Volume LIV, No. 9
May, 2001
The Living Wage Movement
Bill Quigley
IN THIS ISSUE
Poverty law professor Bill Quigley introduces the rapidly growing movement for a living wage, documenting the religious support this has received. He helps us understand the technical aspects of defining a living wage and introduces the legal strategies for establishing living wage laws.
"Our nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work." Franklin Delano Roosevelt, 1937
If a person works full-time, they should not have to raise their family in poverty. The living wage movement is summed up in that simple statement.
In October 2000, the Santa Cruz City Council enacted the nation's highest living wage. Their law requires that city employees and employees of city contractors be paid at least $11 and hour if they receive health benefits, and $12 an hour if no benefits.
As of early 2001, more than 50 jurisdictions had enacted living wage ordinances and another 75 or so had ongoing living wage campaigns.
The Living Wage Movement
The living wage movement is trying, primarily through local laws, to achieve economic justice for low wage workers by requiring that businesses which have public contracts with local government pay their workers wages high enough to support their families.
The living wage movement is made up of a fabric local coalitions of community groups, labor organizations, and interfaith religious organizations.
The living wage movement is built on a recognition that the current federal minimum wage does not provide enough for an individual to live on, much less an individual with a family. Living wage laws supersede the low federal minimum with a local laws requiring workers to be paid a true living wage.
The first victory by the current living wage movement came in the mid 1990s in Baltimore and emerged from action taken by a coalition of churches and labor organizations.
A coalition of fifty Baltimore churches approached the American Federation of State, County and Municipal Employees (AFSCME) to join in creating an organization of churches, labor union members, and low-wage service workers. Churches were seeing an increase of the use of soup kitchens and pantries by the working poor. Low-wage workers were often turning to food stamps, publicly financed health care and private assistance from churches to make up the difference from their low-wage work. The churches concluded that minimum wage jobs with no benefits were not helping people escape poverty. The labor unions were concerned about the privatization of formerly government jobs in areas like janitorial and food services which replaced good public jobs with low wage private jobs. Together they concluded that private companies were paying low wages in order to win low-bid government contracts. To them, this was municipal subsidization of poverty.
The Baltimore coalition created a local campaign. They worked together for a law that would require businesses which had contracts with the city to pay their workers at least a living wage. Importantly, both churches and labor contributed people and funds to create a working coalition to educate the public about the problem of low wages and to lobby for the living wage bill. Due to the work of the coalition, Baltimore ultimately enacted a local living wage law in July 1996. City contractors had to pay a minimum of $6.10 an hour in 1996, rising in annual increments to $7.70 an hour in 1999. The goal of the law was to place the wage at a level sufficient to lift a family of four over the poverty level. The law was estimated to apply to between 2,000 and 3,000 workers.
The success of the Baltimore effort inspired the development of other living wage coalitions made up of labor, community, and religious organizations.
Voters in Detroit in November of 1998 passed a $7.70 an hour living wage ordinance by a 4 to 1 margin with support from 80% of the voters. The ordinance required contractors doing more than $50,000 a year in business with the city or that received that amount in tax breaks to pay their workers a minimum of $7.70 per hour if they provide health insurance and $9.63 an hour if no health insurance is provided. The proposal proved so popular that a spokesperson for the Detroit Chamber of Commerce said after the vote "We knew there was no way we could stop it."
Also in 1998, voters in Washington State, by a 2 to 1 margin, raised their state minimum wage to $5.70 an hour in 1999, to $6.50 an hour in 2000, and to raise it in future years to keep pace with inflation.
An April 2000 survey found that 94% of the 1000 adults questioned agreed with the statement that "as a country, we should make sure that people who work full-time should be able to earn enough to keep their families out of poverty."
In June 2000, the Alexandria Virginia City Council unanimously passed a living wage ordinance which requires city contractors to pay $9.84 per hour, and health insurance, to employees on city contracts.
In August 2000, by a margin of more than three to one, voters in St. Louis approved a living wage ordinance setting hourly rates at $8.67 an hour for workers with health benefits, and $9.92 for those without.
As noted earlier, the nation's highest living wage ordinance was passed by the Santa Cruz City Council in October 2000. The law requires that city employees and employees of city contractors be paid at least $11 and hour if they receive health benefits, and $12 an hour if no benefits.
