NCPA - National Center for Policy Analysis

Expanding "Living Wage" Laws to Apply to the Private Sector

August 21, 2001

So far, "living wage" laws have only affected businesses financially linked to the 57 city and county governments which have enacted them. But Santa Monica, Calif., has extended the policy to apply to any business with more than $5 million in annual revenue located within a certain downtown tourism zone.

The labor-union backed campaign defines a living wage as one that allows a worker to support a family of four without food stamps or other public aid.

Few observers doubt that what is happening in Santa Monica could spread to other cities and towns -- injuring not only businesses, but also the employees the policies are designed to assist.

  • The $10.50 an hour Santa Monica minimum is more than double the $5.15 federal minimum wage.
  • At least two Santa Monica restaurants that gross more than $5 million are considering closing for lunch and laying off workers to get under the law's threshold -- and the local Sears has hinted that it might relocate.
  • The co-owner of an affected deli says the $1 million in added labor expenses he would face would force him to raise prices 20 percent, apply for a hardship exemption or go out of business.
  • Santa Monica is no stranger to adopting radical solutions -- having passed a rent control law favoring tenants in 1978, for example.

Critics refer to the town as The People's Republic of Santa Monica.

Campaigns for a living wage are currently underway in Ashland, Ore.; Providence; Sacramento; San Diego; and Santa Barbara, Calif. Voters in Albuquerque; Dallas; Knoxville, Tenn.; Missoula, Mont.; Montgomery and Prince Georges counties, Md.; Nashville; and New Orleans have rejected living wage proposals.

Source: Martin Kasindorf, "'Living Wage' to Some, 'Business Killer' to Others," USA Today, August 21, 2001.


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