Living wage provisions are part of an overall effort to revitalize communities through lifting the wage floor and providing leverage at the local level to address growing income inequality.  Higher wages and benefits improving living standards for workers and their families, foster workforce stability, and increase the municipal tax base.

In low-income communities, the adoption of a living wage provision reduces the need for government to provide safety net services to people whose earnings cannot meet their basic needs.

Insufficient Minimum Wage

The current federal minimum wage is $5.15 per hour.  It produces 30 percent less purchasing power than it did at its peak in 1968.  While Congress is considering an increase in the minimum wage to $6.25 an hour, this rate would still be insufficient to avert poverty.  While Congress remains unwilling to raise wage levels above the poverty line, living wage campaigns have advanced this rate hike at the local level.

Failure of the Minimum Wage

The Economic Policy Institute indicates the following evidence that the minimum wage is failing low income families and individuals:

• Between 1979 and 1992 the declining real value of the minimum wage contributed to:
• 22% of the growth in wage inequality between men at the 90th percentile of the wage scale and men at the 10th percentile of the wage scale

• 42% of the growth in wage inequality between women at the 90th percentile of the wage scale and women at the 10th percentile of the wage scale.

Taking the High Road

Without living wage laws, governments contribute to the creation of poverty-level jobs when they hire low-paying sub-contractors or give tax breaks and subsidies to businesses without any guarantee that the jobs will pay a decent wage.  The situation is exacerbated in urban core communities, where public budgets are strained and more people live in poverty.  Here, local governments face pressure to meet their budgets by lowering the cost of services.  This often leads to terminating public sector union jobs at decent wages in favor of contracts to the lowest bidder.  Living wage provisions reverse this downward trend by encouraging employers and governments to take the high road to quality jobs and the long-term health of a community.

Advantages of Living Wage Provisions

Living wages benefit families and communities by:

• Alleviating poverty.
• Imposing accountability.   Requires public money to fund a minimum standard of living.
• Helping to build a community-wide wage floor.   Wage standards on public contracts and services create upward wage pressure on other private sector employers who must compete for workers. 
• Expanding health benefits .  Currently, most low-wage jobs do not provide any health benefits.
• Reducing the strain on government services Living wage provisions reduce the need for government provision of healthcare, and housing subsidy.
• Stimulating the economy .  Increased wage provisions expand purchasing power in the community.

Living wage ordinances succeed across the country:

• Michigan: In March 2001, the Ann Arbor City Council approved a living wage law that requires recipients of subsidies or city service contracts that exceed $10,000 to pay at least $8.70 an hour to employees with health benefits and $10.20 an hour to employees without health benefits, indexed annually.  The legislative victory was won by a coalition that included community, labor, and church groups as well as concerned individuals.
• Virginia: In June 2000, the Alexandria City Council voted unanimously to implement a living wage provision that requires city service contractors to pay at least $10.21 an hour (indexed annually to the federal poverty level) in addition to health insurance costs.  The winning coalition included groups such as the Tenants and Workers Support Committee, ironworkers, and the Communication Workers of America.
• California: In November 1998, the San Jose City Council voted to require companies holding city service contracts $20,000 or more to pay employees a wage of at least $10.10 an hour with health benefits, or $11.35 without benefits.  Companies are required to provide assurances of good labor relations and successor contractors must offer jobs to employees of predecessor contractors who performed those services.  Successful coalition work was led by the South Bay AFL-CIO/Working Partnerships USA, the Interfaith Alliance, the Green Party, the Silicon Valley Toxics Coalition, ACORN, and others.

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