LIVING WAGE COALITION IN THE NEWS

Page 1A
July 23, 2002

Living-wage movement takes root across nation
Controversial effort aids lower-income workers
By Stephanie Armour

USA TODAY

Life used to be very hard for Marlene Mendoza. The single mother worked
as a waitress at Los Angeles International Airport. At $5.50 an hour, she
says she had no choice but to put in 80 hours a week.

Today, life is still hard. But under a 1997 city law that provided wage
increases for certain employees, Mendoza now works 50 to 60 hours a
week. She is paid more than $7 an hour, which allows her to cut back and spend
time helping her son, Frankie, 10, and her daughter, Valerie, 8, with their homework.

''I work a lot less,'' she says. ''I can be with my children much more.''

Mendoza has benefited from the living-wage movement, a grass-roots
effort by activists, labor unions, religious leaders and other groups to provide
lower-income workers with better pay.

The concept has been around since at least the early 1990s, but never
before has it affected so many workers in so many cities and counties across
the USA. Even though some economists estimate that fewer than 1% of
employees in living-wage communities are covered, those on both sides of the issue
agree that tens of thousands of workers are receiving higher pay because of
the initiative.

The once-fledgling movement is making major inroads. More than 80
communities, including Boston, Baltimore, Detroit and Chicago, have laws
requiring government contractors and some other employers to pay workers
more.

The patchwork of legislation is circumventing the $5.15 federal minimum
wage, and supporters are setting their sights on statewide wage hikes,
as well.

The drive for a living wage is arguably the most successful organizing
tool and rallying point for labor unions in decades. The cause is helping
revitalize the labor movement, which for years has struggled just to
hold onto membership and benefit gains.

The living wage is bringing new supporters into the fold and harkening
back to labor's original goal of championing workers and bringing about
lasting gains.

But that concerns opponents, who suspect the movement could mark the
first thrust in a threatening, anti-business organizing push.

Wage laws are a costly burden for business, they say, that ultimately
hurts workers by forcing companies to rein in hiring.

''This is an organizing movement that had exceeded . . . supporters'
dream, and they've now become emboldened to go for more,'' says John Doyle at
the Employment Policies Institute, a research group based in Washington.
''But there will be businesses that can't pay it or will have to go out of
business. It will hurt workers and displace them from jobs.''

The stakes are high. Living-wage debates are spurring petition drives
and court cases and packing city council meetings around the country. Though
ordinances vary, the overall ground rules are the same:

* Living-wage ordinances, passed by referendums or legislation, require
certain employers to pay wages higher than federal or state minimum
wages.

* Employers covered by the ordinances are those firms that receive local
government contracts. Some also cover firms that get tax breaks or
subsidies.

* Often, the employer must pay those higher wages to employees only
during the lifetime of the government contract.

* Typically, the wage rate set is what it would take to bring a family
out of poverty (which is about $18,000 for a family of four, according to
the Department of Health and Human Services.) That means covered workers
would generally receive more than $8 an hour. The federal minimum wage was
last raised in 1997.

Sen. Edward Kennedy, D-Mass., is spearheading an effort in Congress to
raise the minimum wage by $1.50 by 2004.

The minimum wage has lost 10% of its buying power since it was last
raised, according to the Economic Policy Institute. In 1997, the minimum wage
stood at about half the median wage, but it had fallen to 40% of the median in
2001.

''This is about using public services to raise the standard of living,''
says Madeline Janis-Aparicio, executive director of the Los Angeles
Alliance for a New Economy, which has worked to enact living-wage laws in areas
of California. ''(Employees) are struggling to buy food and health care,
even though they're working full time.''

Critics worry about trend

What really alarms opponents is that living-wage laws are getting bolder - 
in some cases extending coverage to more employers than those who receive
government dollars and mandating higher wages than $8 an hour.

An ordinance in Santa Cruz, Calif., mandates that city contractors pay
up to about $12.

In New Orleans, a referendum approved by voters would make most
companies in the city -- not just contractors -- pay $6.15 an hour. (The requirement
is under review by the Louisiana Supreme Court and has not yet taken
effect.)

In Santa Monica, Calif., a law would make hotels, restaurants and some
other businesses in a geographical tourist zone with annual revenue topping $5
million pay at least $10.50 an hour. That law is on hold pending a
referendum.

Opponents fear the broader laws are an ominous trend.

''My objection is the issue of fairness,'' says Tim Dubois, CEO of the
Edward Thomas Companies, which owns hotels in the Santa Monica tourist
zone. ''We have to pay a different wage level than anyone else. It violates
every economic principle you can think of. If I can't compete, my employees
will have fewer customers and be hurt in the long run.''

