Living Wage Policies at San Francisco Airport:: Impacts on Workers and Businesses

This paper evaluates the costs, benefits and related impacts of living wage policies implemented at the San Francisco Airport (SFO). Unlike other living wage ordinances, the policies at SFO cover a large proportion of the low-wage labor force in a distinct labor market. We find that about 73 percent of the ground-based non-managerial workers at SFO received substantial wage increases as a direct or indirect result of the policies; the proportion of these workers earning under $10 per hour fell from 55 percent to 5 percent, significantly reducing earnings inequality. Other benefits to workers included enhanced health benefits and an arrest of declines in quality of life indices. The costs of the policies to employers amounted to an average of 0.7 percent of revenue, or $1.42 per airline passenger. We observe a series of dynamic adjustments that reduced those costs, including dramatically reduced turnover, improved worker morale and greater work effort. We find some limited evidence of worker-worker substitution, but no evidence of employment decline.