NCPA - National Center for Policy Analysis

"Living Wage" Kills Jobs

March 24, 1997

Despite the fact that nearly every study of the economic impact of minimum wage laws demonstrates that they are job-killers, labor unions and "community activists" are on a campaign to promote them in states and cities across the land. They even want to amend the U. S. Constitution to mandate a $10 an hour minimum wage.

The Los Angeles City Council caved in to a proposal that city contractors pay at least $7.25 an hour plus benefits to their employees, or $8.50 an hour without benefits.

If experience is any indication, these laws virtually guarantee that employers will replace workers whose skills do not merit such wages with those who do -- leaving the low-skilled permanently locked out of such jobs.

And that, say critics of the "living wage" law, is exactly what its proponents want.

What is behind this push?

  • A group known as the Association of Community Organizations for Reform Now (ACORN) has joined with the unions in a heavily funded campaign on behalf of these so-called "living wage" initiatives.
  • Seeing public-sector union jobs vanish as more and more cities privatize such services as trash collection, labor leaders want to make outsourcing just as expensive and inefficient as using public sector employees.
  • Critics say that ACORN is out to derail welfare reform by bumping up wages to levels that are beyond the reach of most welfare recipients -- thus preventing millions of people from ever entering the workforce and guaranteeing that governments will forever remain in the welfare business.
  • In what critics call one of the most bizarre and cynical moves ever taken by an advocacy group, ACORN -- champion of a high minimum wage -- once sued the state of California in an effort to avoid paying its own employees the state's $4.25 an hour minimum.
  • It admitted in its own legal brief: "The more that ACORN must pay to each individual outreach worker -- either because of minimum wage or overtime requirements -- the fewer outreach workers it will be able to hire."

In other words, artificially high wages destroy jobs.

Source: Richard Berman (Employment Policies Institute), "'Living Wage' or Barrier to Change?" Investor's Business Daily, March 24, 1997.


Browse more articles on Economic Issues