The concern is that higher wages will displace lower-skilled workers
from the labor market because employers who pay more will demand more
experienced hires.

In cities such as New York, critics fear that higher wages will prompt
employers to flee. A bill under consideration by the New York City
Council would require city contractors and companies that receive sizable tax
breaks to pay $8.10 an hour to employees who get health benefits, increasing to
a maximum of $10 after five years. An estimated 80,000 workers would be
affected.

''We're trying to induce firms to stay in the city,'' says Kathryn
Wylde, president and CEO of the New York City Partnership, which represents
businesses. ''If New York needs the jobs, the idea is to make it as easy
and streamlined for firms as possible. This is a mixed message.''

Don't tell that to Ayanna Williams, who works 30 hours a week providing
child care in New York and earns about $7 an hour. It's hard work, she
says, and pays barely enough to cover her $600-a-month rent, plus groceries
and utility bills. Williams wants better wages, and she says she thinks it's
up to the city to make sure workers get it.

''I live paycheck to paycheck and care for my mom. It's killing me,''
says Williams, 22. ''With a better wage, I'd put down something for savings.
I want to go to school. To have a better wage, it would open the door for
me to better myself.''

Dianne Guindon, a child-care worker in Santa Cruz, knows the benefits of
higher pay. She used to make $9.25 an hour. Living-wage legislation
pushed that to about $11, and a raise means she makes $12.25.

''The living wage means I can do this job that I love. Instead of
working eight hours and getting exhausted, I work 4 1/2 hours a day,'' says
Guindon, 34. ''It allows me to work in a field that is my first choice, and
(employers) get quality employees.''

Does it hurt or help?

The crux of the debate comes down to fierce disagreement about whether a
living wage hurts or helps. It doesn't help that research on the issue
often results in contradictory findings.

Living-wage laws do cause job losses, according to a widely touted March
report by Michigan State University economist David Neumark. But the
research also found that living-wage laws lead to pay increases that can
outweigh those losses, leading to a modest decrease in family poverty.
One finding: A living wage that's 50% higher than the state's minimum wage
will raise the average wage of low-income workers 3.5%.

Others researchers have found similar mixed results. Robert Pollin, an
economics professor at the University of Massachusetts, found a living
wage causes some lower-wage workers to lose their jobs.

''That is a legitimate concern,'' says Pollin, co-author of The Living
Wage: Building a Fair Economy. ''But the overall effects of higher wages and
benefits overcome that.''

Kebede Woldesenbet agrees with that finding. The 72-year-old parking
attendant in Alexandria, Va., says a living-wage law there is lifting
him out of poverty. Before, he earned $6.50 an hour; today, it's more than
$10.

''The living here is very tough, I tell you. The prices, even food, are
getting higher, but wages weren't increasing at all,'' Woldesenbet says.
''I can't tell you how much we were suffering, and now, we're getting
better.''

Though the laws lead to higher costs for businesses, employers are also
divided about the movement. Take Barry Hermanson, who runs Hermanson's
Employment Services in San Francisco. He says the higher wages mean less
turnover and more company loyalty, which ultimately helps retain
clients.

''The business gets the benefits from better customer service,'' he
says. ''And it's a good thing for business to pay people a wage they can live
on without resorting to charity or public subsidy.''

But to many, a living wage is anti-business and a coup for unions.

''This is part of a union strategy to push non-union workers off the
market,'' says Robert Lawson, an economics professor at Capital
University in Columbus, Ohio. ''It's hard to tell how far this will go. The fear is
what will happen if the idea takes off. That could be much more
damaging.''

City governments have been getting away from using more costly union
labor by hiring non-unionized contractors. Critics say living-wage laws prod
municipalities back into hiring union workers because the playing field
is more level.

Union leaders say the living wage is vital to addressing what they see
as a failure to boost the federal minimum wage.

Says AFL-CIO's public policy director Christine Owens: ''While it's not
easy to mobilize people at the local levels, it's easier than to organize
nationwide.''

Supporters vow to continue their efforts. They say this is laying the
organizational framework to begin pushing for other social justice
issues such as affordable housing.

The living wage is just the first salvo in what promises to be a long
and intense battle.

''In 10 years, there's going to be some form of living-wage ordinance in
every city in the country,'' says Wade Rathke, a chief organizer in New
Orleans with the Association of Community Organizations for Reform Now
(ACORN). ''As long as Congress defaults on the minimum wage, you'll
continue to see community organizations and unions trying to figure out some
solution.''

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