Living Wage Laws in the United States

History, Controversies, and the Modern Movement
Kevin P. Barry
May 2008

1. Introduction
In the United States, as the concept of a “living wage” has achieved newfound prominence, a nationwide grassroots movement in support of living wages has emerged in recent years. As a result, local living wage ordinances, which generally require employers who receive contracts or economic subsidies from local governments to pay wages above federal or state minimums, have become more commonplace.1 Since the first living wage ordinance was passed in Baltimore in 1994, more than 100 other ordinances have also been enacted.2 Many of these ordinances are loosely modeled after existing federal and state “prevailing wage” laws, which date back to the late nineteenth century and gained popularity during the Great Depression. This paper begins by tracing the history of federal and state prevailing and minimum wage legislation, and then more fully introduces the concept of living wages. It summarizes arguments both for and against living wage ordinances, and analyzes their specific effects and general economic impact. The paper then discusses the origin and development of the living wage movement, and looks at some specific living wagerelated campaigns and ordinances in the Los Angeles area. It concludes by looking at the living wage movement from a larger perspective and considering how it may contribute to broader economic justice movements.
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Economic Policy Institute, “Issue Guide on the Living Wage,” p. 5. Available at http://www.epinet.org/issueguides/livingwage/LivingWage_IssueGuide.pdf 2 Meredith Cohn and Stacey Hirsh, “Living wage bill: ‘disastrous’ or ‘great benefit’?” Baltimore Sun, April 14, 2004.

2. Prevailing Wages and Minimum Wages
(i) Prevailing Wages
The first prevailing wage law in the United States was an 1891 Kansas statute, which applied to state-financed contracts, and required that “not less than the current rate of per diem wages in the locality where the work is performed shall be paid to laborers, workmen, mechanics, and other persons so employed by or on behalf of the State of Kansas, or any county, city, township, or other municipality of said State.” By 1923, six more states had adopted similar prevailing wage laws.3 However, it was not until the Great Depression that the first such federal law, the Davis-Bacon Act, was enacted.4 Davis-Bacon mandated that federal public works projects (generally construction work) pay a prevailing wage.5 Congress passed DavisBacon to ensure that the government’s typical practice of accepting the lowest bid did not drive down the wages that contractors paid their workers, which protected local contractors and workers from cheaper competition elsewhere.6 Despite the controversy

Elizabeth Dominic, “Prevailing Wage Laws,” Members Only: An Informational Brief Prepared for the Members of the Ohio General Assembly by the Legislative Service Commission Staff, Volume 126, Issue 2, (February 26, 2005), p. 1. Available at www.lsc.state.oh.us/membersonly/126prevailingwagelaws.pdf. 4 Davis-Bacon was passed in 1931. After some initial controversy following its enactment, the Act was amended in 1935. It was also amended in 1964 to include fringe benefits in the prevailing wage calculation. The full text of the Act is available at www.osha.gov/pls/epub/wageindex.download?p_file=F26851/WH1246.pdf. 5 Specifically, the beginning of the Act states "That the advertised specifications for every contract in excess of $2,000, to which the United States or the District of Columbia is a party, for construction, alteration, and/or repair, including painting and decorating, of public buildings or public works of the United States or the District of Columbia within the geographical limits of the States of the Union or the District of Columbia, and which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State in which the work is to be performed, or in the District of Columbia if the work is to be performed there.” 6 While the Great Depression may have facilitated the passage of Davis-Bacon, the original intent of federal prevailing wage legislation was unrelated to the economic collapse. Rather, proponents of such legislation sought preserve the relative prosperity of the industry by mitigating downward pressures on

