NCPA - National Center for Policy Analysis

The Spread of the "Living Wage"

November 3, 2003

The "Living Wage" movement has become the latest effort to impose socialism on the United States, one city at a time. After a slow beginning in the 1990s, living wage ordinances--which impose minimum wages much higher than the federal one--have now been adopted in over 100 municipalities, from Somerville, Mass., to Portland, Oregon, from Minneapolis to San Antonio, says William Tucker, columnist for the New York Sun.

Cities as large as New York, Boston, Chicago, St. Louis, and Denver have adopted living wages, as well as towns and villages as small as Taylor, Mich., Bellingham, Wash., Oyster Bay, N.Y., Lakewood, Ohio, and Port Hueneme, Calif.

In practice, the living wage resembles a minimum wage enforced at the local level:

  • The federal minimum wage is now $5.15 an hour.
  • Living wage bills typically up this to anywhere from $7 to $11 an hour.
  • Wary that municipal minimum wages will run into such state constitutional impasses, most living wage ordinances apply only to city workers and contractors -- and sometime to companies that have received tax abatements from the city government.
  • In addition to requiring vendors to pay $3 to $5 above the minimum wage, some cities are starting to mandate health benefits, extended vacations and other extras.

Still, since the smallest competitors cannot meet the new wage standards, and since the costs are imposed on all bidders, any increased expense is quickly passed through to the municipal government. In the end, the living wage is funded by taxpayers. This doesn't bode well for the financial health of municipal governments, which are already growing at nearly three times the rate of inflation, says Tucker.

Source: William Tucker, "Socialism in Every City: The spread of the "living wage," Weekly Standard, November 2, 2003.


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