More than the Minimum: The Living Wage

America just got a raise. Thanks to the new minimum wage hike, by September 1997 youÕll be earning $5.15 an hour while you work your 40-hour-per-week, 52-week-a-year job. But earning a minimum wage doesn't necessarily mean you'll be earning a living wage. In fact, with your $10,712 in yearly earnings, you'll fall 19 percent below the poverty line for a family of three. And in the coming year, roughly 3.5 million workers in America will share your plight.Some "raise," you're thinking. Is something being done about this? As a matter of fact, workers and activists across the nation are rallying around a growing "living" wage campaign.In coalition with community organizations, religious groups and labor unions, living wage campaigns are gaining momentum in such cities as Los Angeles, Boston, Albuquerque, Chicago and Houston. What they've succeeded in doing is creating ordinances and state ballot initiatives that set the living wage $1 above the federal minimum, and mandating insurance benefits to low-wage workers. Other campaigns set wages according to the local costs of living. The Association of Community Organizations for Reform Now [ACORN] Campaign for a Livable Wage, for example, strives to raise wages to the level necessary to keep the family of a full-time worker above the poverty line.Much of the proposed living wage legislation target municipalities that "contract out" public sector jobs to private sector businesses. Currently, most city contracts don't have provisions requiring businesses to pay their employees a standard amount or provide benefits. Therefore, government-subsidized companies often set their own wages well below a "living" or union-scale wage. Requiring city contractors who receive subsidies to pay their employees a living or union-scale wage, living wage advocates maintain that local governments succeed in using tax dollars to create a give-and-take with tax-paying employees to elevate the city's standard of living, instead of subsidizing poverty-wage jobs.While half of proposed state initiatives have already qualified for the ballot and most city ordinances are supported in local communities, the living wage campaigns face heavy resistance in the business community and from some political leaders. Critics claim that adopting the living wage will threaten economic revival. Many business interests toss out the following red herrings: contracts would cost more; fewer workers would be employed; enforcement costs are high; bidders would lose interest; and paying a "living" wage would create an overall "hostile business climate" and lead to corporate abandonment.Amid such protests, the Preamble Center for Public Policy recently released a study of Baltimore City Ordinance 442, one of the first to compel contractors to pay employees enough to keep a family of four above the poverty line, which passed in December 1994. The ordinance faced similar criticism from the business community, but after 21 months, anticipated problems failed to materialize, according to economist Mark Weisbrot, research director at the Preamble Center. "There is no reason to believe the experience will be any different for cities which pass similar laws," he added.Baltimore currently requires companies working on city service contracts to pay their employees--including janitors, food service employees, laborers and bus drivers, for example--$6.60 an hour, and so far, the law has not imposed any measurable economic or fiscal costs on the city. In fact, instead of big increases in costs of contracts, those costs decreased by 2 percent. Compliance enforcement cost taxpayers 17 cents per resident each year, and investment levels rose 4.6 percent in the year immediately after enactment. "Wherever advocates propose laws to help working families--whether the issue is minimum wage, workplace safety, or family leave--the response from business leaders and their political allies is invariably the same: such laws will drive away business, kill jobs, raise taxes," said Scott Nova, director of the Preamble Center."With the Baltimore study, we were able to apply scrutiny and the claims of the business lobby turned out to be grossly inaccurate."Ultimately, advocates for higher wages maintain that raising the federal level through ordinances similar to Baltimore's could serve to elevate millions of workers above the poverty line and prove cost-effective to the local business community.