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surrounding Davis-Bacon, including several temporary suspensions and repeal attempts, the law remains in effect today.7 Several more states subsequently enacted prevailing wage legislation—known as “little Davis-Bacon” acts—during the Depression. Today, more than 30 states have such laws in effect.8 Other federal legislation mandates wage floors and other labor standards with respect to government contracts. The Copeland “anti-kickback” Act of 1934 was enacted to help enforce Davis-Bacon after it was discovered that some contractors were requiring workers to return portions of their wages.9 In addition, the Walsh-Healey Public Contracts Act of 1936 extended the application of Davis-Bacon to employers from whom the government contracted to purchase goods. The McNamara-O’Hara Service Contract Act of 1965 further required prevailing wages and fringe benefits to be paid to certain classes of service employees working on federal contracts. Prevailing wage rates are determined by the Department of Labor (DOL), which uses median wages for comparable jobs and construction projects in a particular locality, wages from local collective bargaining agreements, or some combination of the two. To make such determinations, the DOL performs periodic surveys. Many states with little

wages and working conditions from competition. One of the sponsors of the Act, Representative Robert Bacon (R-NY) had been trying since 1927 to introduce prevailing wage legislation. Around this time, in Bacon’s Congressional district a federal hospital construction contract was given to an Alabama firm that, as Bacon explained, “brought some thousand non-union laborers from Alabama into Long Island, N.Y….They were herded onto this job, they were housed in shacks, they were paid a very low wage and the work proceeded.” Bacon wanted legislation to prevent this type of thing from happening again. William G. Whittaker, “The Davis-Bacon Act: Institutional Evolution and Public Policy,” CRS Report for Congress (November 8, 2005), pp. 3-4. Available at www.house.gov/english/pdf/davisbacon.pdf. 7 The last serious attempt at repeal occurred in the mid-1990s after the Republicans assumed control of Congress. Most recently, in September 2005 President Bush suspended Davis-Bacon for several weeks in the regions of the Gulf Coast devastated by Hurricane Katrina. 8 At one point, more than 40 states had prevailing wage laws, though several have been repealed. 9 The Copeland Act made it illegal for federal contractors to require their workers “to give up any part of the compensation to which he is entitled under his contract of employment, by force, intimidation, threat of procuring dismissal from such employment, or by any other manner whatsoever.” The full text of the Act is available at http://www.actwv.org/library\law\Copeland.doc.

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Davis-Bacon laws use similar methodologies for determining wage rates, although formulas based on modal rates, average rates, weighted average rates, and plurality rates are also used.10

(ii) Minimum Wages
The Fair Labor Standards Act of 1938 (FSLA) first established a national minimum hourly wage of 25 cents, and has been amended numerous times to increase the wage. Most recently, the Fair Minimum Wage Act of 2007 increased the minimum wage from $5.15 to $5.85, the first increase in ten years. This amendment will also increase the minimum wage to $6.55 in July 2008 and $7.25 in July 2009. Several states have also enacted minimum wages laws above the federal minimum. Washington, California, Massachusetts and Oregon have the highest minimum wages; each has a minimum at or near $8 an hour. Unlike the federal minimum wage, which requires new legislation in order to be adjusted, several states have minimum wages that automatically rise with the rate of inflation.

3. Living Wages
(i) Definition, Application, and Conceptual Origin
A living wage refers to the hourly wage a worker needs to attain a certain standard of living, based on the cost of living with respect primarily to necessities such as food, housing, utilities, healthcare, and transportation. Because the cost of living varies geographically, what constitutes a living wage can differ from one locality to another.

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Dominic, pp. 2-3.

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Living wages, which are often significantly higher than minimum wages,11 are typically calculated based on federal poverty guidelines. For example, the wage could be set at the amount a worker needs to support a family at the poverty line, or perhaps 130% of the poverty line, which is the limit for food stamp eligibility. Other calculations are based on higher “self-sufficiency income measures.”12 Similar to Davis-Bacon and the little Davis-Bacon prevailing wage laws, living wage ordinances typically only apply to companies with government contracts. In addition, some such ordinances also apply to companies that receive government subsidies or other economic benefits, such as financial assistance, tax abatements, grants, and low-interest loans,13 or who lease publicly owned land.14 However, there have also been efforts to broaden the scope of living wages laws to include all municipal employees, or all businesses over a certain size or in particular geographic areas of their localities.15 Although the establishment of living wage ordinances is a fairly new phenomenon, the concept of a living wage is not new. It was first introduced by Pope Leo XIII in his 1891 encyclical letter “Rerum Novarum: On the Condition of the

