How Much Is A Living Wage?

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Living-wage proponents, though they are up against companies with enormous war chests, have scored victories in unlikely places. Last July, Suffolk County, on New York's Long Island, claimed to become the first county with a Republican legislature to pass a living-wage bill--and did so over the county executive's veto. There, as elsewhere, the ordinance had the backing not only of unions but also of religious groups and ordinary citizens who support a social policy that emphasizes work. The coalition "cuts against conventional fault lines," says Dan Cantor, executive director of New York's Working Families Party, a three-year-old organization. Jen Kern, director of the Living Wage Resource Center, an arm of the community organizer acorn, says, "It's risky not to do anything when people working on the public dollar are sleeping in cars at night."

So far, living-wage laws directly affect only about 1% of workers in communities that have them, but they have indirect effects on other employers that feel they must increase wages to attract employees. The laws give more bargaining muscle to unionized city and county workers, whose ranks have been thinned by the privatization of many government functions. Both directly and indirectly, living-wage laws can drive up government spending. Suffolk legislator Allan Binder, a leading critic of the county's minimum wage for contractors and firms that receive county funds, cites a study that found the county may have to shell out an extra $13.5 million a year for increased wages. "We have no idea of its impact," says Binder. "We're going into untried territory."

Economist Neumark found that from 1996 to 2000, poverty fell more sharply in living-wage cities than elsewhere. Disproportionate unemployment occurred but, he writes cautiously, "on net, living wages may provide some assistance to the urban poor." Living-wage advocates see Neumark as a conservative minimum-wage basher converted by the success of living wages--a characterization that appears to make him uncomfortable. Critics on the right fault his study for narrowly focusing on families pushed just above the official poverty standard at the expense of those who lost their jobs. Neumark emphasizes that more research is needed to determine whether living wages are more effective at reducing poverty than other measures, such as the earned-income tax credit.

What's already clear, Neumark says, is that living wages, which focus on impoverished workers, are more effective than across-the-board increases in the minimum wage. Minimum wages don't target the poor very well, he contends, because much of the benefit flows to teenagers from middle-income homes who work part time at the Gap or Wendy's. Living wages, however, target the poor quite effectively. Many businesses have found that the productivity gains, lower turnover and greater loyalty that accompany higher wages help offset the costs to employers. A study by the San Francisco department of public health concludes that the increased income should have a buoyant effect on the health of low-income families and their children's education.

The city that boasts the longest experience with a living wage is Baltimore, where members of BUILD, an association of local religious and community groups, found in 1992 that some 30% of soup-kitchen attendees tended to have jobs. But the jobs didn't pay enough to give them a ladder out of poverty. The federal minimum wage was in the middle of a decline in its buying power, from a 1968 peak of $1.60, which is equivalent to $8.17 in today's dollars, to its current level of $5.15. The community organizers teamed up with union muscle, and after two years of lobbying, a living-wage law was passed.

"When you start doing this work, you don't know that you're beginning a movement," says Jonathan Lange, a BUILD organizer. "That was a lesson to us."

Activists are hopeful that Maryland will be the first to create a statewide living wage, especially now that influential Montgomery County is expected to pass a $10.50 wage for service contractors this month. In spite of the county's relatively high median household income of more than $75,000, a fifth of its public school students are poor enough to qualify for subsidized meals. An average two-bedroom apartment rents for $1,000 a month in Montgomery County, and so is affordable to a minimum-wage-earning couple only if they work a combined 100 hours a week. Says Phil Andrews, the living-wage bill's champion on the county council: "You can't get at the issue of poverty without addressing wages."

Patricia Alston, who works at a Baltimore catering company, would agree. Seven years after that city's living wage was enacted, she has had her first beach vacation and is poised to become a homeowner. "The living wage contributed a great deal to my ability to get the house," she says. Like Jerome Gibbons, the Los Angeles airport worker, Alston has seen her job transformed from a dead end to a vehicle of hope. For all the costs and uncertainties of the living wage, that may be the strongest argument in its favor.