'Living wage' laws gain momentum across US

New study shows higher incomes from 'living wage' outweigh the cost in job losses.

Three years ago, Juana Zatarin couldn't make ends meet. The mother of three, a baggage handler at Los Angeles International Airport, was subsisting on an income about half that of the federal poverty rate of $17,028 for a family of four.

Today, thanks to a "living wage" law requiring city contractors to pay employees a minimum of $8.97 per hour, Ms. Zatarin earns more than $24,000 a year. Now life is good. "I can make my payments on time now and even have a chance to take some time off," she says.

It is a story that is being repeated in dozens of cities across America as part of a trend that – surprisingly – has continued to spread even during the economic downturn.

When Baltimore in 1994 became the first American city to adopt a so-called living-wage ordinance, critics said it would reduce employment and hobble local businesses and contractors forced to pay higher wages.

But more than 60 municipalities have since passed such laws, including the broadest, yet in New Orleans in February, and another last week in Santa Fe. The laws mandate that businesses under contract with the city – or in some cases businesses that receive grants, subsidies, or tax breaks from the city pay employees a wage large enough to lift their families out of poverty. (In California, wages under such agreements range from a low of $7.25 in Pasadena to a high of $11 in Santa Cruz.)

Despite some defeats, several dozen campaigns are percolating from coast to coast, even during the current economic slowdown, causing even detractors to admit the movement seems here to stay.

"Over all the early objections and fears, we are seeing a broadening of these laws to larger cities and to all sections of the country," says Robert Pollin, a University of Massachusetts economist who wrote a book called, "Living Wages," and has conducted surveys of cities that have adopted such laws. "Based on earlier successes, the movement is gaining confidence and momentum, strengthening the discussion and carrying it to bigger and bigger arenas."

THE number of workers affected by such laws is still small – perhaps 100,000. And such ordinances have been banned in Arizona, Colorado, Utah, Missouri, Louisiana, and Oregon. But experts say the trend is gaining momentum because there's growing evidence to dispell the early fears that the benefits of substantial pay increases would be overshadowed by huge reductions in the number of jobs in the job categories effected. And they say the demise of other social safety nets, and lack of movement on the current federal minimum-wage law – stalled at $5.15 – are helping spur steady activity.

"Since the beginning of this movement, we kept hearing 'the sky will fall, the sky will fall,' " says Jen Kern, executive director of the Living Wage Resource Center for the Association of Community Organizations for Reform Now (ACORN). "Now those employers who thought they'd suffer are saying they get higher production from these employees, less turnover, more satisfaction ... and are able to service their clients better."

Pro-living-wage forces got a boost from a study released yesterday by the nonpartisan Public Policy Institute of California. Done by an early skeptic of the benefit of living-wage laws, the report examined 36 cities with such laws – including Baltimore, Boston, Chicago, Denver, Detroit, New Haven, and San Jose. It found that slight job losses caused by the law are more than compensated by the decrease in family poverty.

"The steep wage increases [caused by living-wage laws] make it less likely that families with a living-wage worker will live in poverty, especially in cities where the law applies most broadly," says David Neumark, professor of economics at Michigan State University and author of the report. His study comes on the heels of others with similar findings in recent years. But despite the growth of such findings, some observers say, it's still too early to draw conclusions.

"It's very hard to draw definitive conclusions from studies like these because the laws only affect a tiny fraction of the workforce – perhaps 1 percent, tops," says Jared Bernstein of the Economic Policy Institute, a liberal thinktank in Washington. But he says the findings, by a mainstream economist who has opposed living-wage increases, help the movement.

"The fact that a known opponent of these ordinances has come out with a credible study showing the net benefits of the policies is a significant boost to the movement," says Bernstein.

ANOTHER sign of growing acceptance of such laws is the percentage of margin of recent wins. In February, a city-wide referendum in New Orleans raising the minimum wage by $1 passed by 63 percent of the voters. The largest living-wage law yet passed, the measure covers every business in the city, not just public employees or employees of public contractors. An Oakland measure passed by 78 percent of voters March 5. And two weeks ago, voters in Montgomery County, Maryland passed a measure that was rebuffed the year before.

"There was a lot of talk immediately after Sept. 11 that the living wage movement was dead," says Madeleine Janis-Aparicio, executive director of Los Angeles Alliance for a New Economy, which supported a Santa Monica law passed last July. A campaign by local hotels has forced a city-wide referendum in November, but most observers feel the law will be upheld.

"We think the continued groundswell of activity even during this period shows that the issue is changing people's views in small ways that will eventually force the issue on national politicians.