Abstract

Many living wage movements are triggered by the desire to increase the wage floor to certain groups of workers. Living wage refers to the lowest amount of income required for an employee be able to meet the basic needs for a given period of time. The main basic needs include food, clothing and shelter. Scholars have noted that the number of living wage movements has increased progressively from mid-1990s. The main motivations for these movements are to increase the living standards of low-wage city workers, difficult economic conditions in the United States, economic incentives and coalitions. Nonetheless, the opposition that these movements faces poses a great challenge to the achievement of the goals of living wage movements. Opponents of the living wage movements have great influence, power and resources. Moreover, past studies have not considered the indirect effects of the activities of living wage movements. This paper reviews these issues to determine whether living wage movements have an impact on improving the living standards of low-wage workers. 

Introduction

The passage of local ordinances to increase the wage floor for a certain categories of workers covered by the regulations is often the trigger of living wage movements. According to public policy, living wage refers to the lowest amount of income required for an employee be able to meet the basic needs for a given period of time. The main basic needs include food, clothing and shelter. In the 1990s, living wage regulations have multiplied. By the end of 2002, numerous cities and counties enforced living wage laws (Kaufman, 2010). However, several campaigns have been formed to fight for a wage raise in the United States. Thus, the number of living wage movements has increased considerably. However, they face opposition from some employers, taxpayers and administrative officials. This paper will examine different labor regulations and then discuss the reasons for and against living wage movements. The overall aim of this paper is to determine the impact of living wage movements in the promotion of workers’ welfare.

Living Wage Ordinances

Living wage regulation refers to a legislation that determines an income level above the existing minimum wage for employees covered by the laws. These laws are numerous and differ. The regulations are normally specific on coverage. However, negotiations made during political processes affect the coverage. It is normal to find exemptions for some groups of workers on the coverage made by living wage ordinances. Exemptions can be based on the amount earned by workers or the categories in which they fall. The number of hours worked by an employee can also be a criterion for coverage of the living wage regulations. In some cities, like Jersey, coverage is provided for all workers on contract. However, only full-time employees receive health and holiday benefits (Kaufman, 2010).

Conversely, in other cities, like Milwaukee, living wage regulations use specific languages and ensure coverage of all workers. Thus, full-time, part-time and temporary workers are covered. The adoption of outsourcing of services is also another issue that affects the coverage provided by living wage ordinances. Outsourcing is used by organizations to lower the minimum pay provided to workers. For example, Harvard University employed some workers indirectly. Indirectly employed workers were offered low pay and benefits. Additionally, some regulations incorporate the cost of living tunings. Hence, they consider the poverty line and family sizes. However, some regulations are directly connected to the consumer price index (CPI) and do not make any cost of living adjustments (Kaufman, 2010).         

Apart from pay and coverage, living wage regulations differ in terms of consideration of hiring practices, enforcement and labor relations. Many living wage movement activists seek to enhance the labor environment. In San Jose, living wage regulations must be examined to ensure that they consider appropriate labor practices. Employers are also examined to determine whether they have a history of promoting labor peace. Living wage ordinances of Minneapolis note that preferential treatment will be accorded to employers that have responsible labor relations. In addition, some ordinances ensure that employees come from the local population. There are other numerous dimensions for living wage ordinances formulated and enacted by different entities. Moreover, living wage campaigns have often been successful in promoting the formulation of effective ordinances.

Motivations for Living Wage Movements

Difficult economic conditions that face the families of low-income earners are the chief motivator of living wage movements. From early 1980s to mid 1990s, the hourly pay of low-wage employees fell by approximately 18% (Clary, 2009). Fortunately, the labor market tightened from 1996 and the minimum wage increased progressively. The privatization of services that were formerly offered by the public sector is another key motivator of living wage movements. A certain study in 1998 found that many state governments had increased the number of services offered by contractors (Wills, 2009). Moreover, the study found that many other government entities planned to raise the number privatized functions in the next five years. Privatization of services was prevalent in the transportation sector, provision of administrative, social and correctional services. However, living wage advocates note that privatization results in job losses and reduction of wages (Clary, 2009). These mainly affect public sector employees. A survey in Chicago found that privatization resulted in compensation losses ranging between 25 and 46 percent (Clary, 2009).

Living wage movements are also motivated by the increase of economic expansion incentives. These incentives include loans, tax subsidies and public goods. Advocates for living wage note that private businesses must offer their workers appropriate pay for they benefit from public money (Clary, 2009). They argue that subsidy recipients and contractors benefit from the entities, like cities, and should reallocate the benefits among low-wage employees. Furthermore, living wage movement advocates state that in case higher pay is offered to low-wage workers out of the reallocated rents, then market inefficiencies like prices and employment adjustments will not be necessary. Such market inefficiencies are brought by ordinances that seek to ensure that rents are redistributed.

