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What we can see from this is that a living wage cannot be adequately defined. Its goals can be
expressed however because costs of living very greatly across the country and the world, it proves to be
ineffective and lacks a concrete definition. But when a living wage law that is not adequately defined is
put into action, it doesn't help the people who are targeted to benefit from it.This is further supported by
2. MOST LIVING WAGE BENEFICIARIES ARE NOT IN POVERTY
SK/N01.02) STATES NEWS SERVICE, January 14, 2014, pNA, GALE CENGAGE
LEARNING, Expanded Academic ASAP. In reviewing the effect of living wages on poverty, the report
notes a study of seven major U.S. cities that found 72 per cent of workers benefitting from living wage
laws were not actually poor. Of the 28 per cent who were considered poor, only one-third moved above
the poverty line. "Living wage laws often don't help the most poverty-ridden families, in part, because
the overwhelming proportion of those benefitting from living wage laws tends not to be poor,"
Lammam [Fraser Institute, Canada] said.
After observing this we can conclude that, first of all, it's not benefiting the target benefactors. It's not
bringing the impoverished above the poverty line, it's not assisting them to better their ways of living.
Second of all, this is happening because enforced living-wages lack infrastructure and concrete
definition making it an unsound policy.
2. LIVING WAGE WILL STIFLE LOCAL ECONOMIC DEVELOPMENT
SK/N07.02) David Neumark [Professor of Economics, U. of California, Irvine] et al.,
ECONOMIC DEVELOPMENT QUARTERLY, November 2013, SAGE JOURNALS, pp. 280-281.
Moreover the larger report (Charles River Associates, 2011), of which our labor market research was
one component, also studied how the real estate market in New York City was likely to be affected by
the proposed living wage law. The real estate analysis suggested potentially quite adverse effects on
real estate development in New York City owing to the coverage of the living wage law, to whom
liability would have been extended, and the penalties for noncompliance, which include repayment of
the financial assistance received. Because labor markets and real estate markets are closely related,
were these adverse effects on real estate development to occur, the labor market impacts could be
worse than the relatively modest impacts suggested by our labor market analysis.
This study shows that projected living-wage laws are going to have a negative effect on local
economies. If employers were required to pay their employees a living wage and takes ,let's say, 25%
of their profit, a multi billion dollar company won't face drastic negative impacts. The top corporate
positions are still going to be making millions of dollars a year and the company will find more short
cuts to increase their profit margins. 25% of Mcdonalds 5.5 billion dollar profits will leave them with
4.125 billion which is more than enough to keep the company open. However locally owned mom and
pop stores will be taking a massive hit. 25% of their profits being taken will put them out of business.
The average profit that small businesses in the US make yearly is $61,344 according to 2013 study
done by the Huston chronicle. 25% of that being taken because of the cost of the living wage
would leave small businesses with $46,008 a year. Making it hard or impossible to pay the bills and
stay a float because the estimated average cost of keeping a small business open, based on a 2009
study conducted by the Ewing Marion Kauffman Foundation, is just over $30,000. Leaving the
businesses and business owners approximately $16,000 a year. The average cost of living in
the US is $20,194 per person per year according to Bureau of Labor Statistics. This
amount being greater than the profits left for small businesses. Simple math can show
that these challenges will result in millions of mom and pop stores being shut down
and will continue the chain of letting multi billion dollar industries run the economy.