Levin-Waldman - The Political Economy of the Living Wage: a Study of Four Cities

The Political Economy of the Living Wage

The Political Economy of the Living Wage

A STUDY OF FOUR CITIES

OREN M. LEVIN-WALDMAN

First published 2005 by M.E. Sharpe

Published 2015 by Routledge

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Library of Congress Cataloging-in-Publication Data

Levin-Waldman, Oren M.

The political economy of the living wage : a study of four cities / by Oren M. Levin-Waldman

p. cm.

Includes bibliographical references and index.

ISBN 0-7656-1278-X (hardcover: alk. paper) ISBN 0-7656-1279-8 (pbk.: alk. paper)

1. Living wage movementUnited StatesCase studies. 2. Municipal governmentUnited StatesCase studies. I. Title.

HD4975.L428 2004

331.23dc22

2004016070

ISBN 13: 9780765612793 (pbk)

ISBN 13: 9780765612786 (hbk)

In loving memory of my father
Nahum M. Waldman
Avi Mori HaRav Nahum Meir Ben Yitzchok Dov, ZChrona LVrocha

Contents

Tables

Figure

As of this writing, over one hundred communities across the country have passed living wage ordinances, which at a minimum mandate that firms with contracts to perform municipal services pay their workers a specified minimum wage. For those involved in local campaigns for living wages, the successes that have been achieved are no less than a social movement intended to achieve a measure of economic justice. Workers receiving wage increases as a result will no doubt be better off in most cases. Moreover, many of those employers forced to pay higher wages may also be better off in the long term, as they realize cost savings through productivity gains, reduced turnover, and reduced training and recruitment costs. The living wage is said to be a response to both the declining value of the minimum wage over the last couple of decades and the privatization of municipal services. But what is often missed in the debates over the living wage is that the living wage is also the inevitable by-product of the evolution of urban politics. That is, while the collection of local living wage campaigns across the country may have grown into a national movement, the living wage is at heart an urban issue.

Despite this string of successes, there has been little study of these campaigns from the point of view of grassroots politics and social movements. Increasingly, more and more studies have emerged that focus on the economic impact of living wages on workers, their employers, and communities. These studies, however, do not in the end tell us much about the cultural milieus in which they are framed. Moreover, we know little about what impact living wage policies have on the political landscape, particularly at the local level. While living wage advocates often like to think of these campaigns as being the roots of a larger movement intended to achieve economic justice, a more immediate question is the impact that they have on the shape of the political coalitions that either govern those cities where such ordinances have been passed or that influence and may even affect the outcome of the politics in those communities. To date, the issue of the living wage has not been studied from even the vantage point of general politics, let alone urban politics.

This is rather unfortunate because the living wage appears to have symbolism that evokes protests similar to its more encompassing cousin: the minimum wage. Opponents of living wage ordinances typically argue against them on the grounds that they will kill investment, and hence job creation. As such, they send the wrong message to would-be investors. And to the extent that the living wage may revolve around certain economic realities, they are also highly charged political issues revolving around the politics of investment. Of course, these so-called economic realitiesthe need to attract investmentonly create their own set of political dynamics.

Urban governments often appear to be serving the interests of a small group of business interests, and oftentimes outside interests, at the expense of others because these interests are perceived to be key to obtaining investment, which will ultimately serve the interests of all. This dynamic alone perhaps constitutes the main dialectic of urban life. And yet, to not understand the relationship between grassroots living wage campaigns and the dialectics of urban life is to ultimately miss the point. Living wage campaigns are very much part of the dialectics of urban life, particularly in an environment of increasing capital mobility where cities are forced to compete for investment dollars. And to the extent that the competition for outside investment has in large measure become a defining characteristic of urban politics reflective of each citys respective urban political coalitions, the living wage then is a policy matter that either represents a reaction to a reigning coalition, or perhaps a new one.

This is essentially the critical point about the living wage and living wage politics that unfortunately is missed in much of the current literature. On the contrary, much of the work on the living wage has been done from the perspective of activists involved in the cause of economic justice. From the activist perspective, there are four different objectives. The first has to do with achieving livable wages for those at the bottom of the income distribution, particularly those performing municipal services once performed by better paid unionized municipal workers. The second objective is to compensate for the failure of the federal minimum wage to keep up with the rate of inflation by enacting local ordinances that will ensure livable wages for some. This, of course, is limited in its effect because coverage extends only to those workers employed by firms either with contracts to perform municipal services or firms that may have received financial incentives to invest in the first place. The third objective is to respond to the rising income inequality of the last couple of decades, which has disproportionately affected those at the bottom of the distribution. Although living wages will not even out the income distribution by any significant measure, they can potentially narrow the gap to the extent that they result in the average incomes of those at the bottom of the distribution rising at a higher rate than those at the top. And the fourth objective has to do with organizing low-wage workers, which may potentially have benefits to a union movement otherwise in a state of decline. Living wage campaigns are not necessarily about unionization, although various unions have been involved in these campaigns. Still, proponents of living wages are often quick to note that were it not for the presence of unions, such ordinances may not have been passed. Unions are in some cases a key constituency, but they in and of themselves are not the reason why localities have been able to pass such ordinances. Rather, the quest for living wages is really about the ability of grassroots organizations to mobilize political support behind a cause. And as much as these four objectives may be lofty ones, and perhaps ought to be a driving force in wage policy in the United States, the activist perspective misses the pointthat living wages have been passed within a particular economic and political context. Of course, none of this negates that these objectives may become necessary responses, and even policy objectives unto themselves, to the new urban reality. But to focus solely on the justice arguments for why these objectives ought to be achieved unfortunately does not help us understand how we got into this position in the first place. And in the end this lack of understanding may also result in policy failure, both in terms of strategy and substance.