#099 May/Jun 1998

Closing the Wage Gap

Minimum wage doesn’t buy what it used to. Based upon the federal government’s own poverty line, it’s not even enough to survive. To close the gap, community groups and unions […]

Minimum wage doesn’t buy what it used to. Based upon the federal government’s own poverty line, it’s not even enough to survive. To close the gap, community groups and unions around the country are organizing, prompting many cities to pass ordinances requiring some businesses to pay living wages. It’s still not enough, but it’s a good beginning.

Though there’s talk in Congress of raising the federal minimum wage again, for many low-income families and individuals even a two-dollar an hour increase would not be enough to meet all their basic needs. Where minimum wage workers in 1968 earned 111 percent of the federal poverty level, in 1998 those earnings measure up to only 78 percent of the amount the government says a family of three needs merely to survive – $13,650. Today’s federal minimum wage – $5.15 per hour – has 20 percent less purchasing power than the minimum wage of $1.60 did in 1968. It would have to be $7.21 today to keep place with inflation.

To address this gap, coalitions of community groups, labor unions, and some local government officials in cities around the country are campaigning together to pass living-wage ordinances requiring companies that do business with or receive subsidies from the city to fix a higher minimum wage for their employees, often one tied to an annual salary equal to the federal poverty line. The 1996 campaign led by BUILD in Baltimore is one of many campaigns either underway or that have already had success. More than 20 municipalities and counties have such laws on the books, and coalitions in at least another 35 locations are working toward such measures.

Success in Oakland

The newest city to pass living wage laws is Oakland, California. Oakland’s city council voted unanimously in March to require “companies, agencies or nonprofit organizations with a $25,000 city contract or a $100,000 city subsidy to pay workers at least $9.25 an hour, or $8 with benefits,” according to the March 25th Oakland Tribune.

The impetus for that law came from a broad-based coalition that began organizing in 1995. Labor unions, community organizations, and church-based groups participated in a coordinated effort to push for the ordinance, said Brian Kettering, an organizer with the Association of Community Organizations for Reform Now (ACORN) which led the coalition.

A defining moment in the campaign was a March City Council Committee hearing on the bill, when 150 people turned out in support of the measure and only a handful of opponents attended, according to Kettering. That turnout followed two months of major media attention, including an editorial in the Oakland Tribune endorsing the measure.

What captured the attention of the media, the general public, and ultimately the City Council, said Kettering, was the campaign’s focus on the issue as one of critical importance to working people. He credits the unique partnership of labor unions and community groups for the success of the campaign and said the alliance will prove useful in future battles, rather than dissolving now that the campaign is over.

ACORN has coordinated living wage campaigns in a number of other cities. In Boston, where ACORN and the Massachusetts Federation of Labor led the campaign, the City Council passed a measure that went beyond setting wage guidelines. The ordinance requires companies doing business with the city to pay a wage high enough to match the federal poverty level for a family of four, and also includes provisions requiring that companies hire residents of the city, and file reports regularly on jobs and wages. The measure, passed in July 1997, also created a citizen’s advisory board to monitor city assistance to local businesses.

Minneapolis, too, took steps to raise the minimum wage for companies doing business with the city, and passed residency requirements for those companies. That city went even farther, prohibiting privatization of city services that would result in lower wages for workers and setting preferences for city assistance to union-friendly businesses.

Los Angeles, Milwaukee, and New York are among the other cities which have passed similar measures in recent years, and campaigns are underway in many more cities, including Philadelphia, Denver, and Cleveland.

Countering the Critics

Chambers of Commerce and other business associations have opposed the measures and argued that they will stifle competition and cause businesses to relocate to cities without such requirements. Advocates maintain that the investment living-wage laws create within a city actually strengthens the economic base and makes the climate better for businesses to thrive. Based upon the example of Baltimore, where the law has been on the books since 1995, there’s no evidence to support any such concerns, said Kettering.

Though Kettering admits that tying living wage increases to the federal poverty line is still insufficient when it comes to actually satisfying most families’ income needs, he said it’s a step in the right direction. “We’d tie the living wage to $10 or $15 an hour if we could win it,” he said, but previous efforts to do so in New York and elsewhere have been shot down immediately. Similarly, he acknowledges that across-the-board minimum wage increases would have greater impact than those only applying to companies doing business with city government, but points out that ACORN campaigned for such increases three times and “we lost them all.” In Missouri and the cities of Denver and Houston, he said, “big business raised millions of dollars and outspent our campaigns 10-1 or more, with vicious and effective attack ads.”

“We are pushing the envelope,” he said, “but the fundamental question is one of building the movement’s capacity to move stronger bills and more fundamental approaches.”

ACORN: 202-547-2500.


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