The Living Wage

In Fall 2006 a small group of students at St Mary’s College of Maryland where Author teaches took over the office of the college’s president and refused to leave until the college’s administration agreed to consider giving its lowest paid workers a living wage.
This book consists of five chapters. According to me the most interesting chapters are:

Chapter 2. Sustainability: subsistence, necessities and unions;

Chapter 3. Capability: work and wages, virtue and skill;

Chapter 4. Externality, community and wages;

"Sustainability: subsistence, necessities and unions"

This is such a basic concept, that a person must work in order to survive, that one must wonder why it has not been a burning question for every person who ever wrote a book on economics. From the beginning of their existence humans have had to work to survive. What is more recent is the mediation of wages into the work/survival equation. We now take that mediation for granted but it was not always so. Consequently we will start our investigation of sustainability with philosophers in ancient Greece, where wages were not at all common.

One of the wold economics like Robert Malthus and his thoughts about "THE USES OF HIGH WAGES" Malthus agreed that economic growth could increase wages, but identified several countering affects. First, the additional money earned by businessmen through economic growth might not be used to hire workers, being spent instead on other things such as luxuries. Second, if the additional funds were spent on hiring workers, nominal wages would increase but unless those workers produced additional items of subsistence, the price of necessities – especially food – would rise and the real wage of workers might not increase. Third, if real wages did rise workers would have larger families and the population growth that followed would erode those increased wages (Malthus, 1959: 3–5). Population growth would threaten the sustainability of the workforce.

"Capability: work and wages, virtue and skill"

The capability approach takes seriously the idea that society should set a number of objectives for its members. It wants them to be effective producers and effective citizens. In the language of modern economics, this requires that workers develop their human capital and their social capital if they are to participate in life in a meaningful way. In using these terms, however, modern economists are dressing up old concepts – virtue and skill – in their particular jargon. The early economists, while their jargon was not so specific, were also concerned with capability.

John Stuart Mill added the potential for a broader social interest to the standard of behaviour for Utilitarianism, writing: That standard is not the agent’s own greatest happiness, but the greatest amount of happiness altogether; and if it may possibly be doubted whether a noble character is always the happier for its nobleness, there can be no doubt that it makes other people happier, and that the world in general is immensely a gainer by it. Utilitarianism, therefore, could only attain its end by the general cultivation of nobleness of character, even if each individual were only benefited by the nobleness of others.

"Externality, community and wages"

An externality exists when a person or a business takes an action that harms or helps another person or the community at large without the payment of any compensation. We will see in this chapter, however, that economic thinkers argued that low wages and poor working conditions did spill over and affect not only the workers involved but the community as well. Those cases usually involved consideration of how reduced levels of labour force sustainability or capability due to low wages imposed a cost on society.

In this chapter also I can give idea of John Stuart Mill about "Externality, community and wages" He did not want government intervention to remedy the negative affects of low wages but preferred that the government take steps to legalize the formation of unions. Consequently, we might categorize him as seeing unions as a way for private activities to take care of a negative externality from low wages. To him, unions were communities of self-interested individuals who could gain the moral character to recognize the community interest. Mill saw unions as another way to develop a voluntary approach for resolving the externality problem of low wage.