher wages and provides more benefits, relying on reduced employee turnover for cost savings, rather than paying lower wages.  Their stock price continues to rise and the company is thriving.

The article mentions that relative wages in retail have actually fallen 30 cents since 2007.  The recently-released report of the Mayor’s Commission on Homelessness shows that relative wages overall have fallen 19% since 1970, and have fallen 41% for those without a high school diploma.  At the same time, the cost of almost everything else has gone up.  One result is that the “emergency” use of a food pantry has now become routine for many households,  according to data from Feeding America.  In Lexington, the hourly wage needed to afford a two-bedroom apartment is $12.73.  The minimum wage is only $7.25.

The inability of full-time low-income workers to afford the basic necessities will continue to increase if wages don’t rise.  With notable exceptions like Costco, the private sector has worked to keep wages as low as possible.  As a society we have chosen to institute stop-gap measures to help feed and house people who are least able to meet their own needs.  We cannot turn our backs on the short-term problems some people in our communities face, but if we do not address the fundamental economic structures that contribute to the problem, including inadequate wages, we will not be moving toward a more effective response for the long-term.