Can U.S. Cities Afford Living Wage Programs? An Examination of Alternatives

Since 1994, so-called "living wage" ordinances have passed in 20 cities in the United States, and activists are advancing similar proposals throughout the country. These proposals are a response to the declining real wages of low-wage workers in the United States-what David Gordon termed "the wage squeeze" in Fat and Mean-and, in particular, to the 30 percent fall in the real value of the minimum wage from its peak in 1968. We consider here the main arguments advanced by opponents of living wage proposals: 1) they will place a heavy burden on municipal government budgets, forcing, among other things, cuts in vital city services that benefit low-income people; 2) they will encourage local businesses to relocate and discourage new businesses from investing within cities that have such ordinances; and 3) they will cause unemployment among low-wage workers. Examining these issues in the context of proposals that were either passed or considered in different cities, we find that none of the criticisms of living wage proposals stand up to careful scrutiny or evidence. Rather, living wage proposals are affordable and workable. They represent a small but significant step toward reversing the "wage squeeze" so carefully documented and analyzed in Fat and Mean.