Seeker of Truth
05-31-2003, 08:14 PM
How the “Living Wage” Sneaks Socialism Into Cities
Steven Malanga
Over the last decade, a savvy left-wing political movement, supported by radical economic groups, liberal foundations, and urban activists, has lobbied for a government-guaranteed “living wage” for low-income workers, considerably higher than the current minimum wage. The movement has scored enormous success: 80 cities nationwide, from New York to San Francisco, now have living-wage legislation in place. Many of the earliest laws were narrowly focused on workers at companies with government contracts. But as the movement has grown, it has successfully imposed its mandate on a wider array of businesses; one city has even passed a citywide living wage.
This is bad news for cities. The living wage poses a big threat to their economic health, because the costs and restrictions it imposes on the private sector will destroy jobs—especially low-wage jobs—and send businesses fleeing to other locales. Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages. It includes opposing privatization schemes, strong-arming companies into unionizing, and other economic policies equally harmful to urban health.
The living-wage movement got its start in mid-1990s Baltimore, whose radical urban politics and anti-business ethos provided fertile ground. In 1993, a coalition of Baltimore’s left-leaning church leaders, unionists, and community activists began to push for a “social compact” that included a hike in the minimum wage to $6.10—43 percent above the federal minimum wage at the time—for service workers in hotels and other businesses in the city’s redeveloped Inner Harbor, a prime tourist area.
Baltimore’s then-mayor Kurt Schmoke initially balked at the potential harm that such a wage increase would inflict on the city’s already shrinking economy and budget. But he eventually signed a compromise bill that guaranteed the new $6.10 minimum for workers at any companies contracting with the city, on the principle that, unlike the Inner Harbor firms, these employers benefited directly from public funds and thus had an obligation to pay a higher minimum as a way of helping the city carry out its self-proclaimed mission of improving the lot of the urban poor.
Supporters hailed the increase as a costless victory for low-income workers. The labor-backed Preamble Center for Public Policy rushed out a study purporting to show that the legislation benefited Baltimore workers but did no harm to the local economy or to the city budget, because city contractors effortlessly absorbed the cost of the wage hike. The study’s claims didn’t withstand scrutiny—contracting costs did rise—but that was almost beside the point. Far from turning into a workers’ paradise, Baltimore saw its economy crash and burn during the mid-1990s, with 58,000 jobs disappearing, even as the rest of Maryland added 120,000 jobs and other cities across the country prospered. The living-wage bill was just one expression of a fiercely anti-business climate that helped precipitate Baltimore’s economic collapse.
Much more of this @ city-journal.org (http://www.city-journal.org/html/13_1_how_the_living_wage.html)
Steven Malanga
Over the last decade, a savvy left-wing political movement, supported by radical economic groups, liberal foundations, and urban activists, has lobbied for a government-guaranteed “living wage” for low-income workers, considerably higher than the current minimum wage. The movement has scored enormous success: 80 cities nationwide, from New York to San Francisco, now have living-wage legislation in place. Many of the earliest laws were narrowly focused on workers at companies with government contracts. But as the movement has grown, it has successfully imposed its mandate on a wider array of businesses; one city has even passed a citywide living wage.
This is bad news for cities. The living wage poses a big threat to their economic health, because the costs and restrictions it imposes on the private sector will destroy jobs—especially low-wage jobs—and send businesses fleeing to other locales. Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages. It includes opposing privatization schemes, strong-arming companies into unionizing, and other economic policies equally harmful to urban health.
The living-wage movement got its start in mid-1990s Baltimore, whose radical urban politics and anti-business ethos provided fertile ground. In 1993, a coalition of Baltimore’s left-leaning church leaders, unionists, and community activists began to push for a “social compact” that included a hike in the minimum wage to $6.10—43 percent above the federal minimum wage at the time—for service workers in hotels and other businesses in the city’s redeveloped Inner Harbor, a prime tourist area.
Baltimore’s then-mayor Kurt Schmoke initially balked at the potential harm that such a wage increase would inflict on the city’s already shrinking economy and budget. But he eventually signed a compromise bill that guaranteed the new $6.10 minimum for workers at any companies contracting with the city, on the principle that, unlike the Inner Harbor firms, these employers benefited directly from public funds and thus had an obligation to pay a higher minimum as a way of helping the city carry out its self-proclaimed mission of improving the lot of the urban poor.
Supporters hailed the increase as a costless victory for low-income workers. The labor-backed Preamble Center for Public Policy rushed out a study purporting to show that the legislation benefited Baltimore workers but did no harm to the local economy or to the city budget, because city contractors effortlessly absorbed the cost of the wage hike. The study’s claims didn’t withstand scrutiny—contracting costs did rise—but that was almost beside the point. Far from turning into a workers’ paradise, Baltimore saw its economy crash and burn during the mid-1990s, with 58,000 jobs disappearing, even as the rest of Maryland added 120,000 jobs and other cities across the country prospered. The living-wage bill was just one expression of a fiercely anti-business climate that helped precipitate Baltimore’s economic collapse.
Much more of this @ city-journal.org (http://www.city-journal.org/html/13_1_how_the_living_wage.html)