Interview With Mark Brenner

LIVING WAGE LAWS IN PRACTICE: THE BOSTON, NEW HAVEN AND HARTFORD EXPERIENCES

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What exactly is a “living wage”?
This is not an easy question to answer. How much money people need is influenced by a range of factors including their family size and where they live. What is clear, however, is that the current poverty line ($19,157 for a family of four) is far too low. In a high-cost area like Boston, for example, a more reasonable definition of the poverty line - one that corrects for deficiencies in the official poverty measure and reflects the high cost of living - would be more like 160% of the current standard.

Even more important, policy-makers must begin evaluating minimum wage laws in light of living-standards benchmarks. When you do that, you see that the minimum wage is not enough to lift a full-time worker and his or her family above the current federal poverty line, much less a more realistic measure of what it takes to get by in a place like Boston.

When did PERI first start working on the living wage issue and
how did you get involved in studying these questions?
PERI has been working on living wage issues since the institute was founded. I got involved back in 1996 when I was a graduate student at the University of California-Riverside. I was part of a research team evaluating the Los Angeles living wage ordinance, along with Stephanie Luce and Robert Pollin. Based on that original work in Los Angeles Bob and Stephanie eventually wrote  The Living Wage: Building a Fair Economy, and we have all remained active on living wage issues ever since.

Can you give a very brief history of the living wage movement?
The modern movement started a little over 10 years ago in Baltimore, Md. A coalition of religious leaders, community organizations, and labor movement activists came together to send a message that tax dollars shouldn't subsidize poverty-wage jobs. They were frustrated by the lack of progress in raising the federal minimum wage, and saw this as a concrete way to address the problems of the working poor using local policy.

The idea of a living wage is simple, but it really resonates with people, and the initiatives took off. By the end of 2000 there were close to 60 laws on the books in cities across the country. Today, there are more than 120. Over time, campaigns began to ask for higher and higher wage levels, and expanded living wage laws to more types of economic relationships with the local government. Today, one of the most exciting things is the way that these campaigns have expanded their scope to include both city-wide and state-wide minimum wage initiatives.

How many localities have passed living wage ordinances to date?
What workers do the laws typically cover?
To date about 120 localities have adopted a living wage ordinance, and about 20% of the country's population lives somewhere that has a living wage law on the books. This includes big cities like Detroit, Los Angeles, and Denver, and small towns like Oyster Bay, N.Y. and Eastpointe, Mich. Geographically, living wage laws are spread throughout the country, with concentrations in the Northeast, Midwest, and West, particularly in California. The laws are not limited to cities and counties. Other entities including public school systems, universities, and public libraries have also adopted living wage policies.

While most ordinances set wage standards for workers performing services funded with tax dollars–such as janitors working for a private contractor cleaning the public library–they often set standards for other kinds of economic relationships with the local government. For example, many extend to companies who receive business assistance subsidies such as tax abatements or low-interest loans, or to firms that operate on city property (for example, in convention centers, parks, or on golf courses). Some cities have gotten creative– Los Angeles crafted its ordinance to cover the airlines operating at LAX; San Francisco 's law covers homecare workers funded through state Medicaid money.

As far as wages go, today most laws are winning wage levels of over $10 per hour, but that completely depends on the city. The bigger fights are usually around how broad the ordinance should be. For example, in Boston the living wage law covers non-profits. As we discuss at some length in the report “Living Wage Laws in Practice: The Boston, New Haven and Hartford Experiences,” if this provision were not in the law, it would be a much narrower ordinance than it is.

Which cities did you and your co-author, Stephanie Luce,
focus on and why did you select these cities in particular?
We picked these three cities for several reasons. First, we wanted to study ordinances in our area, so we were looking for experiences in New England that we could draw on. Second, we wanted to study laws that had already been on the books for some time when we started our research. Most ordinances are phased in over time, so it takes quite a while before the laws are fully implemented. We didn't want to get into a situation where we mistakenly concluded that the living wage law had no effect simply because it hadn't been applied to covered contracts. Third, we wanted to choose ordinances that had different provisions, so that we could explore the various impacts of different forms of living wage laws. Finally, we wanted to try and introduce some regional variation, choosing cities that were in both Massachusetts and Connecticut .

What empirical gaps in existing research does this study fill in?
First off, we are one of only a handful of studies that examines real, concrete cases where living wage laws have been implemented. More importantly, I think we are the only study that has attempted to examine covered contracts, covered firms, and covered workers at the same time. Now that we are finished, I think it's safe to say that one major reason people don't attempt this is that the work is so difficult!

These laws are precisely targeted, so it's pretty much impossible to use secondary data sources (such as random sample surveys or state-wide employment figures) to examine their impact. What's more, many cities with living wage laws don't require covered firms to report information on their pay, and those cities that do have strong reporting requirements don't necessarily collect the sort of data that would enable researchers to make detailed comparisons. So we had to collect most of our contract data by hand. We also had to carefully examine the scope of services provided in each contract to be sure that cities weren't just cutting services to compensate for higher costs. Needless to say, my file cabinets are full of city contracts! No one else is collecting detailed information on covered firms or workers. So if we want to understand what is going on with them, we have to get out into the field and do both targeted survey and case study research.

