Living Wage (Barf Alert!)

Economic Policy Institute (Robert Reisch's hangout--pro union, anti capitalist) ^ | Recent | Some Socialist

[MonroeDNA]

Search Text:

---

EPI home
search
publications
news room
calendar
about EPI
contact EPI
web features
library
job postings
support EPI

---

WEB FEATURES
datazone
economic indicators
economic snapshots
online calculators
viewpoints

---

ISSUE GUIDES
living wage
minimum wage
poverty and family budgets
retirement security
social security
unemployment insurance

---

Email This Page

Printer Friendly Version

Living wage ordinances have been enacted in over 70 localities.

• A living wage ordinance requires employers to pay wages that are above federal or state minimum wage levels. Only a specific set of workers are covered by living wage ordinances, usually those employed by businesses that have a contract with a city or county government or those who receive economic development subsidies from the locality. The rationale behind the ordinances is that city and county governments should not contract with or subsidize employers who pay poverty-level wages.
  
  
• The living wage level is usually the wage a full-time worker would need to earn to support a family above federal poverty line, ranging from 100% to 130% of the poverty measurement. The wage rates specified by living wage ordinances range from a low of $6.25 in Milwaukee to a high of $12 in Santa Cruz.
  
  
• In addition to setting wage levels, many ordinances also have provisions regarding benefits (such as health insurance and paid vacation), labor relations, and hiring practices.

Living wage ordinances provide much needed raises for low-income workers.

• Wages for the bottom 10% of wage earners fell by 9.3% between 1979 and 1999.
  
  
• The number of jobs where wages were below what a worker would need to support a family of four above the poverty line also grew between 1979 and 1999. In 1999, 26.8% of the workforce earned poverty-level wages, an increase from 23.7% in 1979.

Living wage ordinances can ensure that pay for contractual workers does not fall behind the pay of city workers.

• The trend toward privatization of services formerly provided by public sector workers is well documented.
  
  
• These privatization efforts have often resulted in decreases in wages for the private sector workers in the same job categories. A study by the Chicago Institute on Urban Poverty, which compared the wages and benefits of Chicago city employees to contractual employees for low-skill jobs, found that privatization led to compensation losses for entry level workers ranging from 25% to 46%.
  
  
• Since government agencies disproportionately hire (and advance) female and minority workers, these changes have meant the loss of relatively high-quality jobs for these workers.

Living wage ordinances promote responsible economic development policies.

• Living wage ordinances have the potential to counteract the destructive race to the bottom wherein cities and counties try to attract businesses by offering larger subsidies than their neighbors. The more prevalent living wage ordinances are, the less firms will be able to shop around for the cheapest locality on the basis of cutting wages.
  
  
• Recent research focusing on the number and quality (in terms of wages and benefits) of jobs created by tax incentives has found that many economic development subsidies are not tied to job quality. A study of tax incentives in Minnesota by Good Jobs First found that 72% of subsidized jobs paid below the average for their corresponding industry.
  
  
• Some detractors argue that the living wage will create a "hostile business climate." But most living wage ordinances cover too small a proportion of the labor force to have such a profound effect. Most living wage ordinances cover less than 1% of the local workforce. In addition, for most firms, the increase in labor costs is expected to be less than 2% of total production costs.

Living wage ordinances have no negative effects on a locality's contracting process.

• An EPI evaluation of a living wage ordinance in Baltimore found no significant cost increase to the city. The 1.2% cost increase for the contracts examined was less than the rate of inflation for the same period.
  
  
• An evaluation of the Baltimore ordinance by the Preamble Center also found that the ordinance did not reduce the competitiveness of the contract process. The small decrease in the number of bids per contract wasn't high enough to lower competitiveness or raise contract costs.
  
  
• Even if the costs to contractors do increase, it is still profitable for these firms to do business with the city. Most firms will choose to sacrifice some of their profit margins, which are estimated to range from 10% to 20% of production, since wage increases from the ordinance only amount to an estimated 2% of production costs.

There is no evidence of job losses as a result of living wage ordinances.

• The EPI evaluation of Baltimore's living wage ordinance found no job loss as a result of the ordinance. The workers interviewed for the study reported no changes in the number of hours they worked after the ordinance went into effect.
  
  
• Employers interviewed for the study reported that although wages increased, these costs were absorbed by improvements in efficiency. By raising wages, they decreased employee turnover rates, which decreased recruitment and training costs.

Sources:

Chicago Institute on Urban Poverty. 1997. Does Privatization Pay? Chicago: Chicago Institute on Urban Poverty.

LeRoy, Greg, and Tyson Slocum. 1999. Economic Development in Minnesota: High Subsidies, Low Wages, Absent Standards. Washington, D.C.: Good Jobs First.

Mishel, Lawrence, Jared Bernstein, and John Schmitt. 1999. The State of Working America 1998-99. Ithaca: Cornell University Press.

