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Paying Fair Wages (Part 1/2)

The space that housed the Village Green diner when I was a student has long been the home of the Dirt Cowboy Café, a crowded, friendly coffee house whose owner rightly prides himself on his non-corporate management. The Café has even taken to advertising that it pays a fairer wage than the Starbucks location just down Main Street.

According to the below banner, the Dirt Cowboy pays $12/hour (with no benefits or paid vacation, according to the staff), and Starbucks pays only about $9.25/hour. Actually, Starbucks’ employees say that it pays just under $9.00/hour, but they accrue several weeks of paid vacation each year, and for about a $70/paycheck contribution, they can buy full medical coverage. This latter amount is probably about one third of the health insurance’s actual cost, so Starbucks contributes about $125/paycheck to insurance for those employees who want it.

That latter amount brings the the compensation at the two establishments into rough equivalency, and the total at each place would seem to define the upper level of the Hanover wage scale for work that requires little or no training or education (though employees do need to be neat and personable for these jobs):

DC Wages.jpg

According to the Congressional Budget Office’s wage tables, a couple both employed at the Dirt Cowboy or at Starbucks would find themselves in the middle quintile of American families; that is, they would earn less than about 40% of American families and more than about 40% of American families. No too bad for unskilled work requiring no education or formal skills.

But are these wages “fair” in the parlance of people believing in fair/living wages, as opposed to compensation set by the market. Let’s look at the Penn State Poverty in America project’s Fair Wage Calculator for Hanover:

Living Wage Calculator.jpg

The current legal minimum wage is $7.25/hour, so neither the Dirt Cowboy nor Starbuck’s are breaking the law. As far as a living wage goes, the Living Wage Calculator says that a single individual can live on $9.20/hour, so, again, both places are paying an acceptable wage to a single person by any standard. However, neither establishment is paying wages sufficient to support an adult with one or more children.

But if a couple is working in Hanover serving coffee, their combined income from Starbucks and Dirt Cowboy can support them and two to three children according to the Living Wage Calculator.

Tomorrow we’ll see how fair wages are at Dartmouth, particularly at the Class of ‘53 Commons Dining Hall, which is about 250 feet from the Dirt Cowboy and 500 feet from Starbucks.

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