Who Do Living-Wage Laws Help?

by Charles Walker

Reprinted from Labor Tuesday, March 12, 2002

On Tuesday, March 6, Oakland, Calif. voters overwhelming approved a living wage measure said to require that some airport and maritime businesses (those with more than 20 workers) pay their employees $9.13 per hour with health benefits and $10.50 per hour without benefits.

The measure was initially designed to be a better one, but opposition from the city’s mayor, former Calif. Governor Jerry Brown, and a city council member who is also a Molders Union official, resulted in a compromise measure “substantially weaker than one labor unions pushed for,” reported the Oakland Tribune (March 6).

While the heavy vote for the measure is sure to encourage living wage campaigners, and the pay increases are sure to be welcomed by low-wage workers, the new gains will only marginally improve the affected workers’ lives in Oakland, one of the nation’s costliest regions. But even if the law mandated a much higher living wage, say $25 per hour, its value to Oakland’s workers overall would still be negligible because of the relatively few workers covered by the law.

If living-wage laws haven’t reduced much poverty, they also don’t cost business and governments much. “We’re not really seeing any adverse impact on the business climate,” Michael Reich, an economist at the University of Calif. told the Washington Post. Reich, who has studied San Francisco’s living-wage law also said, “But as far as the low-wage workforce goes, the impact on wages is small, too.”

The living-wage movement has been underway since 1994. Since then hundreds of campaigns have resulted in over 60 cities and counties adopting some form of living-wage legislation. According to labor analyst Harry Kelber, perhaps a hundred thousand or so “low-paid workers—still a small fraction of the working poor—have gotten raises.”

In fact, that’s one of the chief characteristics of living wage legislation, as conceded by one the founders of the living-wage movement, according to the Washington Post (March 1). “Robert Pollin, who is one of the intellectual fathers of living-wage policies, acknowledged that living wage laws…have little economic punch…But he stress that the gains felt for a select few low-income workers from these policies are real. And while their numbers are small, anything that forces better wages for low-income workers is an improvement, he argues, particularly if it becomes a more expansive political movement than it is now.”

The living-wage movement is partly a response to the deep erosion of the buying power of the minimum wage. A little over a year ago the AFL-CIO stated: “The minimum wage is no longer a family-supporting wage. In the past, the minimum wage provided enough income to lift a family of three out of poverty…The minimum wage, however, remained unchanged at $3.35 an hour from 1981 until April 1990, while the cost of living rose steadily; thus, minimum wage earnings slipped significantly below the poverty level. Recent increases have not restored all the lost value. Today, full-time, year-round minimum wage earnings are nearly 20 per cent below the poverty level for a family of three.”

As an “intellectual father” of the living-wage strategy, Robert Pollin, stresses that every little bit helps—but just as surely only a little bit. As a consequence, Americans workers are losing not a little bit, but are losing big time as concessionary bargaining undermines both union and non-union wages, as the minimum wage erodes and as living-wage efforts boost the incomes of relatively few of the working poor. All that has caused a general erosion of workers’ earnings.

Workers’ incomes have become a smaller proportion of the nation’s yearly labor and output, as measured by the Gross Domestic Product, which is calculated by the government to be over 10 trillion dollars.

If today’s workforce received the same percentage of the Gross Domestic Product workers received during the fifties and sixties, workers today would be taking home hundreds of billions of dollars more than they do. Of course those missing dollars aren’t lost. They wind up in investors’ bank accounts and tax coffers.

The upshot is that American workers at virtually all income levels are weighed down and held back by the increasingly maldistribution of the nation’s wealth.

During the 1930s U.S. unions under terrible conditions of mass unemployment won wage increases, gained reductions in the workday, secured the start-up of social security and successfully fought for the all important right of workers to organize.

If today’s labor leaders ever understood the cause-and-effect relationship between union militancy and workers’ gains, they don’t show it. Rather than use struggles by organized workers for even modest gains to prepare the ground for significant and needed advances, our union leaders at all levels seem determined to maintain worker passivity by relying on labor-management collaboration schemes on the job and in politics.

Seemingly reluctant to mobilize the power of the ranks, as was done during the 1930’s, the union’s institutional power, as such, has diminished in most decades since the end of World War II. And despite the union oligarch’s exclamations that organized labor is indispensable to workers’ progress and the achievement of a democratic society, they ignore any evidence that their strategic outlook, commonly called business unionism, is the polar opposite of what is needed to ensure organized labor’s viability.

Granted that such evidence is mostly found in found in labor’s past—but not all of it is old history. In 1997, over 200,000 UPS strikers electrified U.S. workers, unionized and not, when they handed their UPS bosses a defeat.

In the midst of decades of concessionary bargaining that erodes workers’ standard of living and saps their morale, the power of workers’ solidarity could not be denied.

But it has been ignored as organized labor continues to founder on a program of concessionary bargaining, on minimum wage demands that mock the very concept of a minimum wage and on living-wage campaigns that help very few.