[Hpn] 'Living-wage' laws raise pay for poor but may cost jobs
Tue, 04 Sep 2001 09:10:14 -0700
Saturday, September 01, 2001, 12:00 a.m. Pacific
'Living-wage' laws raise pay for poor but may cost jobs
By Adam Geller
The Associated Press
NEW YORK ‹ Ezra Mulugeta used to mark time according to the uniform he wore.
Most days started at 3:15 a.m., when he pulled a black jacket and captain's
hat from his closet and headed for work as a skycap at San Francisco
International Airport. Afternoon meant speeding home, showering and pulling
on a blue jacket and pants for his job unloading baggage from planes. His
"days off" began when he put on yet another uniform for a third job as a
Now, Mulugeta has shelved one uniform and gained newfound time off. The
reason: Airport officials mandated a "living wage" for workers, boosting
Mulugeta's skycap pay from $4.75 an hour to $10, plus tips, and adding
The raise allowed the divorced father of three college students to quit his
security job while keeping his annual income about $44,000.
San Francisco's law
San Francisco is one of more than 60 U.S. cities and counties that have
passed living-wage laws in recent years, trying to ensure that low-wage
workers can keep their heads above the poverty line. Most of the measures
apply only to select groups of workers who have government contracts, but
that may be about to change.
In cities such as Santa Monica, Calif. and New Orleans, advocates are
pushing measures to raise wages for thousands of workers in private
companies unrelated to government. Opponents, who say living wages cost jobs
or push out unskilled workers, are increasingly taking the fight to state
capitals, asking legislators to keep cities from passing their own wage
The movement, just like the concept, is amorphous. A living wage comes down
to whatever local governments decide it should be ‹ from $6.75 an hour in
Milwaukee to $12.25 an hour in Santa Monica, effective next summer.
The living-wage campaign was born in 1994, the brainchild of labor advocates
and religious leaders in Baltimore. Concerned that some of the city's
working poor were relying on soup kitchens and homeless shelters, the group
persuaded council members to pass a law raising pay.
Other cities followed, despite opposition from businesses, with most of the
measures applying to people like school-bus monitors, janitors, day-care
workers and home health aides, employed by private businesses that provide
services under government contracts.
Critics mount attack
Critics call the laws feel-good measures that only drive up costs for
businesses, leading them to cut jobs.
They cite research showing, for example, that raising wages for low-skilled
adults working in restaurants attracts higher-skilled teenagers who simply
displace the original employees.
"Who can be against the idea of helping people in need?" said John Doyle of
the Employment Policies Institute, a Washington, D.C., think tank strongly
opposed to living-wage laws. "But the method of helping people shouldn't be
to hurt the people you're trying to help."
Proponents, led by the Association of Community Organizations for Reform
Now, or ACORN, counter with their own volumes of research. They acknowledge
a very limited risk of job displacement but say that is far outweighed by
the lift in living standards for workers.
"Even as our country is doing better and better and becoming more
productive, low-wage workers are not seeing the benefits," said Jen Kern,
who directs ACORN's living-wage efforts.
In Santa Monica, City Council members this spring mandated higher pay for
workers in hotels, restaurants and other businesses in a ritzy beachfront
district popular with tourists. Business owners rail against the measure,
saying it will double their labor costs.
The law is limited to establishments with $5 million or more in annual
sales, so the owners of the P.F. Chang's and Ocean Avenue Seafood eateries
say they'll cut back on business hours and workers to come in under the
threshold. Sears intimated it might close its store in the district if
forced to raise pay.
"It's such a dramatic increase that businesses that are labor intensive,
they just can't possibly do it. They can't survive," said Tom Larmore, a
lawyer and spokesman for an alliance of businesses seeking to overturn the
measure in a ballot referendum.
In New Orleans, voters will be asked this winter to decide on a new city
minimum wage covering every worker.
Businesses are responding by asking state governments to restrict or ban
In Oregon, after five cities passed living-wage measures, the state's
restaurant association lobbied legislators to stem the tide. The result was
a law, signed this month, restricting cities from mandating wages at
privately owned businesses unless the company receives a tax credit or
direct government subsidy.
A measure under consideration in Michigan would simply outlaw municipalities
from setting their own pay scales.
'Function of the market'
"If an employer could pay you a higher wage, they would," said state Rep.
Andrew Richner, the bill's sponsor. "It's a function of the market. The
problem is if government gets in there and tells you what the wages should
Workers covered by such laws say that's exactly what government should be
The way Chicago home health aide Diane Cunningham sees it, she and her
coworkers are saving money by keeping ailing senior citizens out of nursing
homes. Decent pay is a fair tradeoff, she says.
"It made a big difference for me because I was able to get me a home," said
Cunningham, whose pay rose from $5.65 an hour to $7.60 when the city passed
a living-wage law. "But it wasn't easy and it still isn't easy."
Copyright © 2001 The Seattle Times Company
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