According to a recent study conducted by the Center for American Progress Action Fund, living wage requirements for businesses that receive government subsidies do not have a detrimental impact on business and job growth. A living wage is a base wage that covers an individual’s actual costs of housing, food, clothing and other necessary living expenses. A living wage is not the same term as a minimum wage. The minimum wage is set by federal and state law. A living wage is normally thought of as covering true expenses of living where the legally imposed minimum wage is an absolute minimum an employee can be paid.
The study looked at the living wage mandates imposed by cities on businesses that receive government subsidies or what is also referred to as business-assistance living wage mandates. The authors of the study focused on business-assistance living wage mandates because the wages are not as closely tied to market wages like minimum wages are and therefore an impact on employment could be determined. The study reviewed a variety of employment areas including restaurants, hotels, retail and wholesale. According to the study’s authors, none of the employment areas were negatively affected by the living wage.
Labor advocates in New York City used the news of the study to bolster their proposed living wage legislation proposals. One piece of New York City legislation proposes that building-service workers at city subsidized projects should be paid wages up to $24 an hour. The second piece of legislation calls for all workers who work on projects that receive economic development benefits to make $10 per hour and benefits.
Critics of the study argue that making employees more expensive in a recessionary recovery is not the best avenue to create new business activity and new jobs. Critics also believe the study is biased and say that while living wage laws do raise the wages of low-wage workers, living wages reduce the overall level of employment for low-skilled workers.
Source: crainsnewyork.com, “Study of 15 Cities Sees No Harm in “Living Wage” Laws,” Daniel Massey, 11/30/10