Living wages average above $9 per hour. David Fairris and Michael Reich, “The Impacts of Living Wage Policies: Introduction to the Special Issue,” Industrial Relations: The Impacts of Living Wage Policies, Vol. 44, Issue 1 (January 2005), p. 1. 12 Economic Policy Institute, “Issue Guide on the Living Wage,” p. 8. 13 Scott Adams and David Neumark, “A Decade of Living Wages: What Have We Learned?” Public Policy Institute of California, California Economic Policy, Volume 1, Number 3 (July 2005), p. 2. Available at http://www.ppic.org/content/pubs/cep/EP_705SAEP.pdf. 14 Michael Reich et al, “Living Wage Policies at the San Francisco Airport: Impacts on Workers and Businesses, Industrial Relations: The Impacts of Living Wage Policies, Vol. 44, Issue 1 (January 2005), p. 107. 15 David Neumark, “Living Wages: Protection for or protection from low-wage workers?” Working Paper 8393, BER Working Paper Series (July 2001), pp. 1-2. Such ordinances are essentially local minimum wage laws. One notable example is Santa Fe, NM, which requires all businesses with at least 25 employees to pay a living wage. Another example is the repealed living wage ordinance in Santa Monica, CA, which applied to businesses with at least $5 million in annual revenues located in certain zones of the city. The Santa Monica ordinances will be discussed in further detail later in this paper.

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Working Classes,” in which he states, “If a worker receives a wage sufficiently large to enable him to provide comfortably for himself…excellent benefits will follow, foremost among which will surely be a more equitable division of goods.”16 In 1895, Robert Blanchford published a book titled “The Living Wage and the Law of Supply and Demand,” and John Ryan further popularized the idea in his 1906 book “A Living Wage,” in which he argued “the right to a Living Wage is individual, natural, and absolute.”17

(ii) Arguments For Living Wages
Living wage proponents argue that minimum wages, which have failed to keep pace with inflation, have become poverty wages, unable to provide workers with an adequate standard of living.18 Real wage declines in general, they argue—especially for low-skilled workers—have resulted in economic hardship for millions of hardworking Americans, many of whom receive wages at or near minimum levels and cannot keep up with the rising cost of food, housing, healthcare, and other basic needs. They contrast this with productivity gains, increases in real GDP, and high CEO salaries and corporate profits to highlight the inequities in the system with respect to wage levels.19

The full text of the encyclical is available at http://www.osjspm.org/majordoc_rerum_novarum_official.aspx 17 John A. Ryan, “A Living Wage,” Revised and Abridged Edition (New York: The MacMillan Company, 1920), pp. 3-4. 18 According to Robert Pollin and Stephanie Luce, the federal minimum wage in the late 1960s was basically a living wage in the sense that it approximated the federal poverty threshold for a family of four. Robert Pollin and Stephanie Luce, “The Living Wage: Building a Fair Economy” (New York: The New Press, 1998), p. 23. 19 David Reynolds and Jen Kern, “Living Wage Campaigns: An Activist’s Guide to Building the Movement for Economic Justice” (2002), pp. 7-8. Available at www.laborstudies.wayne.edu/research/guide2002.pdf.

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From a moral standpoint, advocates of living wage ordinances argue that “work should be rewarded, and…no one who works full time should have to live in poverty,”20 and that a wage sufficient to allow workers to provide for themselves and their families without assistance gives them a much-needed sense of dignity. They further maintain that tax money should not be paid to employers who do not provide their workers with such wages.21 From an economic standpoint, living wage advocates maintain that increased contract costs are offset by the reduced need for public welfare and social services. They also argue that by paying their workers higher wages, employers can actually save money due to lower turnover rates and higher productivity.22 As a result, they claim, neither taxpayers nor employers are adversely affected by living wage ordinances. Instead, the costs of higher wages can be shared by government, businesses, and consumers such that none of these groups are made significantly worse off.23

(iii) Arguments Against Living Wages
Arguments against living wage ordinances are similar to those made against any type of mandatory wage floor. Opponents of living wages counter that higher wages will result in fewer jobs and the displacement of low-skilled labor,24 higher contract costs will result in increased taxes (or budget cuts), a less-friendly business climate will discourage

