Finance Highlights 2006 1206 - Laserfiche WebLink

Home

4'.-„ . John Jermanis January 8, 2004 pay a certain amount toward wages. Third, opponents argue that a living wage unfairly targets small businesses that will have a more difficult time competing for government contracts due to their lack of payroll flexibility. Finally, critics point to increased costs in contracts and living wage administration for a jurisdiction as another negative factor. Jurisdictions that pass these laws must administer, investigate, keep records, and deal with potential litigation on this issue. Research Results Research on the impact of living wage law is in its infancy. Living wage laws have been in existence for a relatively short period of time and in a limited number of cities. The bulk of the empirical research covers a very volatile economic period in U.S. history that has seen some of the largest economic growth followed by a significant downturn. Attempts to quantify the economic impact of this type of legislation have been made; however, the small amount of data available makes it difficult to draw a conclusion, positive or negative. The most recent research available is from the Brennan Center for Justice who completed a study in November 2003 on the impact of living wage laws on cities across the country. The information provided in their report was based on interviews conducted with local officials in 20 cities around the country who had a living wage law in effect for a minimum of one year. The study attempted to understand the cost and benefits of the legislation on a community by analyzing increased cost in City contracts and the ability of cities to use business subsidies to increase the number of jobs in their communities. The study concluded that cost increases in contracted services were generally very minor, except those contracts that involved large numbers of low-wage workers. This included primarily janitorial and/or security guard contracts, since these groups typically use a large low-wage workforce. In addition to the contract analysis, the study concluded that business subsidy programs were relatively unaffected by a living wage law due primarily to targeted economic development efforts by the jurisdictions. The author found that economic development efforts targeted companies that would create higher paying jobs for the commmunity, not jobs that paid at or near a subsistence wage level. However, one issue the report does not address is the cost of administration to the jurisdiction for this type of program. The report is silent on the amount of time and resources that are spent on enforcement, administration, investigation, and legal costs associated with this type of policy. Implementation Costs The amount of time and resources that are spent on enforcement, administration, investigation, and legal costs associated with living wage laws is not readily found in any of the current research. Experiences from three local cases; the Port of Oakland, the City of Sacramento, and the City of Hayward; do help to illustrate the potential costs of enacting a living wage law.