Fifty jurisdictions did not just spontaneously enact fifty living wage ordinances. The seventy-five additional living wage campaigns did not just appear out of nowhere. These represent a cumulation of great organizing and decades of education and advocacy work.
Religious Support for Living Wages
There has been solid religious support for living wages for well over 100 years. Many religious groups have gone on record to support the right of workers to living wages, including: the Catholic Church; the Episcopal Church; the Jewish Council for Public Affairs; the Unitarian Universalist Association; and the United Methodist Church.
Outside of the labor movement, religious reformers were the first group to call for a living wage, starting with Pope Leo XIII's 1891 encyclical letter to the Catholic bishops of the world entitled "On the Condition of Labor" which recognized the right of every worker to receive wages sufficient to provide for a family.
In 1911, the Milwaukee Federation of Churches joined with local community organizations like the Consumer's League to push for the first minimum wages for women and children. In 1919, the Federal Council of Churches of Christ in America proclaimed that "The living wage should be the first charge upon industry, before dividends are considered."
In 1931, Pope Pius XI reaffirmed the principle of the need for a living wage, saying "In the first place, the worker must be paid a wage sufficient to support him and his family." Quadragesimo Anno, para 71 (1931).
In 1940, the US Catholic Bishops spelled out the need for a living wage:
The first claim of labor, which takes priority over any claim of the owners to profits, respects the right to a living wage. By the term living wage we understand a wage sufficient not merely for the decent support of the workingman himself but also of his family. A wage so low that it must be supplemented by the wage of wife and mother or by the children of the family before it can provide adequate food, clothing, and shelter together with essential spiritual and cultural needs cannot be regarded as a living wage. Furthermore, a living wage means sufficient income to meet not merely the present necessities of life but those of unemployment, sickness, death, and old age as well. Statement on Church and Social Order, February 7, 1940, paras 41-42, JIM p 435.
In 1961, responding to those who said wages should be left to the dictates of the market, Pope John XXIII proclaimed that a living wage was a justice issue: "We therefore consider it our duty to reaffirm that the remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful. It must be determined in accordance with justice and equity; which means that workers must be paid a wage which allows them to live a truly human life and to fulfill their family obligations in a worthy manner." Mater et Magistra, para 71, (1961)
In 1981, Pope John Paul II indicated that payment of living wages was a critical criteria for determining the legitimacy of the entire economic system: "Hence in every case a just wage is the concrete means of verifying the whole socioeconomic system and, in any case, of checking that it is functioning justly. It is not the only means of checking, but it is a particularly important one and in a sense the key means." John Paul II, On Human Work, para 89 (1981). See also further explanation of living wage in paras 90 and 91.
In 1986, the Catholic Bishops of the USA placed just wages squarely on the social justice agenda for the American economy: "The first line of attack against poverty must be to build and sustain a healthy economy that provides employment opportunities at just wages for all adults who are able to work." Economic Justice for All, para 196 (1986).
Again in 1991, John Paul II also reaffirmed that "A workman's wages should be sufficient to enable him to support himself, his wife and his children." Centesimus Annus, para 8 (1991).
The 1992 Catechism of the Catholic Church describes payment of "unjust wages," even if low wages are allowed by law, as a violation of the seventh commandment. "Even if it does not contradict the provisions of civil law, any form of unjustly taking or keeping the property of others is against the seventh commandment: thus, deliberate retention of goods lent or objects lost; business fraud; paying unjust wages; forcing up prices by taking advantage of the ignorance or hardship of another." Catechism of the Catholic Church (1992): Para 2409, see also para 2434.
Minimum Wage is No Living Wage
The primary reason for the local living wage movement is that the federal minimum wage has failed to provide workers with sufficient wages to support themselves and their families.
The current federal minimum wage of $5.15 an hour went into effect September 1, 1997. According to a 2001 report of the Congressional Research Service, if the minimum wage was adjusted to allow it to retain its 1968 value, it would be about $7.72 per hour. The problem with the federal minimum wage is that it was too low to begin with, it is not indexed for inflation, and it can only be raised by an act of congress. Recent estimates suggest that the current minimum wage is not only thirty percent lower in real value than the minimum wage was in 1968, but that the economy has become fifty percent more productive since then and low-wage workers have not shared in that productivity.