John Gertner, “What is a Living Wage?” The ew York Times Magazine, January 15, 2006. Fairris and Reich (2005), p. 2. 22 Christopher Niedt et al, “The Effects of the Living Wage in Baltimore,” Working Paper 119 (Washington, D.C.: Economic Policy Institute, February 1999), pp. 1-2. Available at http://www.epinet.org/Workingpapers/BUILD.pdf. 23 Pollin and Luce (1998), p. 22. 24 According to Adams and Neumark, “Indeed, one criticism leveled at living wages is that they may induce substitution toward more-skilled workers. This evidence suggests that living wages do not necessarily benefit the most disadvantaged; in fact, the evidence on disemployment effects indicates that some low-skilled workers are hurt by living wage laws. At the same time, it suggests that some low-wage workers and low-skilled individuals—just not the lowest wage and lowest-skilled—may be helped.” Adams and Neumark (July 2005), p. 10.
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local investment, and that small businesses and nonprofit organizations will all be especially harmed by being put at competitive disadvantage that they can less easily absorb.25 They claim that faced with increased costs and regulations, many employers will relocate to municipalities without living wage ordinances, or simply close down altogether.26 Opponents also argue that living wage laws disproportionately benefit the wrong types of low-wage earners, such as nonpoor teenagers, rather than poor adults with families to support.27 Some critics believe that increasing the earned income tax credit or subsidizing health insurance would be a more efficient way for the government to assist low-wage workers.28 Ideological opposition to such laws is based on the proposition that government should not interfere with the workings of the free market by mandating a minimum price for labor, and that wage floors are a form of welfare in the sense that the wages become need-based rather than skill-based.29

(iv) Living Wages in Perspective
Despite all the controversy surrounding living wage ordinances, however, their application is quite narrow, generally covering less than 3% of workers in their

Reynolds and Kern (2002), pp. 73-77. Pollin and Luce (1998), p. 12. 27 As Adams and Neumark note, however, “whether living wages have beneficial distributional effects is a purely empirical question.” Adams and Neumark (July 2005), p. 4. 28 Though not a living wage critic, Harvard economist Richard Freeman does acknowledge its inefficiencies. He says, “because many living wage workers get income-related federal or state benefits such as the EITC, the amount of which will be reduced as their pay increases while others pay state and federal taxes, party of any improved wage will reduce those benefits or raises taxes. Estimates suggest that as much as half of living wage-induced pay increases go into federal or state tax coffers rather than into workers’ pockets.” Richard Freeman, “Fighting for Other Folks’ Wages: The Logic and Illogic of Living Wage Campaigns,” Industrial Relations: The Impacts of Living Wage Policies, Vol. 44, Issue 1 (January 2005), p. 24. 29 Freeman (2005), p. 15.
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jurisdictions.30 As a result, despite their supporters’ portrayal of them as effective antipoverty laws, they do not appear to have significant effects on local wages.31 Economists Scott Adams and David Neumark, who have studied living wages extensively, conclude that “living wage laws, on average, boost the wages of the lowest-wage workers but also reduce employment among the least skilled. However, the net effect of living wages— stemming from wage increases, employment reductions, and how both are spread across families—is to reduce poverty in the urban areas in which they have been enacted…This implies that although living wages offer some assistance to some low-income families, they are not a panacea for the problem of low-wage work and poverty.”32

4. The Living Wage Movement
The modern living wage movement achieved its first victory in Baltimore in 1994, after a grassroots coalition of labor leaders and church groups33 obtained a raise for city contract workers from the $4.25 federal minimum wage to $6.10, with scheduled increases to ensure that the wage would remain above poverty levels. The example set in Baltimore led national organizations such as the Association of Community Organizations for Reform Now (ACORN), Industrial Areas Foundation (IAF), and New Party to launch local living wage campaigns throughout the United States. Labor organizations such as the American Federation of State, County, and Municipal Employees (AFSCME), the Service Employees International Union (SEIU), and the
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Fairris and Reich (2005), p. 2. Further, such laws generally only require that employers pay living wages for the contract work itself. Adams and Neumark (July 2005), p. 12. 31 Richard Freeman says that for living wage ordinances to have a significant effect, they would need to result in large wage spillovers to other sectors of the economy. Freeman (2005), p. 23. 32 Adams and Neumark (July 2005), p. 1. 33 Specifically, the coalition consisted of the American Federation of State, County, and Municipal Employees (AFSCME) and Baltimoreans United in Leadership and Development (BUILD). Niedt et al (1999), p. 3.

