Res Publica 1 Living Wage OrdinancesLiving Wage OrdinancesLiving Wage OrdinancesLiving Wage Ordinances Todd J. Kumler Abstract Since 1994, 130 municipalities have adopted living wage ordinances, which mandate that covered workers receive an hourly wage providing enough income to keep the individual above the poverty line. This study identifies what factors have lead to the proliferation of living wage laws across the United States while also determining what characteristics have prompted some municipalities to pass living wage ordinances while others have not. This research also considers the impact of living wages on municipalities that have adopted such laws. To further elucidate the issues associated with living wage ordinances, two cities—Baltimore and Los Angeles—are examined as case studies. Ultimately, this study concludes that municipalities that have adopted living wage laws share several characteristics and that living wage ordinances have provided significant benefits at relatively small costs.2 Res Publica IntroductionIntroductionIntroductionIntroduction On September 21, 2005, several dozen members of the Bloomington, Illinois based Central Illinois Organizing Project (CIOP) gathered outside of the site of U.S. Cellular Coliseum in downtown Bloomington. This group of community activists, religious leaders, union members, and students had one simple demand—that the Bloomington city council guarantee that every worker at the new arena be paid a living wage of at least $9.33 per hour. Unfortunately for CIOP and its activists, the Bloomington city council did not agree to the organization’s demand; and city council members have yet to pass a living wage ordinance. The campaign for a living wage in Bloomington, despite its lack of success, is representative of the national living wage movement which has swept across the United States over the last decade. Since 1994, when Baltimore passed the first living wage ordinance, over 130 cities and counties have adopted similar laws (ACORN, 2006). Although ordinances vary in specifics depending on the municipality, all living wage laws mandate that certain workers in the private sector be paid above a minimum level, typically set at the wage necessary to keep a family’s income above the poverty line. Living wage laws usually affect only firms which receive government contracts and/or assistance from municipalities in the form of subsidies, tax support, or developmental grants. The growth of the living wage movement has been called “the most striking progressive achievement in labor and employment policy in the past 25 years” (Fairris and Reich, 2005: 1). Indeed, living wage campaigns have been very successful in convincing municipalities to adopt laws, and the policy has quickly spread to cities andRes Publica 3 counties across the United States. Despite the proliferation of living wage laws, however, there has been little research regarding many important issues about these ordinances. Thus, this paper hopes to address two significant topics regarding the living wage. First, this study will determine the factors which lead to the success of living wage campaigns. In addition, this paper will discuss the impact of living wage laws in municipalities with ordinances. The Success of Living Wage CampaignsThe Success of Living Wage CampaignsThe Success of Living Wage CampaignsThe Success of Living Wage Campaigns In his influential book City Limits, Paul Peterson asserts that municipal governments will not pursue redistributive policies that benefit the poor. As Peterson explains, municipal governments depend on businesses and investors to provide jobs for citizens and to stimulate the local economy. Since businesses usually act independently of local governments and are free to relocate, cities typically compete against each other to attract businesses and investors. In this type of atmosphere, few municipalities will adopt redistributive policies which impose costs on businesses and threaten the health of the local economy (Martin, 2001). If Peterson’s theory is indeed true, why have so many cities adopted a redistributive measure such as the living wage? Scholars point to a variety of factors which have fostered the emergence of the living wage movement. First, although a few municipalities have required all businesses operating within their jurisdictions to pay workers a living wage, the overwhelming majority of ordinances (as well as the ones examined in this paper) apply only to businesses receiving government contracts or subsidies. Since these companies rely on urban markets in order to sell their goods and services and depend on local governments to provide contracts and subsidies, these firms4 Res Publica are largely immobile and would be unlikely to relocate if a city were to adopt a living wage policy (Martin, 2001). Thus, unlike other redistributive measures, living wage ordinances will not cause businesses to flee cities. By overcoming the dilemma posed by Peterson, living wage laws have become an attractive policy for urban activists and city councils. Economic developments during the 1990s also contributed to the rise of the living wage movement. Over the past two decades, the minimum wage has fallen considerably relative to the poverty line. For example, in 1979, the minimum wage stood at 104.3 percent of the poverty line; however, the minimum wage dipped to 70.5 percent of the poverty line by 1989 and recovered to just 78.1 percent by 1996 (Levin-Waldman, 2005). Currently, the minimum wage’s real value stands at only 65 percent of its peak of $7.92 in 1968. Minimum wage earners, thus, struggle to achieve a basic standard of living; and the ranks of the working poor have swollen to approximately 7.2 million Americans (Lipp, 2002). This increase has led many community activists to believe that the minimum wage is no longer effective and that some other wage control is necessary to ensure that employers pay full-time workers a high enough wage so that anyone working a full-time job does not live in poverty (Fairris and Reich, 2005). Related to the decrease in the real value of the minimum wage is the