If you are reading this blog, chances are when you were in school you learned that “price” was the amount for which you could sell something and “cost” was how much you spent making or acquiring it. For example, suppose a lady inherited a grand piano that traumatized her because it reminded her of childhood lessons with a strict maestro, so she ran an ad in the Iwanna offering it for $5 and hauling. She’d be happy not to look at it again, the buyer with no emotional baggage toward the piano would be more happy, and neither would want government stepping in saying the piano could not be sold for less than its government-assigned “price” of $200,000. It might not sell.
So what about wages? Wages are the price an employer is willing to pay for labor. Except Just Economics wants people to be paid more. That is well and good for a short-sighted special interest and a short-sighted politician who care nothing for anything but the here and now. However, the money must come from somewhere. If government is hiring, then the taxpayers are paying. Some believe small contributions from all don’t hurt, but several people know what it is like to fall short on the last chance to make a mortgage payment, or to run out of gas after using up one’s PTO. Furthermore, if government is paying better than the private sector, there is a good chance that the private sector labor pool will erode into the public sector. This is fine for fans of big government.
The argument may also be made that whenever a purchaser is forced to pay more than market value for something, he has less funds to spend on other things he may need or otherwise value. That hurts the business of those who make what he had wanted to buy. A contractor, for example, might prefer to pay six workers an agreeable wage than pay five a government-set wage. Furthermore, if wages are high, then product cost should rise accordingly, perhaps to an uncompetitive level, or at least enough to reduce demand.
But other theories of economics predominate. Just Economics Executive Director Vicki Meath argued paying a living wage costs municipalities nothing. Councilman Cecil Bothwell referred to failure to implement a living wage policy as driving labor costs down. Members of city council expressed confusion over staff’s statement that:
The City will be responsible for paying the living wage contract, not the vendor.
In the end, Asheville City Council voted to require persons working under municipal contracts valued between $30,000 and $90,000 to be paid a living wage. Municipal employees must already be paid at least that much.
