July 23, 2002 >
The living-wage movement is a largely grassroots movement that began in the early 1990's, but it is taking hold in communities across the nation, USA Today reports. Living-wage legislation exists in over 80 communities nationwide, including Boston, Baltimore, Detroit and Chicago. It circumvents the federal minimum wage of $5.15 an hour, requiring some employers to pay more.

Although the legislation is far from prevalent, thousands of workers are having an easier time making ends meet. Marlene Mendoza, a single mother from Los Angeles, previously worked 80 hours a week as a waitress for $5.50 an hour. She now makes over $7 an hour, allowing her to cut back her hours in order to spend more time with her children. Seventy-two year old parking attendant Kebede Woldesenbet of Alexandria, Va., says that his pay increase from $6.50 an hour to more than $10 has helped him rise out of poverty.

According to USA Today, the living-wage movement has also proven to be a successful tool for labor unions in helping them to revitalize the labor movement.

But opponents of the movement say that the movement poses a threat to businesses and workers alike. Companies have to cut the number of new hires in order to compensate for having to pay current workers higher wages.

"This is an organizing movement that had exceeded ... supporters' dream, and they've now become emboldened to go for more," John Doyle at the Employment Policies Institute, a research group based in Washington, told USA Today. "But there will be businesses that can't pay it or will have to go out of business. It will hurt workers and displace them from jobs."

Living wage legislation varies from community to community, but most contain the same fundamental principles. The ordinances require some employers to pay higher wages than those mandated by the federal or state minimum wages. Employers that fall under the ordinances are generally firms that receive local government contracts and sometimes firms that get tax breaks or subsidies. Many ordinances require employers to pay higher wages only during the period of the government contract.

According to USA Today, the living wage is generally considered to be the minimum wage needed to bring a family of four out of poverty. The Department of Health and Human Services estimates that this figure is about $18,000, which comes out to over $8 an hour.

Sen. Edward Kennedy, D-Mass., is leading an effort in Congress to raise the minimum wage by $1.50 by 2004. The minimum wage was last raised in 1997 and has lost 10 percent of its purchasing power since then.

"This is about using public services to raise the standard of living," Madeline Janis-Aparicio, executive director of the Los Angeles Alliance for a New Economy, which has worked to enact living-wage laws in areas of California, told USA Today. "(Employees) are struggling to buy food and health care, even though they're working full time."

Critics concerned about the trend

Opponents of the living wage have raised eyebrows at laws that are getting bolder and broader. Some ordinances cover more employers that just those receiving government contracts and mandate wages higher than $8 an hour. The city of Santa Cruz, Calif., requires city contractors to pay up to $12. A pending referendum in Santa Monica, Calif., would require hotels, restaurants and some other businesses pay at least $10.50 an hour.

Critics are concerned that these laws are indicative of a broader trend. Some think that mandating higher wages will mean that employers will want more skilled and experienced employees, displacing the lower-skilled workers. In New York, other critics fear that employers will be driven away by higher wages.

"My objection is the issue of fairness," Tim Dubois, CEO of the Edward Thomas Companies, which owns hotels in the Santa Monica tourist zone, told USA Today. "We have to pay a different wage level than anyone else. It violates every economic principle you can think of. If I can't compete, my employees will have fewer customers and be hurt in the long run."

Does a living wage hurt or help?

The debate over the living wage is whether or not it hurts or helps. The controversy isn't settled by empirical research, which is also divided in its findings, USA Today reports.

Michigan State University researcher David Neumark found that living-wage ordinances do cause job losses, but those same laws lead to pay increases that have the potential to compensate for the losses. As a result, family poverty decreases: Neumark found that a living wage that is 50 percent higher than the state's minimum wage will raise the average wage of low-income workers by 3.5 percent.

While businesses face higher costs because of living-wage laws, employers cannot reach a consensus on the movement. Barry Hermanson, who runs a San Francisco employment service, told USA Today that higher wages lead to more company loyalty and less employee turnover.

"The business gets the benefits from better customer service," he says. "And it's a good thing for business to pay people a wage they can live on without resorting to charity or public subsidy."

Others, however, see the living wage as an attack on businesses and a manipulative tool for unions. Robert Lawson, a professor at Capital University in Columbus, Ohio, told USA Today, "This is part of a union strategy to push non-union workers off the market. It's hard to tell how far this will go. The fear is what will happen if the idea takes off. That could be much more damaging."

City governments have avoided expensive union labor by hiring non-union contractors. Critics accuse living-wage laws of manipulating local governments into hiring union workers because the pay discrepancy is much smaller.

According to USA Today, union leaders say the living wage is key in addressing the problems with a low federal minimum wage.

"While it's not easy to mobilize people at the local levels, it's easier than to organize nationwide," the AFL-CIO's public policy director Christine Owens told USA Today.

The movement's supporters pledge their support in continuing their efforts. They say that right now the movement is paving the way for other social justice issues, like affordable housing.

Links

• USA Today article