How Much Is A Living Wage?

Monday, Apr. 08, 2002 By ERIC ROSTON

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Jerome Gibbons works about 60 hours a week, just as he did five years ago--but with one difference. In 1997 Gibbons held two demanding jobs--as a wheelchair attendant at Los Angeles International Airport and a security guard in an office tower. He still works 40 hours a week at the airport, but thanks to the city's five-year-old "living wage" ordinance, which raised the minimum wage for firms that contract with the city, his hourly pay has jumped from $5.75 to $9.54. He has been able to drop his second job and now studies at a local college for what he hopes will be a better job, as a counselor to substance abusers. Gibbons, 31, who is unmarried, says of the city-mandated pay raise: "It makes paying bills easier and going to school easier."

More and more low-wage workers like Gibbons are finding hope for a better life as the living-wage movement gains momentum. Devoted to the principle that people who work full time should not live in poverty, the living-wage campaign won its first success in Baltimore, Md., in 1994, and has since spread to 81 other cities and counties--including Boston and Santa Fe, N.M.--as well as such institutions as universities and school boards. Living-wage proposals are pending in dozens of other localities, from Santa Monica, Calif., to New York City.

Driving the movement is new evidence that may dispel early fears that the social benefit from higher wages would be wiped out by job cutbacks among businesses subject to the living-wage laws. Last month a study of 36 cities with living-wage laws--conducted by David Neumark, a Michigan State University economics professor and an early skeptic of such laws--found that the slight job losses caused by the higher wages are more than offset by the decrease in poverty among working families. "The impact on businesses and governments is very small," says Robert Pollin, an economics professor at the University of Massachusetts at Amherst. "If there were any evidence otherwise, it would have shut down the living-wage movement a long time ago."

These laws generally require that contractors who work for local governments--and in some places, businesses that receive subsidies and tax breaks--must pay employees enough to raise their income above the federal poverty level of $18,100 for a family of four. That works out to more than $8 an hour--though some cities with high living costs like Santa Cruz, Calif., require hourly wages as high as $12.55. (The federal minimum wage is $5.15.)

Some cities are attempting more sweeping reforms. In February, New Orleans voters approved by 2-1 a referendum that would require every private employer in the city to pay at least $6.15 an hour. Activists went to court the next day to ask a judge to strike down a 1997 state law banning local minimum wages. Last week the judge ruled that ban unconstitutional (five other states have similar laws), so New Orleans will be free to force higher wages May 3, pending an expected review this week by the Louisiana Supreme Court.

The Santa Monica city council passed an ordinance last July that would impose a living wage not only on its contractors but also on hotels and other major businesses located in a 1.5-sq.-mi. "coastal zone," adjacent to its famous beach. Hotel owners got enough signatures to suspend imposition of the law, and are challenging it in a referendum that will be on the city ballot in November.