Niedt, Christopher, et al. 1999. The Effects of the Living Wage in Baltimore. Working Paper No. 119. Washington, D.C.: Economic Policy Institute.

Pollin, Robert, and Stephanie Luce. 1998. The Living Wage: Building a Fair Economy. New York: The New Press.

Weisbrot, Mark, and Michelle Sforza-Roderick. 1998. Baltimore's Living Wage Law. Washington, D.C.: Preamble Center,
For a printer-friendly (PDF) version of the entire Issue Guide on Minimum Wage, click here.

 

Copyright © 2003 by The Economic Policy Institute. All rights reserved.

Readers may redistribute this material to other individuals for noncommercial use, provided that the text, data, and all HTML code remain intact and unaltered in any way. This article may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission. If you have any questions about permissions, please contact EPI at webmaster@epinet.org.

[MonroeDNA]

Major Barf alert from the communist control freaks.

If you recognize any of the statements, I suggest that you remember the freepers who espouse them.

This would kill entrepenuers, and most businesses. But that is what we are up against.

[MonroeDNA]

thoughts?

[So Cal Rocket]

Well... why don't we legislate a "Wealthy Wage" for everyone... this way everyone pays taxes at the highest rates and the Government can balance their budget!! </sarcasm>

[Mike Darancette]

If the Illegals that are driving down entry level wages were removed then wages would stabilize at market levels.

[MonroeDNA]

Yeah, let's set the minimum wage at, say, $100,000 per year.

Oh wait, LA Longshoremen would have to take a pay cut. They make an average of $120,000 per year.

[My2Cents]

Whatever happened to personal initiative and improvement? Are we suppose to require McDonald's to pay their burger-flippers $50,000 a year because minimum wage isn't a "living wage"?. Hey, how about going to school and entering a profession which pays more than burger-flipping?

[MonroeDNA]

I'm all in favor of cutting off ALL Ilegal immigration, and actually, I favor NO immigration at all, until those here are assimilated. As in, learn to speak english, and get a job.

A moratorium. No welfare for immigrants, period.

Let the US workers compete on their own. I also favor the abolition of a minimum wage, once the border is sealed. And favor right-to-work laws.

[MonroeDNA]

Personal initiative is a myth. </sarcasm>

[AZ GRAMMY]

entry level jobs are not ment for a family of four to live on, all this will do is eliminate alot of jobs.

[MonroeDNA]

You are absolutely correct.

All artificial wage boosts destroy businesses. Especially unions.

Just ask Germany.

[Graybeard58]

"Hey, how about going to school and entering a profession which pays more than burger-flipping"?


---but what about people who are utterly incapable of tasks above the level of "burger flipper"--- Silly me! They already have jobs, such as Rangle D-NY, Clinton D-NY...AWWWW Make up your own list, I have already supplied you with the correct letter to go behind their name.

[.cnI redruM]

As long as other nearby communities don't pass these laws, their effect on the average American will not be too bad.

Along similar lines, Killeen and Copperas Cove, Tx have local ordinances that make it more difficult than average to acquire alcoholic beverages in their localities. Luckily for all the drunks in CenTex, the Lowly Hamlet of Harker Heights, encourages you drink like a guppy on their premises. (They just resent it went you try to drive home afterwards.) So Harker Heights has tons of bars and rakes lots of tax revenue that would otherwise accrue to Copperas Cove and Killeen.

The net effect of 'Living Wage' laws, if any, is to chase the Sears and Walmart stores into nearby communities that don't have these laws. In other words, the Living Wage laws constrain the likelihood that communities passing them will collect much revenue via their local sales taxes. Also, people may leave these communities to live near places they can conveniently shop.

On balance, this is just another example of the morally self-righteous cutting off their noses to spite their faces.

[Kay Ludlow]

entry level jobs are not meant for a family of four to live on, all this will do is eliminate alot of jobs.

The number of "family of four" households has probably declined since 1979 as well. Certainly their proportion of the workforce has.

[Vaduz]

As they say in the new world order your papers please.

[Capitalism2003]

as Thomas Sowell explains so perfectly in his books, legislation like this solves NOTHING...It excaerbates current problems and hurts those it supposedly is meant to help. There are no such thing as political "solutions"...There are only TRADEOFFS. The tradeoff here is a higher wage for the most experiences workers and a devastating increase in unemployment among the least educated and skilled. Of course, when employers are forced to cut workers to prevent bankruptcy, "corporate greed" can always be blamed...playing right into the hands of the lefty politicians who need another justification to expand the welfare state and further punish the job providers in the private sector.

[theFIRMbss]

>Only a specific set of workers are covered by living wage ordinances, usually those employed by businesses that have a contract with a city or county government or those who receive economic development subsidies from the locality.

It would seem these laws
are a kind of fair attempt
to spread out the grift...