NCPA - National Center for Policy Analysis

Detroit Living Wage Shows No Signs Of Life

December 8, 1999

Detroit's living wage ordinance -- which forces firms doing business with the city to pay workers well above the federally-mandated minimum wage -- has failed to raised the pay of its supposed beneficiaries. The problem is that the city isn't enforcing the law.

  • The law, passed a year ago, calls for an hourly wage of $8.35 an hour.
  • That compares with the federal minimum wage of $5.15 an hour.
  • However, the city's purchasing division, which works with contractors, has no full-time inspectors to monitor whether contractors are paying living wage salaries.
  • The union-backed measure was passed by 80 percent of Detroit voters in November 1998.

Critics say the law has only caused confusion for employers and workers, and want to see it repealed, as do some state lawmakers who believe pay rates should be implemented at the federal level. Three bills are pending in the state legislature to abolish or amend the law.

The ordinance has already had an impact on non-profit organizations. The Salvation Army, for instance, didn't renew its contract with the city because it would cost additional millions to pay the living wage.

Similar living-wage laws have been passed in 35 other cities, including Los Angeles, Chicago and Boston.

Source: Darren A. Nichols, "Living Wage Dead In Detroit," The Detroit News, December 2, 1999.


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