'Living Wage' Drive Accelerates in Cities

AFTER 19 years of pushing a broom on Chicago's South Side, Sammie Sims is fed up.

"I've just about had it; I'm paid next to nothing," says Ms. Sims, who earns the minimum wage working as a maid for pensioners at a one-story brick home. "The city has got to start paying us a wage we can live on," she sputters.

Sims has joined thousands of Chicago workers seeking higher pay in an aggressive campaign of leafleting, downtown rallies, and high-profile protests outside the offices of low-wage employers.

This bottom-up campaign to hike the basic $4.25 an hour wage is born of frustration - and is spreading. In Chicago, New York, Los Angeles, and at least 13 other cities and a dozen states, workers are pressuring city and state officials to push through an initiative that has largely stalled in Washington.

Some economists see this minimum-wage ferment as part of an emerging labor backlash. It includes both blue- and white-collar downsized employees who have been caught in the widespread corporate layoffs of the past decade. It mines some of the weariness felt by the two-thirds of American families where both spouses now work. It draws from the same pool of resentment so effectively tapped by Republican presidential candidate Pat Buchanan.

"The pendulum is now beginning to swing away from capital and back toward labor," says Stephen Roach, chief economist at Morgan Stanley in New York. "The second half of the 1990s could be increasingly dominated by worker backlash."

Statistically, Sims and the other 10 million Americans on the bottom rung of the wage ladder have reason to complain. Despite a recent overall rise in hourly earnings, in real terms, the hourly minimum wage remains close to it lowest level in 40 years.

As the 1996 campaign for Congress and the presidency heats up, some pundits see the minimum wage as one of the great political divides between the major parties.

The AFL-CIO - the nation's largest umbrella labor organization - recently voted to deploy a record $35 million toward campaigning for pro-labor candidates for Congress in November.

President Clinton is now making the minimum wage a campaign issue, seeking a 90-cent increase to $5.15 an hour. But so far, Democrats' attempts to win a higher federal minimum wage in the Republican-controlled Congress have been rebuffed.

The main opposition argument is that higher wages would mean fewer jobs for low-skilled workers at a time when many states are trying to shift people from welfare rolls to business payrolls.

Conservatives and corporate executives also argue that government intervention, particularly wage hikes, has historically provoked inflation.

"It will always be a mistake to vest in a public authority the determination of wage levels or price levels - that is a fundamentally poor policy," says Robert Galvin, chief executive officer of Motorola Inc. in Schaumburg, Ill.

Roots of labor's discontent

Corporations this decade have logged robust profits in part by boosting worker productivity and holding down wages. A successful campaign to increase wages faster than inflation could undermine short-term corporate performance and might hasten the end to Wall Street's 13-year bull market, critics warn.

The wage push has sharpened a classic debate in American society: Do workers do better when the economy runs with little state intervention, or when bureaucrats tinker with wages, taxes, and other economic levers? Although experts agree that listless wages are a serious problem, they are poles apart in both their diagnoses and antidotes.

One side, including free-market economists and executives, sees stagnant wages and downsizing as the ugly and unfortunate underbelly in a cyclical downturn - triggered in part by corporate overexpansion in the 1970s and '80s. Widespread cuts in payroll and wages naturally followed, according to David Levy, vice chairman of the Jerome Levy Economics Institute at Bard College in Annandale-on-Hudson, N.Y.

As the wage world turns

As investment revives and the cycle matures, both wages and job opportunities will increase, he argues. Workers need only wait.

Among the loudest champions of this view are executives. They say that by hiking the minimum wage, government wipes out entry-level jobs for poor and minority youths.

Instead, government should indirectly spur growth and otherwise stay out of the way. The executives call for lower interest rates, a balanced budget, eased government regulation, stepped-up foreign trade, and reform of the tax system to encourage savings rather than consumption.

US corporations want "a national growth strategy that removes the obstacles to creating more permanent, high-paying jobs," says Dana Mead, chief executive officer of Tenneco Inc. and chairman of the National Association of Manufacturers.

Critics of laissez faire say greater growth and a cyclical upturn in the economy will not necessarily ease the wage pinch. Instead, workers face a historic shift in the economy as new labor-saving technology wipes out traditional assembly-line jobs and demands higher skills.

Moreover, competition among companies has intensified as businesses are privatized and trade barriers and government regulations fall, says economist Barry Bosworth at the Brookings Institution in Washington.

With little movement on the minimum-wage issue in Washington, a grass-roots drive to change pay scales is gaining momentum across the country. Workers have already pushed through laws mandating higher wages in three localities - Baltimore, Milwaukee, and Gary, Ind., - and in 15 states.

Such laws set a minimum hourly wage above the federal rate of $4.25 or they require public contractors and subsidized businesses to provide a "living wage" - hourly pay sufficient to keep a family of four above the federal poverty line. This figure is usually about $7.50.

Here in Chicago, for instance, a coalition of some 50 labor, community, and religious groups has endorsed an ordinance that would require businesses that receive a city contract or subsidy to pay workers $7.60 an hour.

The wage would enable a breadwinner to earn an annual income above the federal poverty line of $15,600 for a family of four. Currently, a full-time worker on minimum wage annually brings in just $8,500.

Labor activists say the initiative would create upward pressure on wages and boost the pay of low-income workers at other businesses. Moreover, a living wage would channel a steady stream of cash to low-wage workers in inner-city neighborhoods. As better paid workers spent more on local businesses, neighborhood residents would pay more in city taxes.

"The cycle will never turn around unless people are paid a living wage, they are happy at work, and when they come home they can relax and buy their kids a pair of shoes," says Michael Vojcik, one of more than 30 Chicago aldermen who support the ordinance.

Foes of Chicago's 'living wage'

The measure has so polarized Chicago that even Mayor Richard Daley - considered one of the cleverest leaders of a major US city - apparently deems it too hot to handle. He declines to comment on the ordinance. His office says it is under "intensive review." Activists plan to present the measure to the city council next month.

Unlike the mayor, the Chicagoland Chamber of Commerce trumpets its hostility toward the ordinance. "It adds to the already burdened business climate in the region and sends a negative signal to any company considering a move into Chicago," says Jerry Roper, chamber president. He says the higher baseline wage would induce companies to discharge many low-paid workers, a criticism hotly debated by economists.

But Sims would risk losing her job as a maid rather than endure more years locked in the ranks of the "working poor." "I love taking care of my elders and I work hard and do the best I can," she says while leaning over a hissing iron. "But right feelings and hard work should pay something I can live on."