How many people need living wages? Part of the answer is apparent from looking at how many people earn minimum wages now. If the minimum wage was raised immediately in early 2001 by $1.50 an hour, 11.9 million workers, or 9.9% of the workforce would see an increase in wages. Despite the prevailing wisdom that only teenagers and part-time employees work for minimum wages, 68.2% of the workers affected would be over 20 years old and close to half, 45.3% of the workers, would be full-timers. The majority of the affected workers would be women, 60.6%, and African American and Hispanic workers would disproportionately benefit.
Calculating a Living Wage
A living wage is a wage that enables a worker to earn enough to lift herself and her family out of poverty becoming self-sufficient. But how much must a worker earn in order to be able to do that?
A common method to calculate a living wage is to see how much a person would need to earn to have income above the Federal Poverty Guidelines. There are serious drawbacks to this approach because the government poverty guidelines are unrealistically low. But, these guidelines remain the minimum upon which to build any discussion of living wages.
For a single parent with two children, the official poverty guideline for the year 2001 was a yearly income of $14,630. For a parent with three kids, the yearly income is $ 17,650. A parent with two kids would need to make at least $7.03 per hour, and a parent with three children would need to earn $8.48 per hour, to at least earn enough to be over the 2001 official poverty threshold. Several cities have pegged their living wage ordinances directly to the poverty guidelines.
The problem with $7 to $8 an hour, while a great improvement over minimum wage, is that these wages are still not enough for a worker to raise a family without assistance. Such workers still need public assistance to be able to survive and government program eligibility guidelines reflect that. Full-time workers with three kids can earn over $10 an hour and still be impoverished enough to remain eligible for food stamps. Workers with two children are eligible for the Earned Income Tax Credit even if they make over $14.00 an hour.
Because the official poverty threshold is so low, advocates for the working poor often look to the food stamp guidelines for a more realistic income to determine what kind of living wage is necessary to lift a family out of poverty. Since food stamp guidelines are 130% of the official poverty thresholds, a parent with two kids would have to earn over $8.00 an hour for a living wage and a family with three kids would need over $10.00 an hour to lift their families to 130% of the 2000 poverty line. This is what St. Louis voters used in 2000 when they pegged their city's living wage ordinance at 130% of the federal poverty guideline for a family of three, $8.67 an hour with benefits and $9.92 without.
Any calculation of a true living wage must recognize what common sense and our government has long recognized, that wages far higher than minimum wage still leave families in need. A challenge for the living wage movement is to continue to try to make the legislative enactment of living wage ordinances define living wages sufficiently generously to enable workers to become self supporting.
Local Government and Living Wage Ordinances
More than 50 localities have enacted living wage laws and another 75 or so have ongoing living wage campaigns. While most of these ordinances apply to businesses which have public contracts with local government, the laws define a variety of hourly rates as living wages and apply and operate in quite different ways as well.
The first part of a local living wage law is the minimum hourly rate that businesses with contracts with the city are required to pay their workers. Some cities set an hourly rate in the ordinance as the living wage required to be paid by businesses having public contracts. Some index the hourly wage to inflation. Others peg the living wage to a percentage of the poverty level for a family of three or in some cases four members. Some cities require benefits like health insurance to be paid in addition to a fixed hourly rate. In other cities, the living wage is characterized both as an hourly wage that has to be paid if the employer is paying benefits or another higher hourly wage when the business does not pay benefits.
These living wage laws require companies which hold public contracts with local government to pay their employees a living wage. Some jurisdictions require living wages for all jobs created by public contract while others exempt small contractors or non-profit contractors.
The Baltimore living wage law applies to workers in businesses which have local public contracts over $5,000. Santa Cruz applies its living wage law to public contractors which have received over $10,000 annually. Miami-Dade requires all employers bidding on contracts over $100,000 to pay living wages.
Other cities do not restrict the requirement of living wages only to businesses which are parties to local public contracts, but also apply the living wage law requirements to other businesses which receive governmental benefits as well.
