The Magazine

Socialism in Every City

The spread of the "living wage."

Nov 3, 2003, Vol. 9, No. 08 • By WILLIAM TUCKER
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THE "LIVING WAGE" movement has become the latest effort to impose socialism on the United States, one city at a time. After a slow beginning in the 1990s, living wage ordinances--which impose minimum wages much higher than the federal one--have now been adopted in over 100 municipalities, from Somerville, Mass., to Portland, Oregon, from Minneapolis to San Antonio. Cities as large as New York, Boston, Chicago, St. Louis, and Denver have adopted living wages, as well as towns and villages as small as Taylor, Mich., Bellingham, Wash., Oyster Bay, N.Y., Lakewood, Ohio, and Port Hueneme, Calif.

In major urban centers, the effort is often spearheaded by radical city council members who otherwise spend their time raising taxes and condemning the war in Iraq. But upscale suburbs like Alexandria and Arlington County, Va., have adopted living wage ordinances, as have Tucson, Ariz., and Missoula, Mont.

"Most of the people who testified were immigrants to the region who said, 'I'm new to the area, I'm working two jobs, and I still can't afford to pay my children's school expenses because I'm only making $6.50 an hour,'" says Barbara Donnellan, director of management and finance for Arlington County, which passed a living wage ordinance earlier this year. Arlington now pays a wage of at least $10.98 an hour to its workers and requires businesses with which it contracts to do likewise. "We want to be a diverse and inclusive world-class community where each person is important," says Donnellan.

Although church groups, labor unions, and local community organizations have been involved in the campaign, the major exponent has been ACORN (Association of Community Organizations for Reform Now), a community-organizing group founded in 1970 that claims 700 chapters in 51 cities. Traditionally a group that knocks on doors to raise money and consciousness about discrimination in voting, housing, and banking, ACORN has found the living wage to be its most galvanizing political issue. "It's the one issue that immediately affects people's pocketbooks," says Jen Kern, director of ACORN's living wage resource center in Boston.

In practice, the living wage resembles a minimum wage enforced at the local level. The federal minimum wage is now $5.15 an hour. Living wage bills typically up this to anywhere from $7 to $11 an hour. In New Orleans, a $6.15 citywide minimum wage was adopted by popular referendum. But hotel owners sued and had it overturned by the Louisiana Supreme Court.

Wary that municipal minimum wages will run into such state constitutional impasses, most living wage ordinances apply only to city workers and contractors--and sometimes to companies that have received tax abatements from the city government. In addition to requiring vendors to pay $3 to $5 above the minimum wage, some cities are starting to mandate health benefits, extended vacations, and other extras. Omaha adopted a living wage in 2000 but rescinded it when the city council discovered it was costing too much to hire summer lifeguards.

Jared Bernstein of the Economic Policy Institute justifies the living wage by arguing that "Employers who receive tax benefits or contracts from the locality ought to give a little something back to their workforce." Many municipalities, of course, have been shameless in handing out property and sales tax exemptions in order to lure major employers, but these employers usually pay far above the minimum wage anyway.

Instead, the living wage generally applies only to government employees and contractors. Thus, it's no surprise to find the living wage strenuously supported by the American Federation of State, County, and Municipal Employees, which sees private contractors as its major source of competition. Just as trade unions traditionally support federal and state minimum wage laws in order to avoid being undercut by non-union competitors, so municipal unions attempt to raise the costs of outside contracting services to make privatization less attractive to local governments. The unions also see the issue as an opportunity for recruitment. As an AFL-CIO newsletter told its members, "Living-wage campaigns are part of an overall strategy [that will] potentially enhance union organizing among workers."

Because they are generally limited to government contractors, living wage ordinances do not seem to be having much impact on local labor markets. One study in Baltimore, which in 1994 was the first municipality to adopt the living wage, found only a small effect, mostly on school bus drivers and other part-time workers. However, the law did discourage smaller companies from bidding on government contracts.