Say “Supersize Me” With A Smile

Pundits of all stripes agree: California is undergoing a severe economic crisis. At the same time that the national economy is restructuring itself towards an import-oriented ‘service economy’ of consumers (versus producers), industries such as food processing, automobile manufacturing and the semiconductor production chains are packing their bags for cheaper labor markets. As the cost of transportation, food, health care and housing continue to increase at alarming and unprecedented rates, more and more people are finding themselves scrounging for a living in low-wage service sectors jobs(1).

Due to the exacting tension between supply and demand this confluence of factors has produced, “7.3 million families in the United States live in poverty, and more than 65% of these families include one or more members who work at jobs” (The Living Wage, Robert Pollin). To bring those numbers home: in Santa Cruz, 21% of all households earn under $25,000 a year (2005 United Way Report http://www.appliedsurveyresearch.org/cap_report.htm)

While everyone agrees that poverty is bad and economic insecurity tends to generate a set of social costs which we (as both a government and a community comprised of individuals) may or may not be able to deal with considering the rising trade deficit, national debt, gastranomic defense budget and declining value of the dollar, the issue of who should deal with these costs and how rages on.

As the debate roars across the country, states like California are finding themselves the epicenter of an all out war for the cultural copyright to the values and economic principles on which our capitalist social order runs to date.

In Santa Cruz, this ideological fracas has taken the form of a campaign for the “living wage” in which proponents argue that employers should be responsible for ensuring that workers can afford the basic necessities of food, shelter, clothing, energy, and health care in the communities they live and work in. “Living wage is generally considered as the amount of money a person working forty hours a week, with no additional income, needs to be able to afford housing, food, utilities, transport, health care and a certain amount of recreation. This concept differs from the minimum wage because the latter is set by law and may fail to meet the requirements of a living wage” (wikipedia.com).

Spearheaded by the Working Alliance for a Just Economy (WAJE); this campaign seeks to raise the minimum wage in Santa Cruz county from $6.75 to $9.25. The group has until mid-May to gather 3,338 signatures to qualify the initiative for the November ballot. If passed, the new minimum wage would start January 2007 with indexed annual increases related to the cost of living. Nonprofits and businesses with 10 employees or fewer would start at $8 an hour and have a year to begin paying the higher wages (San Francisco Chronicle).

While the WAJE campaign argues that an increase in wages would stimulate the economy, “When workers earn more money, they spend more money. And where do they spend their money? The places where they live and work” (Nora Hochman), local businessmen such as the President of the Chamber of Commerce, Greg Carter, are concerned that rising wages will squelch Santa Cruz’s “baby economy”(2) and put community entrepreneurs out of business, “ it’s taking a shot at big business (but it’s) going to hit a lot of small businesses with the bullet. Santa Cruz is not a Walmart economy…all kinds of economic theory here, but the central question at play is who is most well-suited to contributing that money?” (Greg Carter, President of Santa Cruz Chamber of Commerce)
Who indeed.

In response to Marxist (?)(3) Mike Rotkin’s claim that, “ raising the minimum wage would prompt some businesses to leave town and make it harder to attract high-tech and other firms by fostering an anti-business image” (as quoted in the San Francisco Chronicle), WAJE organizer Nora Hochman responded that wages are only one factor in a complex calculation. Citing land shortage and the rising cost of rent as primary business disincentives, Hochman went on to state that the true culprit for Santa Cruz’s loss in sales revenue over the course of the last fiscal year (during which, for the record, there were no wage increases) is the rising cost of impact fees related to buying property and running a business on one of the most coveted plots of land in the country.

In response to the argument that raising the living wage will increase the cost of production beyond small businesses’ capacity to pay benefits such as health care, WAJE representatives responded that, “57% of the jobs in Santa Cruz County are low wage, service sector jobs” (2005 United Way Report “Community Assessment” see also http://www.library.ca.gov). As many of these jobs are part-time, employers are not required to provide their workers with healthcare, and therefore many don’t. In light of such realities, workers have little to lose in the way of health care; indeed, a rise in wages may even mean making that long-postponed trip to the dentist.