St. Louis, for example, requires living wages be paid by all city contractors and all companies which receive city tax breaks, grant money or other forms of public aid. Detroit requires living wages be paid by all businesses receiving public service contracts over $50,000, and by any other businesses which receive financial assistance worth over $50,000 from the city including federal grants administered by the city, revenue bond financing, tax credits and includes contractors, subcontractors or leaseholders at subsidized sites. The Los Angeles Living Wage Ordinance requires a living wage be paid by several types of businesses: firms with service contracts over $25,000; recipients of bond financing and other subsidies worth at least $1,000,000 a year; and city lessees and licensees with $200,000 or more in annual revenues and eight or more employees. Gary Indiana and Houston require recipients of tax abatements to pay living wages.
As these communities collect information from the impact of these relatively new laws, the different hourly rates and the varying thresholds of coverage should provide a wealth of legal and economic experience for the living wage movement to analyze. These variations are a tribute to the willingness of local coalitions and governments to allow the push for living wages law to develop in a way that has not appeared possible on the federal or state level.
Living Wage Hourly Rate Table
State Wage Laws
Living wage campaigns have not made much recent progress on the state level in raising the minimum wage above the federal level for all workers in a state. Twenty-six states match the federal rate, nine states and the District of Columbia have higher minimums, and the rest have lower rates than the federal. The one area where many states have historically mandated higher than minimum wages is in the area of certain public contracts, usually construction projects. Advocates must be knowledgeable about the state minimum wage law because opponents of living wage laws have had some success in prohibiting local jurisdictions from setting local living wage laws higher than the state minimum wage law.
Nine states have set their own state minimum wage at a higher rate than the federal government. These states and the amount employers are required to pay are: Alaska, $5.65 per hour; California, $6.25 per hour, will go to $6.75 January 1, 2002; Connecticut, $6.40, will go to $6.70 January 1, 2002; Delaware, $6.15; District of Columbia $6.15; Hawaii $5.25; Massachusetts, $6.75; Oregon, $6.50; Rhode Island, $6.15; Vermont, $5.75; Washington, $6.72 and indexed to inflation. All other states either explicitly match the federal minimum wage or still have laws which still reflect lower wages but are generally no longer enforceable.
While most state hourly rates that are higher than the federal minimum are not nearly at the hourly levels of local living wage ordinances, their sweeping coverage and breadth, which typically apply to nearly all workers state-wide, make these laws applicable to many, many more workers than any local living wage ordinance.
Federal Government and Living Wage
While most of the effort of the living wage movement has been dedicated to the enactment of living wages on the local level, there is recent effort on the federal level that should be briefly noted. Legislative efforts have been organized on the federal level to extend living wages to large companies and local governments with federal contracts, requiring them to pay their workers at least $8.20 an hour.
In May 2000, Rep. Luis Gutierrez (D-Ill), and 83 House co-sponsors, introduced the "Federal Living Wage Responsibility Act," legislation to require federal contractors to pay workers on federal contracts at least $8.20 an hour. The legislation required that all employees of federal contractors of over $10,000 earn enough to meet the federal poverty threshold for a family of four, which in 2000 was $8.20 an hour.
The Economic Policy Institute released a report in November 2000 which found that more than 162,000 federal contract workers, 1 in every 10 federal contract workers, earn less than a living wage of $8.20 an hour. These workers are mostly female, adult, full-time workers, and disproportionately minorities. Most of the contractors paying these low wages are defense contractors and other large businesses, not small businesses nor non-profits.
Despite the lack of substantive action on the federal level so far, this is an area to watch, as it could provide substantial momentum and information if such legislation is enacted.
Opposition to Living Wage Movement: Maximum Minimums
Not everyone supports the living wage movement. Most of the opposition comes from the same forces that oppose raising, or sometimes even the existence of, the minimum wage. These folks have sought to put a legislative maximum on the minimum wage that local communities can set.
The most successful method used by opponents of living wage ordinances has been to ask state legislatures to prohibit local governments in the state from enacting a living wage that mandates a minimum higher than the state minimum wage.
The most recent example of the maximum minimum effort occurred in February 2001 when Utah passed a state law prohibiting local governments from setting a minimum wage higher than the state minimum wage of $5.15 an hour. The main proponent of the legislation argued that the maximum minimum wage bill will make it easier "for young people and people who have just entered this country" to find entry-level work. "We should not allow municipalities to arbitrarily set a wage that denies entry to those trying to get a foothold" in the job market.
