NCPA - National Center for Policy Analysis

Cities, States Target Contractors

April 3, 1996

Several states have long had a state-mandated minimum wage above the federal level. In a new twist, some state legislatures and city councils have passed or are considering measures to require government contractors to pay workers more than the minimum wage.

  • The Minnesota's legislature passed a bill requiring companies getting $25,000 or more in government aid or contracts to pay workers at least $7.28 an hour in wages and benefits -- but the state's governor is set to veto the measure.
  • Baltimore and Milwaukee have passed laws to require firms with city contracts to pay more than $6 an hour -- with Baltimore planning to phase in hikes over four years to $7.70 an hour.
  • Chicago, Los Angeles and St. Louis also have considered such proposals.
  • The current five-year-old federally-mandated minimum wage is $4.25 per hour -- with proposals to increase that to $5.15.

Advocates call the concept a "living wage," but critics wonder how many employers will remain in business once such laws go into effect. They say it will have a chilling effect on business, and will skew and disrupt markets.

Source: Carl Horowitz, "Can Government Ensure a 'Living Wage'?" Investor's Business Daily, April 3, 1996.


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