Another vital feature of living wage campaigns is the character of coalitions that they engage in frequently. Notably, the coalitions are also a key motivator for the living wage movements in the United States of America. The coalitions are normally comprised of political, religious and labor groups and community organizers. In addition, the coalitions that fight for the provision of appropriate pay for low-wage workers are highly diverse (Clary, 2009). They motivate living wage movements since they provide the required machinery to ensure success of campaigns. The machinery is in terms of finances and technical abilities. Labor unions also normally support living wage movements as they seek to enhance economic justice for lower-wage city workers. Unions also support living wage movements as they hope to decrease competitive pressures brought about by outsourcing of their functions to contractors within the private quarters. Thus, labor unions provide financing, political strength and influence to the coalitions.

Coalitions are encouraged since they involve the whole community and improve the chances of success of living wage movements. For example, in Los Angeles, a coalition that consisted of religious groups, community members, labor unions and workers succeeded in ensuring that the provisions of a living wage ordinance were reviewed. Los Angeles Alliance for a New Economy (LAANE) led the coalition. LAANE incorporated and organized workers affected by the regulation in the campaigns. The workers were offered opportunities to speak and this made a significant impact. LAANE also ensured that workers were informed about their rights as provided by the ordinance that the campaign was opposing. According to Rossi & Curtis (2013), it appears that living wage campaigns strengthen labor movements. These motivations have provided a suitable ground for advocates of living wage advocates. The organizers of living wage movements emphasize that the campaigns are a channel for low-wage employees in cities and other stakeholders to pursue social justice (Clary, 2009).

Many successful living wage campaigns have adopted a more or less similar strategy to that adopted by LAANE. They incorporate community members, labor unions and religious organizations in the campaigns. They also work together with economists and legal experts to provide technical assistance. Nonetheless, there are opponents for living wage movements.

Opposition for Living Wage Movements

Generally, some members of the local administration and affected companies are the opponents of the course of living wage movements. In addition, some taxpayers oppose the course of living wage movements. These taxpayers and citizens consider the effects that the movements can have on their businesses. They are likely to face higher tax responsibilities or drop in services. Some companies resist living wage crusades because of labor expenses. Whenever they present low wages, employers argue that they are offering market rates. They state that they are offering wages determined by the market forces of demand and supply (Kaufman, 2010). A commanded increase in pay for low-wage workers will make them pay above the market-determined rate. This affects their competitive abilities and makes them lay off some workers. Moreover, it can make them leave the market.

On the other hand, city officials who oppose living wage movements argue that living wage ordinances affect the ability of their cities to compete for contracts with other entities. Secondly, they note that the ordinances normally raise the cost of business deals. This forces the local authorities increase taxes or reduce services offered (Kaufman, 2010). Opponents of living wage movements use a considerable amount of resources to ensure the failure of the campaigns. For example, in Santa Monica, LAANE faced a great opposition from the National Restaurant Association in 2001. The National Restaurant Association spent over 2 million to oppose a living wage rule in the area.             

Living Wage Movements and Living Standards

Many previous studies on the impact of the movements simply made predictions (Wills, 2009). Many such studies consider information on city deals covered by an ordinance, use input and output theories to determine employment levels and employ micro statistics on jobs in relevant sectors to establish would be affected workers. According to the study by Wills (2009), the number of workers affected in models with contractors and subsidies was smaller compared to the labor force of a city. Associated costs in the same models are lower.

However, the key issue is the determination of whether living wage movements can assist in improving the living standards of low-income workers. Determination of the appropriate answer to the issue relies on the magnitude of the coverage provided by an ordinance, the targeted sectors, the intersection between social programs and wage increase and the reaction of firms to increases in labor costs. In addition, it depends on the indirect results of living wage ordinances and other factors. However, previous studies have not considered some of these factors. In addition, other studies have not examined the impact of opposition mounted by opponents of living wage movements. Thus, there is a gap in literature concerning the effectiveness of living wage movements in improving workers’ living standards. The inclusion of the identified factors in surveys can assist in determining the true impact of the living wage movements.

Conclusions

The goal of living wage movements is to improve the living conditions of low-income workers. These movements seek to enhance the living conditions of workers by ensuring proper formulation and enactment of living wage laws. Such laws are diverse and differ from one city to another. The movements face opposition from some employers and taxpayers. Nonetheless, living wage movements are motivated and have effectual ways of campaigning. The goal of this paper was to determine the impact of living wage movements in the promotion of workers’ welfare. It reviewed some motivations for living wage movements. It then reviewed some of the reasons opponents of the movements provide for opposition. Finally, it considers a brief summary of the results and weaknesses of some past studies. Thus, this paper concludes that the true impacts of living wage movements can only be determined in a study that considers all the issues involved in the campaigns. Some of these issues are city deals covered by ordinances, input and output theories, statistics on jobs in relevant sectors, opposition’s strategies and finances, economic transfers and indirect effects of the campaigns.

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