Several other legislatures have considered such state-wide maximum minimums. The Louisiana legislature banned local living wages laws higher than the state minimum just as New Orleans was facing a living wage ballot initiative. Michigan has tried to do the same. The Arizona legislature turned back an attempt in April 2000 to impose a state minimum maximum, which could have imperiled Tucson's living wage ordinance.
Future Issues for the Living Wage Movement
It takes nothing away from the accomplishments of the living wage movement to point out where improvements are needed. The challenge is to make these laws more generous and more encompassing.
The number of workers covered by local living wage laws needs to be expanded. According to one living wage proponent, the usual impact of a living wage ordinance is on less than 1 percent of a city's total workforce. Limited coverage is understandable in the beginning of the current living wage movement. The future of the living wage movement will be evaluated, however, on not only how many jurisdictions it expands to, but how much it increases the coverage of the laws to give real living wages to more and more workers.
Cities could amend and apply their laws more broadly to contracts with smaller threshold amounts. The Baltimore law which covers all municipal contracts over $5,000 has broader impact on low-wage workers than the ordinance of Boston which only applies to contracts over $100,000.
Local governments could also expand the coverage of living wage ordinances beyond local contractors to other financial instruments of the government like grantees, licensees, lessees, those receiving tax credits or special zoning relief, as a few cities do in their law. Duluth applies their living wage law to companies receiving over $25,000 in economic assistance. Berkeley extended their living wage law to cover all businesses in the city's public marina area arguing that these businesses are made possible by public funds.
Cities could require all businesses, even those without public contracts, within the jurisdiction to be subject to a living wage ordinance, like a ballot proposition pending before the voters of the City of New Orleans. In New Orleans, ACORN and the AFL-CIO are pushing a 2002 ballot initiative to establish a city-wide minimum wage one dollar above the federal minimum wage. Though the wage amount proposed for New Orleans is significantly lower than most living wage ordinances, the scope of the proposal is broader and would apply to most all businesses in the city, not just those with city contracts. Similar efforts to extend living wages to private employees are also being considered in Baltimore and Knoxville.
The living wage movement will also have to struggle with a defensive effort to keep states from enacting laws prohibiting local living wage ordinances.
A final challenge for the living wage movement is to enact real living wage rates, rates that allow workers to be self supporting. That means hourly living wage rates of over $6, $7, or even $8 an hour. Workers really need wages in the range of $10 an hour and up to begin to move off of government assistance like food stamps and become self-sufficient.
Conclusion
Recent victories by coalitions of religious, labor and community groups have provided a surge of energy and enthusiasm for those who support living wages and self-sufficiency for all workers. The challenge is to sustain that momentum and to increase the numbers of workers who are entitled by law to earn living wages. For the foreseeable future, the real opportunity to implement a living wage, a wage sufficient for workers to support their families, lies on the local level in the tireless efforts of the living wage movement. By their actions, our nation is moving towards the promise of FDR in 1937 that all our working men and women should receive "a fair day's pay for a fair day's work."
Resources for further study:
Organizations providing information about living wage issues include: ACORN, an organization committed to supporting living wage ordinances www.livingwagecampaign.org ; AFSCME, a union supporting living wage ordinances, Www.afscme.org/livingwage ; the Economic Policies Institute, supportive of living wage ordinances, www.epinet.org; the Employment Policies Institute, a comprehensive source for information opposing raising the minimum wage or enacting living wage ordinances, www.epionline.org ; See also www.makingwageswork.org .
The best single book on this issue is Robert Pollin & Stephanie Luce, THE LIVING WAGE; BUILDING A FAIR ECONOMY (New Press 1998).
About the Author
Bill Quigley is a law professor at Loyola University in New Orleans. He directs Loyola's Gillis Long Poverty Law Center as well as the Law Clinic. Bill has written a much longer and more detailed article on the national living wage movement. This article is based on an address recently given at the University of Mississippi. You can contact Bill Quigley at quigley@loyno.edu or 504-861-5590 for a copy of that longer article or for more information.