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Hotel and Restaurant Employees Union (HERE), have also been involved in such campaigns, as have religious organizations, student groups, other local community-based organizations, and academics.34 Resistance to living wage laws has come largely from the business community and pro-business politicians. By 1997, living wage laws had been enacted in twelve more cities, including New York, Boston, and Los Angeles.35 Since that time, as the movement has further taken hold across the country, the pace has accelerated. There have been several notable successes but also several failures in the face of strong opposition.36 Most living wage ordinances apply to cities, although a smaller number have been enacted in counties and townships. The state with the largest number of living wage ordinances in effect is California, and there are a number of such ordinances in the Los Angeles area alone. Accordingly, this paper will now look at examples from the City of Los Angeles, County of Los Angeles, and the City of Santa Monica.

5. Los Angeles-Area Living Wage Ordinances
(i) City of Los Angeles Living Wage Ordinance
In March 1997, the Los Angeles City Council passed a living wage ordinance, which was enacted in May after the City Council’s override of Mayor Richard Riordan’s veto.37 The tenth such ordinance in the nation, it mandated wages of at least $8.50, or $7.25 with benefits, and applied to employers with large city contracts—including
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Freeman (2005), pp. 15-20. Pollin and Luce (1998), p. 3. 36 According to Adams and Neumark, “In some cities living wage campaigns took things quite far before ultimately failing or being derailed because of a court ruling, state legislative action, a negative city council vote, a mayoral veto, or even non-enforcement following enactment.” Scott Adams and David Neumark, “The Effect of Living Wages Laws: Evidence from failed and derailed campaigns” Working Paper 11342, BER Working Paper Series (May 2005), p. 1. 37 www.losangeleslivingwagestudy.org/docs/About_Los_Angeles_Living_Wage.pdf

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subcontractors—recipients of significant government assistance, and employers with city leases, licenses, and permits. The wage was indexed for inflation, though the benefits were not.38 The measure was sponsored by City Councilwoman Jackie Goldberg,39 and was promoted heavily by the Los Angeles Alliance for a New Economy (LAANE), an organization created by HERE in 1993 to promote union organizing efforts in the area.40 Although the 1997 ordinance only affected a small number of workers, a 1999 amendment closed several loopholes and expanded its scope to thousands more workers—most notably, at LAX Airport, where businesses had been disputing their supposed inclusion in the ordinance.41 This amendment, which made it clear that the ordinance applied to the airport, was a product of the “Respect at LAX” campaign, which was launched in 1998 and, in conjunction with its union organizing efforts, sought to ensure that airport workers received living wages. These workers included security guards, employees of retail and food concessionaires, and others.42

(ii) LAX Enhancement Zone Ordinance
In 2006, a campaign to extend living wages to hotel workers near LAX began. Headed by LAANE, UNITE HERE,43 and the Los Angeles County Federation of Labor, the campaign organized a massive demonstration in September that included acts of civil

Specifically, the ordinance applied to all city contracts of at least $25,000, and businesses that received government assistance of at least $1 million in a year, or $100,000 per year regularly. David Fairris, “The Impact of Living Wages on Employers: A Control Group Analysis of the Los Angeles Ordinance,” Industrial Relations: The Impacts of Living Wage Policies, Vol. 44, Issue 1 (January 2005), p. 85. 39 Larry Kanter, “Compromise brewing on living wage ordinance, but veto looms,” Los Angeles Business Journal, January 13, 1997. 40 Carol Zabin and Isaac Martin, “Living Wage Campaigns in the Economic Policy Arena: Four Case Studies from California” (June 1999), p. 12. 41 Ibid., pp. 12-14. 42 http://www.policylink.org/EDTK/LivingWage/action.html 43 HERE merged with the Union of Needletrades, Industrial and Textile Employees (UNITE) in 2004.

