Living Wage

Millions of men and women who work full-time don’t earn enough to climb out of poverty. A minimum wage earner who works full-time earns approximately $10,700 a year—$5,900 below the 2006 poverty line for a family of three, and $9,300 below the poverty line for a family of four. At the insufficient minimum wage, hard work goes unrewarded.

States award billions to contractors who employ thousands of workers to provide public services. As direct or indirect employees of the state, these janitorial, healthcare, construction and clerical workers deserve wages that allow them to feed and clothe their families.

A rational economic development policy promotes the creation of good jobs. The creation of sub-poverty level jobs does not lead to a self-sufficient workforce. Minimum wage workers and their families must rely on taxpayer-funded programs like Medicaid, subsidized housing, childcare programs, and free school lunches to survive. Such jobs cannot provide the basis for sustainable economic growth. Public dollars should be leveraged for the public good by awarding contracts to “high road” private sector employers that demonstrate a commitment to decent, family-supporting jobs.

In the 1960s and ‘70s, the federal minimum wage gave Americans an income slightly above the poverty line. If the minimum wage of 1968 were adjusted for inflation, it would equal about $9.12 today.1 A living wage of $10 per hour provides an income that is just slightly above the 2006 federal poverty level for a family of four.

A Living Wage Act requires employers who receive major service contracts from the state to pay a living wage to the employees who work on those contracts. Studies show that the workers affected by state-supported low-wage jobs are disproportionately female and non-white. Living wage raises offer the greatest benefit to these workers. The other workers who stand to gain from a living wage raise are adults­—95 percent are aged 20 or older—who work full-time—on average 43 hours per week.2

Increased payroll costs are partially offset by a significantly reduced turnover rate, decreased absenteeism and improved work performance. Often the remainder of the cost is absorbed as a result of the competitive bidding process. A survey of 20 living wage cities determined that the actual effect on city budgets had been consistently overestimated by city administrators. The impact tended to be less than one-tenth of one percent of the overall budget.3

In 2004, the Maryland legislature became the first to pass a statewide living wage—but it was vetoed by the governor. Living wage laws have been enacted in more than 130 cities and counties, including Baltimore, Boston, Chicago, Cleveland, Des Moines, Detroit, Los Angeles, Milwaukee, Minneapolis, New York City, San Antonio, San Francisco, and St. Louis.4 Many studies demonstrate that the living wage is a success, lifting families out of poverty without adversely affecting local economies.5

Americans overwhelmingly support the living wage. Seventy percent of Los Angeles voters surveyed, for example, said they favored their city’s living wage law. Moreover, according to a Lake Snell Perry & Associates poll, 84 percent of Americans support the idea that no one who works full-time should have to live in poverty.6