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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Bernstein and Kern argue that living wage ordinances have actually improved productivity. "Studies show that the higher wage cuts down on lateness and absenteeism," says Kern. "Contractors tell us, 'We would have made these improvements before, but other contractors would have underbid us.'" Still, since the smallest competitors cannot meet the new wage standards, and since the costs are imposed on all bidders, any increased expense is quickly passed through to the municipal government. In the end, the living wage is funded by taxpayers.

This doesn't bode well for the financial health of municipal governments, which are already growing at nearly three times the rate of inflation. "Over the past five years municipal spending has grown 35 percent, 22 points ahead of inflation and 15 points faster than inflation plus population growth," says Phil Kerpen, analyst with the Club for Growth. "This is not a great time to be putting more burdens on municipal budgets."

One example of how living wage campaigns can balloon is New York, where Governor George Pataki in his 2002 reelection campaign agreed to pay health care workers a "living wage" through higher Medicaid reimbursements. The decision won the support of the 224,000-member health care workers' union. However, it only inflated New York's Medicaid bill, which is already two and a half times the national average. New York City's $3 billion appropriation for Medicaid spending now exceeds the entire municipal budget of every city in the country except Chicago and Los Angeles.

THE CONCEPT of trying to guarantee a living wage to full-time workers at the bottom of the economic ladder has a long history. "A Living Wage," published in 1912 by John A. Ryan, added the idea to the reform agenda of the Progressive Era, at a time when mechanization was making it possible for women and even children to supplant skilled tradesmen in the workforce.

The Progressives hit upon the idea that each head of household should have the opportunity to earn a "living wage," meaning enough to support himself and his family. Rather than adopting minimum wage rules across the board, reformers began by passing eight-hour days and other restrictions for women and children. This both strengthened families and limited the power of factories in hiring women and children to undercut men's wages.

The Progressive Era's "Family Wage" system eventually became a national norm, enforcing an informal rule of "one breadwinner per family." Through the 1950s, informal rules said that married women should not participate in the labor force except in cases of grave necessity. This both provided more time for childrearing and made sure employers didn't use women to cut their husbands' wages. The system worked well until a married newspaper reporter named Betty Friedan was told in 1950 that she had to leave her job after having her second child. The rest, of course, is history.

In today's atomized world, we are back to a system in which most families--especially those with low incomes--rely on more than one wage-earner. Yet living wage advocates rarely take this into account. Advocates assemble elaborate tables comparing minimum wages with average housing prices, trying to show that a person cannot support a family at the minimum wage. Yet how many families are supported by one wage-earner? By failing to differentiate between heads of households with dependents and high schoolers making a little extra money, the living wage movement falls into the old minimum-wage trap of knocking the lowest-skilled workers off the scale.

Give ACORN credit. They have built a vast network of grassroots organizations that have become a potent force in hundreds of cities, large and small, across the country. They run charter schools, register voters, organize health clinics, intervene in tenant-landlord disputes, and have generally won the loyalty of thousands of underprivileged Americans. But their plan for raising family incomes by putting the screws on government contractors is simply another way of soaking taxpayers and growing the government.

William Tucker is a columnist for the New York Sun.