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disobedience and drew significant public attention to the issue.44 In November, the Los Angeles City Council voted to extend the existing living wage ordinance to thirteen large hotels along the “Century Corridor” near LAX (this was called the “LAX Enhancement Zone Ordinance”), based on the rationale that these hotels benefited from being located near the airport. Minimum wages were set at $10.64 an hour (or $9.39 with benefits45) and approximately 3,500 LAX workers were affected. In January 2007, the ordinance was enacted with minor modifications, the result of a compromise between its supporters and its opponents in the hotel industry and business community, who agreed in return for certain concessions not to put the measure on the May ballot.46 Despite the compromise, however, opponents mounted a court challenge against the LAX Enhancement Zone Ordinance in February 2007. In May, they succeeded in having it blocked in Superior Court on the grounds that the new law was too similar to the existing Los Angeles living wage ordinance, and that it was passed in a bad-faith attempt to avoid a referendum on the matter. Nevertheless, the 2nd District Court of Appeals overturned the Superior Court ruling in December.47 In April 2008, the appeals court ruling was upheld by the California Supreme Court, which declined to review the case.48 Although the law has now taken effect, some hotels have resisted its

More than 2,000 supporters marched down Century Boulevard, thereby blocking traffic, and over 300 were arrested. Peter Dreier, “Living-wage victory in LA,” The ation, February 5, 2007. 45 Jessica Hoffman, “LAX Hotel Workers Hungry for Living Wage,” The ew Standard, December 12, 2006. 46 While opponents had collected enough signatures to put the measure on the ballot, a recent public poll showed overwhelming support for the ordinance. Thus while the measure did not face a significant risk of being repealed, this compromise saved its supporter, opponents, and the city itself millions of dollars in media campaigns and election costs. Mayor Antonio Villaraigosa helped broker these negotiations. Dreier (2007). 47 http://www.clia.org/news_detail.cfm?newsid=324 / http://economie.moldova.org/stiri/eng/45982/ 48 Howard Fine, “LA Living Wage Law Upheld,” Los Angeles Business Journal, April 11, 2008.

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implementation, and community leaders have threatened a boycott and other actions if they do not comply.49

(iii) County of Los Angeles Living Wage Program
In 1999, following a campaign by LAANE and the SEIU, the Los Angeles County Board of Supervisors approved a living wage law that, similar to the city law discussed above, required living wages to be paid on all county contracts of at least $25,000. It also required that only full-time employees be used for county contracts.50 The minimum wage was set at $9.46 an hour, or $8.32 with benefits.51 These wages were not automatically indexed for inflation, but in 2007 the Board of Supervisors increased the minimum to $11.84, or $9.64 with benefits.52

(iv) City of Santa Monica Living Wage Ordinance
In the late 1990s, the fight over living wages in Santa Monica began. A coalition of community, religious and labor organizations called “Santa Monicans Allied For Responsible Tourism” (SMART) advanced a proposal for businesses with at least 50 employees in Santa Monica’s tourist-frequented coastal zone to pay a living wage of $10.69 per hour. Opposing business interests formed a competing coalition that they called “Santa Monicans for a Living Wage,” which sought to forestall such a measure by funding a ballot drive in support of a weaker and very narrow living wage ballot initiative

“Coalition for a New Century Calls on Hotels Not to Fight Living Wage Law,” Business Wire, May 12, 2008. 50 However, the ordinance grants exceptions for contractors that can demonstrate the necessity of using part-time workers. 51 The full text of the ordinance is available at http://www.communitybenefits.org/downloads/LA%20County%20Living%20Wage.pdf 52 http://www.lacounty.info/doing_business/living_wage.htm

