Living wage: How about $9 an hour?

By Melinda Fulmer

Donna Riley never liked taking handouts. The 49-year-old parking lot attendant had for years subsisted on disability payments for her injured back and $6-an-hour part-time work, eventually filing for bankruptcy in 2003 because of her mounting medical debts.

In 2004, when the city of Buffalo, N.Y., passed its last living-wage ordinance, raising city contractors' minimum pay to $9.03 plus benefits, she saw the opportunity to finally get off disability and work full time.

Now, Riley and her husband, who also works for a city parking company, make $6 more an hour combined -- enough to pay all of their bills and buy their first new car.

"Driving out of the car lot at the dealer with a brand new car was a total blow-away," Riley said. "Now we are working on buying a house."

With federal minimum wage stuck at $5.15 since 1997, many cities and states are taking matters in their own hands. They are enacting minimum wages for city contractors and, increasingly, mandatory minimums for all area businesses in an attempt to lift the fortunes of workers on the lowest rungs of the economic ladder.

The floor has sunk

As it stands now, a worker making the federal minimum wage would make $10,712 a year, or less than $1,000 above the 2006 poverty line of $9,800 for an individual.

"If the minimum wage had kept pace with inflation, it would be more like $9 right now. We've let the floor sink so low, it's historically less than we were paying back in the 1960s," said Jen Kern, director of the Association of Community Organizations for Reform Now (ACORN), an advocacy group that has led the "living-wage" movement.

Changes in the federal minimum wage

Year	Wage		Year	Wage
1938	$0.25		1975	$2.10
1939	$0.30		1976	$2.30
1945	$0.40		1978	$2.65
1950	$0.75		1979	$2.90
1956	$1.00		1989	$3.10
1961	$1.15		1981	$3.35
1963	$1.25		1990	$3.80
1967	$1.40		1991	$4.25
1968	$1.60		1996	$4.75
1974	$2.00		1997	$5.15

Source: U.S. Dept. of Labor

Twenty-two states, the District of Columbia and 140 cities and counties have now voted in new living-wage laws. Washington state's minimum wage is $7.63 an hour, highest of any state. And several cities have set their own rates much, much higher: Santa Cruz, Calif., for example, requires that city contractors pay more than $12 an hour, plus health benefits. Lawrence, Kan., sets minimum pay for all workers in the city at 130% of the federal poverty threshold.

In July alone, Pennsylvania and North Carolina signed increases into law, and Chicago ordered "big box" retailers such as Wal-Mart to pay $9.25 an hour, plus $3 an hour in fringe benefits.

And dozens more are now being debated this year, including at least a dozen state minimum-wage initiatives, according to ACORN.

Opponents of the living-wage movement believe market forces, not regulation, should set wages. Laws like these only hurt the people they are trying to help, said John Doyle, managing director of the Employment Policies Institute, a think tank supported by retail, hotel and restaurant businesses.

In many areas, these wages are not enough to lift workers' fortunes substantially, Doyle said, and often the added labor costs force employers to shed jobs and hours.

"More often than not, low or unskilled workers are displaced from the job they hold," oftentimes being replaced by a high-school student lured by the higher pay, Doyle said. He points to the 540 workers who lost their jobs in Santa Fe, N.M., the year following its first citywide minimum-wage increase to $8.50 in 2004. Those that lost their jobs had 12 years of schooling or less.

However, economist Robert Pollin, co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, notes that while these people did lose their jobs, employment in the city actually grew 2%. And in those industries with the lowest starting pay -- restaurants, hotels and retail -- it actually grew 3.2%.

"More people got jobs, but more people are also looking for jobs," he said. In other words, as wages have gone up, more people entered the market looking for work, making it harder for the least skilled to get work inside the city.

But, he said, that doesn't necessarily mean that people are getting laid off as a result of the ordinance, which was later boosted again to a starting wage of $9.50.

"There are more jobs in Santa Fe that are higher quality," he said. "Overall the benefit is positive."

The cost of a pricey town

Sam Gerberding, general manager of Santa Fe's chic Inn of the Governors hotel, said the ordinance has cost the 100-room hotel, especially during slow months, when extra pay from its profit-sharing plan didn't bring housekeepers up to the new $9.50 wage.

These costs have been manageable, he said, and the hotel hasn't furloughed any workers. But, Gerberding said, the pay raises, including a planned bump to $10.50 in 2008, do make him think twice about replacing people. When a houseman left his job this past year, the hotel tried to do without his position for several months.

Some Santa Fe employers say they feel they have to pay workers a higher minimum wage so that employees can afford a place to live in this pricey but beautiful city.

"This is an expensive place to live," said David Salazar, owner of El Farol, the city's oldest restaurant and cantina, housed in an 1835 adobe. "Not like San Francisco or Manhattan, but we still have some very expensive real estate."

Santa Fe's ordinance counts waiters' tips as part of the hourly minimum, so most sit-down restaurants don't wind up on the hook for much more money. Salazar says he pays an extra $8 for each of his two new dishwashers per day, not enough to make him raise prices or consider any layoffs.

"It never crossed my mind," he said.

The living-wage movement

The living-wage movement, started just over a decade ago in Baltimore, when labor and religious leaders campaigned successfully for a local law requiring city service contractors to pay a higher, "living" wage, a term that didn't really exist before. A string of other cities followed suit, with minimum wage requirements for city contractors in areas such as St. Louis, Los Angeles, Boston, Tucson, Ariz., San Jose, Calif., Portland, Ore., Minneapolis and Milwaukee.

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