As the national debate over the minimum wage continues to generate political heat, another movement that could force some employers to almost double the salaries of their workers is developing in several major U.S. cities.
The living wage campaign, led by an unlikely coalition of labor unions, religious groups and community-based organizations, has brought together working-class Americans to flex their political muscle.
The effort is underway in 30 cities but has been especially visible in Chicago, where weekly rallies, demonstrations and town hall meetings have attracted hundreds of supporters in recent months.
On Thursday, an ordinance is expected to be introduced in the City Council that would require businesses that receive city contracts or subsidies to pay their workers at least $7.57 an hour, or $15,000 a year–the federal poverty level for a family of four. Many such jobs currently pay the minimum wage of $4.25 an hour.
Without the support of Mayor Richard Daley, who has questions about the budget implications of such a requirement, the legislation likely will not go far. But organizers of the local campaign, led by ACORN, the Association of Community Organizations for Reform Now, say 36 aldermen have indicated they are receptive to the concept.
“The City of Chicago has an obligation to ensure that when it spends money, it spends it wisely,” said Ald. Ricardo Munoz (22nd), who will jointly sponsor the ordinance with Ald. Toni Preckwinkle (4th). “In this case, it means supporting a living wage.”
Thus far, Baltimore and Milwaukee are the only cities that have passed living wage laws. The Minnesota legislature approved a similar statewide law this year that was vetoed by Gov. Arne Carlson.
The proposed Chicago ordinance would apply to firms that receive at least $50,000 in city subsidies and employ at least 25 employees, with the exception of those that employ construction workers, virtually all of whom already earn above living-wage pay. It would also affect companies with at least 10 employees that hold city contracts valued at a minimum of $5,000.
In all, the ordinance would affect more than 1,000 businesses and some 10,000 workers. It also would require firms to attempt to fill vacant jobs with unemployed and underemployed Chicago residents and to recruit first in the neighborhood where the business is located.
As it has elsewhere, the proposed ordinance is opposed by such business interests as the Chicagoland Chamber of Commerce and the Illinois Restaurant Association. The reasoning is similar to that of opponents on the national level to efforts to increase the minimum wage to $5.15 an hour: that forcing companies to pay higher wages would be devastating to small businesses that already are on financially shaky ground.
According to Colleen McShane, executive director of the restaurant association, the national organization documented a loss of 500,000 jobs in 1992 and 1993 following the last minimum wage hike in 1991.
“The living wage, like the minimum wage, would be counterproductive,” said McShane. “If wages go up, there will be layoffs.”
The Chicago-based Heartland Alliance has calculated that increasing wages to $7.57 an hour from $4.25 will cost businesses about $200 more a month per worker. However, a worker earning $7.57 an hour contributes an average of $101 a month in taxes, while a minimum wage worker qualifies for a monthly tax credit, they point out.
Daley–as well as several aldermen, including Finance Committee Chairman Ed Burke (14th)–has expressed concern that living wages will increase the cost of some city contracts.
“Where’s the money going to come from?” Daley said last month before a meeting with ACORN.
On Wednesday, he pointed out that many city contractors are already required to pay the prevailing wage–an amount at least comparable to what unionized workers earn doing the same job in the private sector, generally more than $7.57 an hour.
Living wage laws, like the minimum wage hike proposal, are aimed at raising the pay base for the working poor. The main difference is that minimum wage laws affect 95 percent of all workers, while living wage laws affect primarily government contract workers, such as Leon Doughty of Chicago.
Doughty, 65, works for Andy Frain Services Inc., a city contractor that provides passenger security and services at the United Airlines terminal at O’Hare International Airport.
Doughty is a retired Chicago Head Start coordinator who needed to take the job with Frain seven months ago to help pay the rent on the apartment he shares with his wife. He never expected to be doing this kind of work at retirement age.
“We are just getting by,” said Doughty.
Organized labor, which has lost membership and bargaining power in recent years, has led many of the ongoing demonstrations in support of living wage laws in various cities.
The grass-roots movements have picked up local steam because of the widespread sentiment that the shape of the economy has had a devastating effect on the working class. And, political savvy organizers, such as ACORN, have taken advantage of an election year to boost their local agenda to state and national levels.
Ted Thomas, a postal worker from the Englewood neighborhood, sees the issue as one of economic parity.
“Living wage workers pay more taxes than minimum wage workers. Living wage workers spend more in their communities,” said Thomas, president of the ACORN board. “It’s time we quit promoting welfare and give people an incentive to work.”
Carl Tannenbaum, chief economist for LaSalle National Bank, said most businesses probably could afford the proposed 21 percent increase in the minimum wage.
But regarding a living wage law, he said: “Asking businesses to absorb 2 bucks more than that–a 78 percent increase–might be too much to ask.”
