Since Baltimore passed a living-wage ordinance in 1994, some 130 cities have enacted similar laws to boost local wages above — often far above — the minimum wage. They range from small, liberal outposts like Santa Fe, N.M., and Burlington, Vt., to megacities like New York and Los Angeles.
But a powerful countermeasure known as state pre-emption is blocking city living-wage laws — and in some cases even minimum-wage laws — in a growing number of cities and counties. The conservative American Legislative Exchange Council (ALEC) is spearheading a campaign that scored its first victories in 1997, when Arizona and Louisiana passed the first so-called preemption laws barring local governments from setting their own wage requirements. Since then, nine other states have followed suit, including Georgia and Wisconsin in 2005.
“State legislatures need the power to preempt local governments from enacting their own wage laws,” ALEC declares. The U.S. Chamber of Commerce credits the group with devising the preemption strategy, writing the template for such legislation and distributing a model bill to 3,000 state legislators.
Living-wage ordinances typically require any companies with municipal contracts or subsidies to pay health benefits and a salary above the poverty line. In 2005, the federal government's poverty threshold for a family of four in the 48 contiguous states and Washington, D.C., is $19,350.
Though living-wage beneficiaries make up a smaller group than minimum-wage workers, organizers see the living wage as a tool to spread prosperity to non-government workers as well. “Paying a living wage is a powerful way to stimulate demand and spur employment,” a trio of labor scholars concluded two years ago.
But opponents say living-wage laws cost too much for the relatively few workers who qualify. In Washington, for example, an economics columnist calculated that the city's proposed $11.75-an-hour wage requirement for city contractors would raise the pay for fewer than 2,000 workers, many of whom don't even live in the city. Public-employee unions have used living-wage requirements, however, to defeat efforts to outsource their jobs to lower-paying firms both here and abroad.
Despite the opposition, the living-wage movement has become a force to be reckoned with. And, given the continuing reluctance of Congress and many state legislatures to raise minimum wages, unions and other workers'-rights advocates are borrowing its strategy of working city-by-city.
Santa Fe's $8.50-an-hour living wage applies to all businesses (not just city contractors) with more than 25 employees. And in Wisconsin, workers'-rights activists pushed municipal minimum-wage ordinances through city councils in Madison, Milwaukee, La Crosse and Eau Claire.
Then the Republican-controlled legislature stepped in. GOP lawmakers — who had already barred Democratic Gov. Jim Doyle from raising the state minimum wage, in stages, to $6.50 an hour by executive order — moved to preempt local-government wage laws. Eventually, the two sides worked out a deal: Doyle signed the state preemption bill, and the legislature approved a statewide minimum-wage boost to $5.70 as of Jan. 1, 2006, and then to $6.50 an hour in June.
But in more conservative Georgia, state preemption didn't come with a pay raise attached. In March, the legislature killed an Atlanta ordinance that gave preference in contract awards to companies paying their employees at least $10.50 an hour.
“The citizens of Georgia now can compete on an equal playing field for doing work with government agencies in their area,” said state Rep. Earl Ehrhart, R-Powder Springs. “There will be no special preferences given. . . . People would rather have a job at $8 an hour than no job.”
The new state law “has put any sort of grassroots organizing in Atlanta at a disadvantage,” acknowledges Jen Kern, director of the living-wage campaign of the Association of Community Organizations for Reform Now (ACORN). Earlier setbacks include a 2002 Louisiana Supreme Court ruling that threw out a $6.50-an-hour New Orleans minimum wage. Voters had approved the ordinance the same year, but the court said it intruded on the legislature's power.
Members of the Living Wage Coalition march in Atlanta's Martin Luther King Day parade in 2003. (Cindia Cameron)
The state preemption pushback is only one reason for a slowdown in the living-wage campaign. “Most of the major cities with grassroots and labor organizing capacity already have these laws — Los Angeles, Boston, Detroit,” Kern says.
