What Is the Living Wage Movement?

The previous two months of Library Worklife featured articles about the Fair Labor Standards Act (FLSA) and recent changes. The Living Wage Movement is a progression from efforts that led the legislative and judicial branches to set a standard for wages in the 1930s to citizens in the 1990s requesting that local governments assess for themselves whether that wage is sufficient. FLSA was enacted in 1938 and guaranteed a minimum, but not a living, wage.1 Living wage laws are primarily for subcontractors with cities, not those who are on the city’s payroll. Some apply only to certain categories of workers or to businesses that receive other types of local government funding, including tax abatements. Pittsburgh almost doubled the minimum wage for businesses that provide good or services to the city and for businesses that receive economic assistance.2 Few cities apply the living wage law to all workers.

The movement began in earnest in 1994, Baltimore, MD, aided by a coalition called ACORN ( Association of Community Organizations for Reform Now). Workers in churches, homeless shelters, service industries, and labor unions were successful in convincing the city to establish a wage of $6.10 for employees of companies doing contract work for Baltimore. The minimum wage in 2004 is $5.15. The wage was to increase “until the income of the full-time worker was ninety percent of the poverty threshold for a family of four.”3 This was the first “living wage” passed and more than 80 municipalities have passed laws since. Grassroots campaigns have also been launched to compel universities and other public employers to set and pay a living wage. One argument of the movement is that when people earn poverty wages, they cost the city to provide in public assistance. Another was that governments that are outsourcing accept bids from private firms that may lower wages to win contracts. It has been easier to pass laws at a local level than it has been to raise the federal minimum wage.

According to ACORN’s list of Living Wage Successes, the “Central Arkansas Library System Board … adopted a living wage policy in 2001 providing that all CALS employees be paid at least $8.75 immediately and $9.00 starting July 1, 2002, plus full health benefits and retirement benefits, indexed for inflation. The policy also includes an anti-privatization clause that limits the Library’s ability to privatize existing services and requires any such contracting out to be covered by the living wage.”4

Pros and Cons

Response to and research about living wage ordinances have been mixed. The degree to which the ordinance has an effect depends on the wage set and the scope of coverage. Proponents say they improve the lives of those who are covered. They say the costs of increasing wages would be offset by lower turnover. Research has supported the premise that living wage laws have a positive impact on urban development.5

Opponents say that establishing local- or state-mandated minimum wages will have no or damaging effects. Groups like the Employment Policies Institute conduct research comparing living wage laws with other anti-poverty initiatives like the earned income tax credit. Detractors say this compromises the quantity of bids a municipality will receive. Most of the ordinances have affected only companies that contracted with or received funds from cities. However, some of the new laws are affecting all businesses. One prediction is that businesses will leave the area where a living wage law is passed. In Santa Monica, CA, where the city passed a law in 2001 requiring businesses to pay employees either $10.50 with benefits or $12.15 without benefits. One small business owner, who was paying employees this much or more, said she couldn’t afford to double her staff with the mandatory wage increase and was thinking of relocating.6Small business may grapple with the hard choices of moving, reducing staff, reducing owner salaries, raising prices, or hiring more qualified staff, leaving those with limited skills out of the candidate pool.

Costs

Again, the two camps differ over the cost of a living wage to a city. Proponents point to the fact that it is usually only relevant to city contractors, who usually pay above minimum wage. They also maintain that relative to production, the costs are minimal.7 Opponents say taxpayers are responsible for the additional funding and point to the total dollar amounts if each worker affected received the increase.

Challenges

  • Momentum for living wage campaigns has slowed down in the past few years.8

  • Living wage campaigns promote exceeding state minimum wage laws, which may already be higher than the federal minimum wage, like in California.

  • There are no strategies that will work universally, for either camp. Each municipality calls for a different living wage and a different scope of coverage.

  • The two camps will, of course, vary in terms of resources, players, and allies and opponents.

  • Campaigns require a detailed plan, including budgets and statistics on the economic impact, implementation schedules and enforcement procedures.

  • Objections require a similarly detailed plan and research defining the potential negative impact.

Notable Film about Living Wages

Struggling to Survive was produced during the Summer of 2003 during Appalshop’s Appalachian Media Institute, a community-media based training program for Eastern Kentucky youth ages 15–20. During the summer and fall of 2003, Mary Profitt, Dana Hall and Ashley Potter conceptualized, shot and edited this documentary video. The youth were inspired to make this video when they learned about a Letcher County initiative to pass a living wage ordinance [of $7.50 as opposed to the current $5.15]. They were surprised to learn that a city, county or state could pass their own minimum wage law that overruled the federal one, and they were impressed by the fact that Letcher County, a small county in Eastern Kentucky where they all lived, was pursuing this idea. While still in the research phase, the youth talked to Carroll Smith, Letcher County’s top elected official and a proponent of a living wage, to get a sense of the history of the proposed ordinance. But it wasn’t until they spoke with Debbie Gibson, a single mother trying to raise two children on a low wage job, that they were convinced that this documentary had to be made.”

References

  1. What exactly is a “living wage”? 2001. BusinessWeek, May 28.

  2. Smith, Sasha. 2002. Fortune, April. 1.

  3. Harvey, Rachel. 2003. Labor law: Challenges to the living wage movement: Obstacles in a path to economic justice. University of Florida Journal of Law and Public Policy, 14(2): 230.

  4. Living Wage Resource Center. Living wage successes,www.livingwagecampaign.org/victories.php

  5. Harvey, 245.

  6. Do “living wages” kill business? 2001. BusinessWeek, October 29.

  7. The problems of labor [interview with Robert Pollin]. 2001. Challenge, 44(5): 6-18.

  8. Schramm, Jennifer. 2004. Living wages. HR Magazine, March.