Despite how time consuming it can be, our in-depth, holistic approach to researching the economic impact of living wage laws has major benefits. We are able to put the results from our firm survey into context with what we found out about city contracts and what workers told us about their experiences. This provided us with far more insights than we could possibly get by looking at each piece of the picture alone, and it really helped bolster our conclusions. Further, the interviews with workers generated rich, detailed responses that we would not necessarily have been able to elicit through a survey alone.

Let's talk about the economic arguments against the living wage. Opponents of living wage laws warn that firms will respond by laying off low-wage workers. They also argue that, by extension, living wage laws that govern city contractors will discourage firms from bidding on city contracts, depressing competition and swelling city budgets. What's the empirical evidence on both of these claims?
The empirical evidence for job loss or other serious economic consequences is weak. Prior studies have found no consistent evidence that living wage laws increase contract costs, although there is wide variation. Some contract prices have gone up substantially after living wage implementation, others dropped significantly. This is why we stress the fact that living wage laws are only one of many factors influencing the cost of city services, and often not the most important one!  To date there has been no evidence of laws on the books leading to systematic job losses. Our study confirms this; living wage laws did not generate job losses in the cities we examined. We actually found some evidence that the living wage law in Boston may have improved the covered jobs, making more of them full-time.

Early on, people just extended arguments made about minimum wage laws to the living wage context. Never mind that the two are completely different policies, or that there is quite a bit of accumulated evidence that minimum wage laws don't lead to job loss either.

As the economist and commentator Deirdre McCloskey would say, the arguments against the living wage are a classic case of blackboard economics talking. We all know that when you raise the price of something people demand less of it, right? We have the graphs to prove it! The trouble is that the world doesn't work as neatly as our models suggest, and all of our abstract thinking and theorizing has made us less attuned than we should be to what is often a very complex reality out there.

For example, a standard competitive model of the labor market would predict that if McDonalds lowered their wage by a penny tomorrow they would be unable to hire anybody. Nobody thinks that's an accurate description of what would actually happen. But it's only in recent years that people like Alan Manning, a well known labor economist at the London School of Economics, have begun to really explore the implications of this divergence between our models and the real world.

At heart, what I think these folks are bringing to the fore is a recognition that the labor market is not like other markets. In the supermarket, for example, when you buy Special K, you still get the same stuff in the box whether it's on sale or not. The product, so to speak, is unaffected by its price. That is just not true with people. What you pay people has an incredible effect on what you get from them, and even the same individual will be a different type of employee depending on whether he or she is paid the minimum wage or something much above minimum wage.

To what extent do living wage laws appear to succeed in lifting affected workers out of poverty? How does the wage hike affect their lives more broadly; what other quality-of-life effects did you observe?
Well, our research would suggest that living wage laws do a fairly good job lifting workers above the federal poverty line. However, as we've already discussed, that is not really an adequate benchmark for what it costs to live in a city like Boston.

Unfortunately, at their current levels, living wage ordinances are unable to lift workers above a more ambitious living standard–one that really reflects the spirit of the term “living wage.”

That said, we spoke to a lot of people who talked about the tangible, concrete benefits they got from having higher wages. For example, one woman was able to help her elderly mother buy medicine. Another younger worker was able to save some money and help his mom make a down payment on a house. People talked about being able to take a vacation, not have to worry about paying all their bills, paying down some of their debts. The living wage made a tangible difference.

How are living wage struggles connected to the federal minimum wage? Given the continual erosion of the federal minimum wage, are local efforts to some extent “swimming upstream”?
Well, on the one hand, it would be much better to have a high national minimum wage. It would cover many more people, while at the same time setting a single standard for the whole country. Clearly the current patchwork of state and local policy leaves many people behind. However it's also true that I think one of the most important aspects of the living wage movement is the fact that it's a  movement. It is getting people in motion; getting them engaged in politics again; building capacity at the grassroots around core principles of economic justice and democracy. To me this is the key to how to change things at the federal level.

Last November, voters in Florida voted overwhelmingly (71% to 29%) to raise the state's minimum wage by $1, with annual indexing to inflation. How do you view this in the context of the living wage issue nationally?
Is it an important development?
I do think it's important. Florida now joins more than a dozen other states that have minimum wages higher than the federal level. This helps put pressure on Congress to raise the federal minimum wage, as more and more states make it clear that this is a political priority for voters. The fact that they indexed their minimum wage to inflation is also really important, because it helps expand what is possible nationally.

But I think this victory was more important for other reasons. During the last election it was common to talk about how deeply divided the country is. We're split right down the middle–on the war, on tax cuts, you name it. Well if you look at the returns from the Florida minimum wage ballot measure, it won in every single county in the state. Even in hard core Republican territory, people recognized that the minimum wage isn't enough to live on, and were willing to do something about it. That leaves me pretty optimistic about what's possible when it comes to achieving a more just and equitable society.