NCPA - National Center for Policy Analysis

Left Promotes Living Wage Over Democrats' Objections

August 4, 1999

The leftist New Party has had great success getting "living wage" legislation enacted by city governments. Democrats are finding these left-wing third parties every bit as much of a threat as their right-wing counterparts are to Republicans.

Living wage legislation requires all city contractors to pay all their employees wages well above the national minimum of $5.15. For example, in June the Los Angeles County Board of Supervisors passed an ordinance requiring all county contractors to pay at least $8.32 per hour ($9.46 if no health insurance is provided).

Advocates often cite a Baltimore study that showed the cost of city contracts fell after a living wage ordinance took effect. However, the Employment Policies Institute found the data was doctored.

And a study of a proposed living wage ordinance in Chicago by George Tolley of the University of Chicago and Peter Bernstein of DePaul University found it would have cost the city $20 million per year, raised costs for firms by $37.5 million and destroyed 1,300 jobs. Ironically, it wouldn't even have done much for low wage workers because much of the increase would go to higher taxes and reduced Earned Income Tax Credit payments.

Democrat Detroit Mayor Dennis Archer strenuously opposed a living wage referendum last year. He pointed out that the city contracts with nonprofit organizations to provide services for the poor and elderly, and forcing them to pay higher wages would hinder their ability to assist those in need.

And in July, a living wage campaign in Montgomery County, Md., was torpedoed when Democrats opposed the measure as a threat to business development because it would apply to businesses receiving city tax breaks as well as contractors. The liberal Washington Post even called it "a formula for assisted economic suicide."

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, August 4, 1999.


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