Living in an area where apartment rents are well over $1,000 a month and home prices average $750,000, makes saving a virtual impossibility for workers earning $6.75 an hour. According to WAJE, this lack of economic cushion stifles investment in the local community. Citizens are not able to reinvest their wages in the community when they must worry about rent (or doctor’s bills or school supplies, or gas & engergy costs etc.) According to a recent study compiled by the Center on Budget and Policy Priorities, “a minimum wage worker would have to work 130 hours per week to afford a two bedroom rental unit at Fair Market Rate, currently at $954 per month”. A recent study by the National Low-Income Housing Coalition found that 45% of renters in Santa Cruz spent more than 30% of their monthly income on rent and are often forced to make decisions between such basic necessities as health care, transportation, and their child’s education.

So what to do with all these ghastly numbers?
Focusing on the severe gap between the amount of money workers must pay to maintain basic living expenses in the community and the amount of money workers earn, the WAJE campaign argues that, “The county should stop looking to low wage workers as sole supporters of suppressed wages…it’s just not smart for the economy” (Nora Hochman, phone interview January 28, 2006). According to WAJE, placing the burden of a faltering economy on society’s most vulnerable members is not only morally reprehensible, it in fact engenders greater social costs (e.g. use of emergency room due to lack of health care costs the state $/mo), hazards greater economic instability, and tends to generate low consumer confidence that in turn leads to a downturn in the sales tax the city depends on for its revenue. People who don’t have money are less likely to go to the Boardwalk, stock up at Cost Plus (the highest grossing ‘Big Box’ stores in Santa Cruz), or spend the extra $3.25 for a cup of Joe downtown.

According to WAJE, the most immediate and effective way to address this pressing issue is to raise the minimum wage. Though proponents agree that this will not solve all of Santa Cruz’s issues, they believe it is a big step towards the right direction.

On the other side of the fence stands the argument that high-wages stifle capital; wages should be determined by the market. Taking into consideration the fact that “the city has shed the equivalent of 80 municipal jobs and watched the closing of the Texas Instruments, Salz tannery and Lipton Tea plants. From fiscal year 2001 to 2005, the city saw a drop in sales tax revenue of 3.6 percent” (SF Chronicle), the question of local business vitality remains a crucial one. If there are no businesses in Santa Cruz, where will workers find their jobs?

How much would a rise in wages affect the profit margins of the Santa Cruz business community? Would the consumer and tourist economies be enough to bolster business? Are threats such as the Boardwalk(Seaside Co.)’s prediction that it could be “forced to close part of the year if the initiative passes”, (Kris Reyes as quoted in the SF Chronicle) valid?

Both sides play with numbers. While WAJE supporters hold up the case of San Francisco as an example of success, opponents of the measure point out that San Francisco is “a metropolitan city of 770,000 people, Santa Cruz has 55,000. We just aren’t that economy” (Greg Carter). There are other cities such as Santa Fe which are closer, 66,000 (population). WAJE critics point to such examples where business suffered substantial losses as a case-in-point, however, this data is inconclusive as well once geographical and economic differences are taken into consideration. Living in the 8th largest economy in the world (California) is not the same as living in the arid strip mall planes of the dot-com escape hatch market of the Southwest. Also, local politics and historic timing make for a wildly different set of contexts.
When asked what solutions he would pose to Santa Cruz County’s current economic crisis, Greg Carter leveled, “The reality of the situation is that there is a huge information void...we don’t know what this measure is going to do...models of comparison are all markedly different from Santa Cruz”.

So much for grand finales: the data both sides brandish remains inconclusive and politically tempered at best.
With the county’s future on the table and the bottom line still out to lunch, it’s time for us as a community members to start thinking beyond the myopia of class lines and begin generating solutions that combine the strengths of divergent perspectives. The only way community will survive this crisis is if all the minds and needs are represented at the table. And that means educating ourselves so we have something to contribute.

Instead of reaming some generalized notion of ‘business’ just because everyone else in your Community Studies 100 does, why don’t you seriously consider the valid points the Other Side makes as well? Progress demands change and innovation. One can’t begin to fix a problem until one has known it from all angles. The point is not to deamonize business. The point is to think more crticially about the role business plays in our community.

The business-oriented argument that high wages overwhelm the bosses’ ability to pay core inputs like rent and workers deserves consideration, however this argument must be evaluated in conversation with the day-to-day realities of workers who cannot wait to take their children to the doctor or pay the energy bills before the lights are cut and winter comes.
Historically, premising profit over people has betrayed community’s ability to survive as a social organism. That is to say, both people and the enterprises that they build and work for suffer. The unfetterred market, may the gods bless her invisible, back stabbing hand, has given us.