Living wages

From Los Angeles to Philadelphia, from San Antonio to Cleveland, cities across the country are adopting laws to ensure family-supporting wages are being paid by businesses that receive taxpayer funding.

Here’s how these laws work:

David Madland, Director of the American Worker Project at CAP Action: Local governments spend billions of dollars every year to entice private businesses to invest in their communities. This money finances developments such as sports arenas, high-tech manufacturing zones, and big-box retail.

But, unfortunately, public funds have all too often helped to create low-quality jobs that pay poverty wages and provide no benefits. To address this problem and ensure public funds help create quality jobs, cities are attaching job standards that require businesses receiving public subsidies to pay workers family-supporting wages.

Marika Baldwin, AlliedBarton Security Services: Higher wages have meant for me and my family peace of mind, more comfort, and it helps me pay my bills on time.

Opponents of wage standards argue these laws are job killers.

Marc Freedman, executive director of labor law policy, U.S. Chamber of Commerce: The focus these days on creating jobs—my question would be is this in fact a good move? My thoughts are—and I think this is reflective of where my members have spoken to me about this—making employees more expensive is not a strategy for spurring economic activity.

The Center for American Progress Action Fund recently conducted the largest study of its kind on the effects of wage standards. The Center's research refutes the opponent’s claims and finds that wage standards are not job killers. The study shows that 15 cities that have effectively implemented economic development wage standards had the same levels of employment growth overall as a comparable group of cities without such standards.

David Madland, Director of the American Worker Project at CAP Action: That’s because paying workers family-supporting wages is a smart investment for businesses. When workers are paid fair wages, they are more loyal, stay at their jobs longer, and are more productive. And, in the long run, fair wages reduce the costs of replacing dissatisfied workers and ensure that when workers are on the job, they work their hardest.

A specific example relates to the San Francisco Airport. After adopting wage standards for its workers, turnover rates fell for security screeners fell by 80 percent, saving employers more than $4,000 per employee.

Wage standards ensure companies receiving subsidies compete on an even playing field with existing companies who pay their workers nonpoverty wages.

Madeline Janis, executive director of Los Angeles Alliance for a New Economy, commissioner of the Community Redevelopment of the City of Los Angeles: Los Angeles has had a living wage ordinance for about 14 years. And about seven years ago the city’s redevelopment agency adopted that standard. It’s really become an important tool for really building the city in a sustainable way. We’re creating good jobs and we’re also creating sustainable long-term businesses. We have not seen the negative impacts of raising wages that have been claimed by some of the opponents. Rather, we’ve seen hard-working families lifted out of poverty with health benefits and really a decent life.

Wage standards also ensure that taxpayers get good value for their investment in subsidized firms. They create an economic boost for communities, as families affected by the laws spend their new income in local stores and restaurants. Also, when workers wages are higher, they are less likely to rely on government assistance programs such as income and food assistance. For example, it’s estimated that California spends $10.1 billion every year in public assistance for working families with jobs that pay very low wages—that’s over $5,000 per working family.

David Madland, Director of the American Worker Project at CAP Action: Wage standards are one way we can ensure that job quantity and job quality in our communities grow hand in hand. By adopting economic development wage standards, communities can encourage investment in good jobs without affecting its business climate or job growth and ensure that taxpayers receive good value for their public investment.