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October 12, 2009
Living Wage: Controversy and Community

Living wages sound simple enough: Pay your lowest-earning employees enough to keep them out of poverty and to support decent living conditions for themselves and their dependents. But as anyone who has gotten involved in the living wage controversy can attest, the issue is anything but simple.

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Since the city of Baltimore enacted the first comprehensive living wage law in 1994, a growing number of American cities have grappled with this issue, and 49 now have ordinances requiring companies that contract with the city (or county) to pay their employees an hourly living wage that is higher than the federal and state minimum wages.

Although most of these laws only cover public employers and certain government contractors and subcontractors, many of them also apply to recipients of public grants, tax abatements, and other economic development subsidies. It may seem premature, but perhaps it's time for private employers to examine their own pay scales in light of what the living wage advocates are saying.

Living Wages Garnishing Attention

According to employment experts, there are two reasons why the living wage movement is getting so much attention lately. The first is that the growth in the service sector over the past 10-15 years has resulted in an explosion of minimum-wage jobs. The second reason is that since the 1980s, many cities have privatized services in an effort to cut costs. Higher-paid city and union workers have been replaced, in many cases, by lower-paid private sector workers.

Living Wage Targeting the Right People?

People tend to be either for or against the living wage. Advocates of the living wage argue that low wages keep even some full-time workers dependent on food stamps, Medicaid, and other social services.

Opponents of the living wage argue that legislating high labor costs will force many small businesses to cut profits, reduce jobs and hours, and perhaps even relocate. They also claim that since three-fourths of minimum wage earners are not sole breadwinners, but often middle-class teenagers living with their families and flipping burgers after school, living wage requirements won't target the workers (single mothers who clean offices at night, for example) who really need the help.

Employers Can Be Living Wage Role Models

Although most of the current living wage laws apply to less than one percent of a city's total workforce (mostly those working for employers with $25,000 to $50,000 in government contracts) it's not too soon for HR and compensation managers to examine how they're paying their lowest wage earners.

Is it possible to support even a minimal lifestyle on such earnings? Although the living wage movement might never gain momentum in your town or city, there's a lot to be said for paying your employees enough to keep them above the poverty line.

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