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that they had drafted.53 However, the initiative was defeated by a small margin in November 2000. The following year, the Santa Monica City Council approved a living wage ordinance similar to the one advocated by SMART. Specifically, the ordinance required that certain businesses—namely, those located in the coastal and downtown districts with at least $5 million in annual gross revenues for the previous two years—pay their workers at least $12.25 per hour, or $10.50 with benefits.54 The law would affect approximately 40 businesses, several of which were oceanfront hotels which employed most of the 2,000 or so workers it was estimated to cover.55 This law was different than standard living wage ordinances in that it did not apply to city contractors or businesses receiving government assistance or leasing public property. However, supporters argued that since these businesses benefited from public projects that made Santa Monica more tourist-friendly, the city had the right to require that they pay their workers higher wages.56 Nevertheless, the ordinance was repealed in November 2002 via referendum.57 After this defeat, however, SMART continued to campaign for living wages in Santa Monica, and in 2005 the City Council enacted two different living wage ordinances—one which applied to city contracts of at least $50,000, and another which covered all city employees. The minimum hourly wage was set at $11.50 for each
Kelly Candaele and Peter Dreier, “Living Wage: Big Money’s Wolf in Sheep’s Clothing in Santa Monica,” Los Angeles Times, May 10, 2000. 54 The full text of the ordinance is available at http://www.mckeown.net/lvngwage.html. 55 Oscar Johnson and Bob Pool, “Santa Monica OKs ‘Living Wage’ Law,” Los Angeles Times, May 24, 2001. 56 According to Richard Freeman, “Santa Monica spent over $170 million to turn the area into a tourist attraction, and zoned it so that existing hotels and restaurants in the zone had potentially sizable location rents, which the living wage could redistribute to workers at essentially no loss of employment or output.” Freeman (2005), p. 22. The justification for this ordinance is similar to that for the LAX hotel ordinance. 57 http://www.newrules.org/equity/santamonica.html
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ordinance, and indexed for inflation. Currently, the contract threshold is $54,200 and the minimum wage is $12.48.58

6. Conclusion
Because living wage laws are fairly narrow in scope, many people wonder why they have been pursued so fervently by their proponents instead of broader local minimum wage laws, which would likely be far more effective in accomplishing their goal of reducing poverty. Neumark has considered the hypothesis that strong union support for living wages has less to do with reducing poverty than with protecting relatively well-off municipal union labor from low-wage competition.59 This may be true, although it fails to explain the whole story, because the living wage movement is broader than just a group of union campaigns. Another potential reason behind the push for living wage ordinances rather than other alternatives is that their limited economic effects make them less feared and therefore easier to enact. This tradeoff that supporters face is a paradox which Richard Freeman refers to as “the logic and illogic of living wage campaigns.”60 Freeman also speculates that the living wage campaigns might simply be a means of creating a larger social and economic justice movement,61 and that labor reforms are simply more achievable at the local level.62

www.smgov.net/cmo/solid_waste/LivingWageCertification.pdf Neumark (2001), pp. 2-3. 60 Freeman (2005), p. 26. 61 Robert Pollin and Stephanie Luce, strong supporters of living wages, add credibility to this hypothesis. They say, “The living wage movement is resisting these dominant trends and posing an alternative economic vision, making it an effective voice for economic justice in the United States. The living wage movement, in other words, is not simply concerned with improving wages for workers employed by businesses holding municipal government contracts, even though this is the immediate target of their efforts. The living wage movement is committed to reversing the economy-wide wage squeeze, stopping
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A final and related explanation could be that living wage campaigns, by building a broader movement, drawing attention to the plight of low-wage workers, and popularizing the concept of the living wage, could simply be laying the groundwork for more expansive local minimum wage laws. Already, ambitious such laws have been enacted in Santa Fe, Albuquerque, San Francisco, and elsewhere. Even more farreaching could be an eventual push for making state minimum wage levels—or even the federal minimum wage—equal to a living wage.63 With a more favorable political climate, this might someday be possible.

tax giveaways to big business, reenergizing the labor movement, and ending the war on the poor.” Pollin and Luce (1998), pp. 7-8. 62 Freeman (2005), pp. 27-28. 63 http://www.thirdworldtraveler.com/Economics/LivingWage_LiveAction.html

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