Appelbaum, Eileen, Annette Bernhardt and Richard J. Murnane, eds., Low-Wage America: How Employers Are Reshaping Opportunity in the Workplace, Russell Sage Foundation, 2003.
The editors have compiled detailed, research-based essays on decreasing upward mobility in the low-wage sector of the economy. The overall perspective is in favor of a “living wage.”
Card, David, and Alan B. Krueger, Myth and Measurement: The New Economics of the Minimum Wage, Princeton University, 1995.
Economists from the University of California, Berkeley (Card), and Princeton (Krueger) rejected the classic theory that jobs become scarcer when the wage floor rises, igniting a still-ongoing debate over the effects of increasing the minimum wage on job availability. Their main critics, David Neumark and William Wascher, have written journal articles (see below), but no book.
Bernstein, Nina, “Family Needs Far Exceed the Official Poverty Line,” The New York Times, Sept. 13, 2000, p. B1.
Economic realities have overtaken the methodology used for calculating who lives in poverty, and the minimum wage alone isn't enough to keep a family above the poverty line.
Caldwell, Christopher, “The social logic of a living wage,” Financial Times, Oct. 22, 2005, p. 11.
A conservative writer for a London daily argues that raising wage minimums may provide insurance against social unrest.
Gosselin, Peter G., “If America is Richer, Why Are its Families So Much Less Secure?” Los Angeles Times, Oct. 10, 2004, p. A1.
Gosselin argues in a lengthy, anecdote-rich piece that the minimum wage's declining value relative to average pay is an indicator of how social safety nets are vanishing.
Henderson, Nell, “Skilled Labor in High Demand; Employers Lament Declining Ranks of Capable Workers,” The Washington Post, Aug. 25, 2004, p. E1.
Jobs are going begging at the higher end of the pay scale, while skills — and wages — further down the ladder are stagnating.
Joyce, Amy, “Wal-Mart Chief Says Customers Need Increase in Minimum Wage,” The Washington Post, Oct. 26, 2005, p. D2.
Wal-Mart Chief Executive H. Lee Scott Jr. asked Congress to raise the minimum wage, saying that his workers — who are also his customers — did not have enough money to buy basic necessities between paychecks.
Micklethwait, John, and Adrian Woolridge, “A Little Americanization Can Fix Europe's Economic Misery,” Los Angeles Times, May 16, 2005, p. B11.
Two British journalists argue that Western Europe's labor laws — including high minimum wages in France and Germany — have contributed to poor productivity and competitiveness.
Weisman, Jonathan, “Measuring the Economy May Not Be as Simple as 1, 2, 3,” The Washington Post, Aug. 29, 2005, p. A2.
Gauging the extent of poverty — which is important to the minimum-wage debate — is more complicated than most people have been led to believe, economists conclude.
Reports and Studies
Adams, Scott, and David Neumark, “A Decade of Living Wages: What Have We Learned?” California Economic Policy (quarterly journal of the Public Policy Institute of California), Vol., 1, No. 3, July 2005.
Leading critics of raising the minimum wage conclude that living-wage ordinances reduce poverty but shrink the job opportunities of low-skilled individuals.
Chapman, Jeff, “Employment and the Minimum Wage: Evidence from Recent State Labor Market Trends,” Briefing Paper, Economic Policy Institute, May 11, 2004.
A staff economist at a liberal think tank examines employment data and concludes that minimum-wage increases do not result in major job losses.
Neumark, David, and William Wascher, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment,” American Economic Review, Vol. 90, No. 5, December 2000, pp. 1362-1396.
Two economists provide a detailed rebuttal of the Card-Krueger thesis that minimum-wage raises do not increase unemployment.
Yelowitz, Aaron S., “Santa Fe's Living Wage Ordinance and the Labor Market,” Employment Policies Institute, Sept. 23, 2005.
A University of Kentucky economist concludes that Santa Fe's municipal minimum wage caused the unemployment rate in New Mexico's capital city to jump 3.2 percentage points.