The Argument for a Living Wage

Over the last several years, hundreds of labor, community and student activists have been engaged in campaigns pushing for living-wage ordinances. Living-wage ordinances implemented at the municipal and county levels raise the minimum wage (that ranges from $5.15 to $6.50 per hour) to a more livable wage for workers that are paid from public funds.

Over the last several years, hundreds of labor, community and student activists have been engaged in campaigns pushing for living-wage ordinances. Living-wage ordinances implemented at the municipal and county levels raise the minimum wage (that ranges from $5.15 to $6.50 per hour) to a more livable wage for workers that are paid from public funds.

Government employees, employees of government contractors or subcontractors, employees of lease-holders (e.g. airports) and of concession holders (e.g. food vendors at stadiums) are often covered by livable wage laws. The first living-wage ordinance was enacted in 1994 in Baltimore.

Since then, 103 cities and counties have adopted ordinances and there are 121 other campaigns underway. Each ordinance is different: Baltimore’s law only covers employees of city contractors and provides a wage of $8.20 per hour. As the movement has grown, activists have pushed for ordinances that provide higher wages and better benefits for more and more workers.

Some ordinances include provisions for higher wages, better health coverage, labor peace, non-discriminatory hiring practices, and use of local hiring halls. Living-wage movements have spread across the country uniting labor, community, religious, and student groups. Perhaps more importantly, the right to a livable wage has proven to be a powerful position where progressives can stand to resist the current onslaught from the far right.

When attacking living-wage ordinances, conservatives use a series of economic arguments to convince workers and city officials that passing a living-wage would hurt more than help workers. One of their favorites is that living wages decrease the number of jobs available. The higher-wages-means-fewer-jobs argument can be difficult to counter because it is such an integral part of free-market dogma—many people accept it as a “natural�? law. Conservatives argue that if employers have to pay a higher wage, they will simply hire fewer workers.

Using this logic, a market-determined wage (a wage at market equilibrium) would lead to full employment; a wage floor (like minimum wage laws) raises wages above market wages and cause unemployment. In truth, this argument and the logic behind it are nothing more than an over-simplistic model that has little supporting evidence. Current economic literature provides some facts that will help us push for living wages and counter arguments against them.

There is no indisputable published evidence that demonstrates that living wages cause workers to lose their jobs. In fact the literature around living wages is very sparse. Conservative economist David Neumark has been the only person to find that living wages may have an affect in reducing jobs1, but his study is being disputed for methodological flaws2. Other research has shown that the cost to employers of living-wage ordinances is so small that it would be more expensive for them to give up a city contract or relocate to another city than to pay their workers a living-wage.

David Card and Alan B. Krueger, two respected economists, found that the 1992 minimum wage hike in New Jersey did not cause a decrease in jobs for fast-food workers and may even have caused an increase in the number of jobs3. Employers may be hiring too few workers to keep wages artificially low; if a law is passed to raise wages, then employers no longer have an incentive to hire so few workers4. Living-wage ordinances have a definite positive impact on workers who benefit from higher wages, but, as far as we know, they have no negative effects on employment.

Since conservatives do not have the research to support their assertions that living-wages cause job loss, they use the common dogma in bourgeois economics that minimum wages cause a reduction in jobs. However, despite the fact that some economists accept this assertion, there has not been any supporting evidence in recent decades; perhaps because the real value of the federal minimum wage has fallen by 37% since the early 1970s and currently may be below the market-determined wage. The truth is, minimum wages are far below what the market can bear, and definitely less than a wage needed to support a family today.

1 Neumark. (2002) How Living Wage Laws Affect Low-Wage Workers and Low-Income Families. San Francisco, CA: Public Policy Institute of California.

2 Brenner, Wicks-Lim and Pollin. (2002). Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark\'s How Living Wage Laws Affect Low-Wage Workers and Low-Income Families. 43. Political Economy Research Institute Working Paper Series. Amherst, MA.

3 Card and Krueger (2000). \"Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply.\" American Economic Review 90(5): 1397-1420.

4 Card and Krueger (1995). Myth and Measurement: The New Economics of the Minimum Wage. Princeton, New Jersey, Princeton University Press.

Flavio Casoy is an activist from Providence, Rhode Island and a member of the YCL