San Francisco's fight over highest 'living wage'

Some Denver religious leaders plan a demonstration next week favoring a "living wage" in that city.

Chicago, which already has a living-wage law, elected activist Ted Thomas as alderman this week on a campaign to strengthen and expand that ordinance.

And as San Francisco weighs adopting the nation's highest living wage of $14.50 per hour, the voices of opposition, even from the business community, are relatively muted.

All three illustrate the breadth of support, growing power, and shifting politics of a movement that, while only five years old, has overthrown traditional notions of how local economics work.

Just as important, say analysts, this movement to raise local pay for those that do business with the city has transformed the relatively narrow issue of wages into a potent tool of local activism. Religious groups, labor organizations, and neighborhood activists, while often sympathetic to one another's causes, have worked hand in hand around the wage issue in cities like Chicago, Baltimore, and Boston.

"It's an active coalition that just never existed before," says Jen Kern of the Association of Community Organizations for Reform Now, a Washington-based neighborhood group active in the living-wage movement.

The movement's aim is to bypass the slower mechanism of raising the federal minimum wage through Congress, though supporters certainly favor doing that, by fighting for pay hikes community by community, where the issues are local and more visceral.

Stunning success

The very notion of a politically dictated "living wage" horrifies some economists as a dangerous abandonment of free-market principles. But while many oppose it, the movement's success is stunning. Some 29 cities and counties have adopted living-wage laws since 1994, another 30 are considering it, and every single attempt to enact a local living wage has succeeded.

Less successful have been ballot initiatives to raise the local minimum wage across the board. Two such attempts, in Denver and Houston, failed in recent years partly because business mounted ambitious and expensive opposition campaigns. Living-wage battles, because they affect a smaller group, have drawn less active opposition.

The economic consequences of these local living-wage laws are disputed. Their scope is somewhat narrow to begin with.

Usually they apply only to businesses that have contracts with or receive subsidies from the city or county. While the requirement of a higher minimum wage for businesses with city contracts means their costs rise, it's not clear yet how much of the higher cost is passed along to the city or absorbed by businesses to stay competitive in contract bids.

For Marvin Kosters, an economist with the American Enterprise Institute, it's all a slippery slope because, inevitably, living-wage laws "tend to make taxpayers pay more for the services they buy." He says it's no coincidence these policies are flourishing while employment levels are high, thus weakening the argument by opponents that higher wages will mean fewer jobs, and local budgets are flush.

But Mr. Kosters warns, "it's going to be hard to get rid of. It's like rent control. Sounds good, but once you get into it, it's very hard to get out of it."

Studies done about the economic impact in Baltimore, the first large municipality to enact a living-wage law in 1994, show it's been limited. An examination of the city's contracts by researchers at Johns Hopkins University concluded: "The living-wage ordinance has had positive effects on a relatively small number of workers in Baltimore without significant financial cost to the city."

Robert Pollin, author of the book "The Living Wage" and a professor of economics at the University of Massachusetts at Amherst, says the pool of workers directly affected by such laws is "pretty tiny." He's studied the impact of the living-wage ordinance adopted in Los Angeles in 1997 and concluded it boosted costs about 1 percent for the businesses affected.

"Arguments about rising costs to the city are a legitimate concern. But the fact is that they are not going to create significant increases for city government. They're just too small," Mr. Pollin says.

Strengthening movement

Still the passage of one law after another has emboldened the movement. Politically, it's a tough concept to fight. Chambers of commerce, guardians of local business, are often the leading opponents.

But in San Francisco, the coalition behind a living-wage ordinance, expected to be introduced in the coming days by Board of Supervisor president Tom Ammiano, is so broad and powerful that local opponents seem resigned to fighting over the details, not the basic concept.

"It's well meaning," says San Francisco Chamber of Commerce spokesman Jim Mathias of the local living-wage push. "What we're saying is that some jobs will be lost if the wage is set too high."

This city's Coalition for a Living Wage is lobbying for a $14.50 wage, based on the high cost of living in the area. That too is a relatively new tack. In the past, most cities and counties have based their wage on an index of the federal poverty level, rather than local cost-of-living factors.