Whose Living Wage?


During the last 10 years, "living wage" laws have swept through U.S. cities, jacking up minimum wages for municipal workers and for businesses that accept city contracts. Such laws are now on the books in 10 of the 20 largest cities in America–but whom do they actually help? A study by the Public Policy Institute of California, a nonpartisan think tank, suggests that while living wage laws do tend to reduce overall poverty, they hurt those who can least afford it. Researchers found that cities looking at a 50 percent wage hike could expect to send a significant percentage of their least-skilled workers (those in the bottom decile of the skill distribution) to unemployment lines. The broadest living wage ordinances–the ones that mandate higher wages not just for city workers but for businesses that receive city contracts or assistance–had an even stronger effect. After a year, they reduced unskilled workers' employment rates by more than 8 percent.

Graph (not available online): "Change in the Employment Levels of Least-Skilled Workers After Living Wage Ordinances Go Into Effect" (Source: Public Policy Institute of California)