A proposed living-wage ordinance threatens to introduce the first major policy rift between the Council and the mayor’s office since Bill Purcell took office 20 months ago.
A hefty 28 of 40 Council members signed on initially as co-sponsors of the bill, and with only 27 needed to override a mayoral veto, the prospects for the measure look promising. In the last few days, however, a handful of backers in the Council have had second thoughts, and now the sponsoring majority is no longer veto-proof.
In opposing the bill, Purcell is allied with powerful business interests who have formed a surly coalition expressly to sink the living-wage proposal. The open question is whether the mayor and his corporate confederates can chip away sufficiently at what may be a fragile Council majority to dilute the bill into a meaningless shellor kill it outright. For perplexed liberals and progressives who helped put Purcell in office, a bigger question is why the mayor feels compelled to even try.
Living-wage advocates argue that people working full-time to support a small family should be able to avoid poverty without public assistance. This would seem to suggest that the minimum wagecurrently $5.15 an hourshould be a lot higher than it is. An individual working 40 hours a week for the entire year and supporting a family of four would have to make $8.50 an hour ($7.03 for a family of three) just to reach the U.S. Department of Health’s poverty level for 2001. But the political reality is that substantially higher federal or state minimum-wage levels are not likely anytime soon.
So the living-wage movement adheres instead to the simpler principle that tax dollars should not be subsidizing poverty-wage work, and targets jobs created by or subsidized by tax dollars at the local level. In practice, this translates into local laws that set higher minimum wagesso-called living wagesfor public-sector jobs within the localities and for certain private-sector jobs tied to public funding.
Living-wage laws have been enacted in 46 cities and 10 counties across the country, according to the Association for Community Organizations for Reform Now (ACORN), which tracks the issue nationally, and campaigns are actively engaged in more than 70 others, including Nashville. Although the roster of places with laws on the books features some of the usual suspects inclined toward progressive urban activismOakland, San Jose, San Francisco, Boston, Minneapolis, Portland, Ore., and Madison, Wis., for examplethis is hardly a movement confined to the urban avant-garde. Other bastions of civic adventure that have taken the plunge include Buffalo, Chicago, Omaha, St. Louis, Cleveland, Toledo, Miami, Jersey City, and Milwaukee.
The specific provisions vary quite a bit from place to place. Virtually all begin with a minimum living wage applied to the municipality’s own public employees. In just over half, the living-wage mandate is also applied to private firms and organizations that have service contracts with the city or county. There is typically a minimum value threshold that brings contractors under the living-wage law (as low as $2,000 in Denver and as high as $100,000 in Boston). In some places, the living wage applies to all employees at a contracting firm, while in others it covers only those employees actually doing work under the firm’s municipal contract. Some living-wage laws craft exemptions for nonprofit contractors; others don’t.
Many ordinances also cover employees at firms that accept economic development subsidies or other forms of taxpayer-funded financial assistance (think Dell, Gaylord, HCA, et al.). A handful of cities also apply their living-wage laws to firms leasing publicly owned property. Most ordinances require or encourage covered employers to provide health insurance, and a few mandate levels of vacation or sick leave. And to protect the living-wage rate from the same legislative neglect that has plagued the federal minimum wage, several cities include indexing clauses tying the rate to the federal poverty rate or the consumer price indexor some other provision for automatic adjustment to keep pace with inflation.
Viewed against the backdrop of these dozens of laws in other places, the proposed living-wage law for Nashville is mainstream, even mild. It mandates a minimum wage of $9.78 per hour for Metro employees and for workers at private firms with Metro service contracts valued at $20,000 or higher. For contractors, it applies only to those workers employed “in connection with the service contract,” rather than to all employees at the contracting company. It excludes contracts for the purchase or lease of goods, products, or equipment.
The new wage also would be required of companies receiving at least $20,000 in economic assistance from the city in the form of grants, tax abatements, bond financing, or other subsidies. Here again, though, its application is narrow, covering only those employees whose work is based at or supervised by the particular company sites underwritten by the subsidy.
Under the proposed law, the mandated living wage rises by an additional $2 in cases where the employer is not providing comprehensive health insurance. Employers also would be required to provide at least 12 paid days a year covering holidays, sick leave, vacation, or personal time. The bill exempts the employment of youths in summer job programs. It includes a provision for regular upward adjustment linked to Metro Council approval of increases in pay for all city workers.
The proposed living wage of $9.78 (or $11.78 if no health insurance) may seem like a lot compared to the current paltry minimum wage of $5.15. But living-wage advocates are quick to point out that while $9.78 does push a small family above the federal poverty line, it still represents a significant compromise in relation to the real cost of living. The Nashville Living Wage Coalition, which researched local costs of living and helped draft the proposed ordinance, figures it really takes a wage of more than $14 an hour for a family of four to survive independently in Nashville’s economy. We’re not talking frills here, just a simple apartment, a second-hand car, and the basic necessities for a decent lifewhat the Coalition’s Daynise Couch calls “a very average, basic standard of living without having to rely on public subsidies for housing, food stamps, or assisted day care.”
Joining the mayor in opposition to the proposed bill is a powerful collection of business interests, including the Nashville Area Chamber of Commerce, that have come together as the Coalition to Keep Nashville Working. They argue that a living-wage ordinance will have a variety of dire consequences for the local economy, including higher taxes, a distortion of the labor market, and a dampening of future business investment.
The extreme version of this critique is articulated by Bob Pitts, executive vice president of Associated Builders and Contractors, a Middle Tennessee industry group, who calls the proposed ordinance “a harebrained idea...that’s offensive to the private sector and to free enterprise.” Beyond his opposition on the merits, Pitts seems to regard it as a kind of Northern conspiracy, calling the living-wage movement “a scam” that “comes out of a think tank up East.... What they are really trying to do is build power and influence.”
Skepticism of a more measured sort comes from the likes of at-large Council member David Briley, who fears a fiscal effect on Metro that would mean higher taxes, as well as ripple effects in the Nashville labor market. Briley speculates that “if we have a living wage here, employers can pick up and move to surrounding counties and have a 25-percent lower wage.”
Living-wage advocates counter that the measure’s likely fiscal impact is relatively inconsequential. Couch projects an annual hit to Metro of approximately $4.4 million, representing less than one-half of 1 percent of the overall $1 billion budget. The experience of other cities bears out this version of eventsthe fiscal impact of a living-wage law tends to be modest because of the relatively small number of workers whose wages are lifted.
The bill’s main sponsor, Council member Don Majors, diplomatically labels the hyperbolic warnings about disastrous consequences for the local economy as “slightly overstated.” In fact, the experience of cities around the country with living-wage laws indicates that these concerns are, at best, rhetorical embroidery and, at worst, inflammatory misrepresentation. Solid academic research on the impact of living-wage laws is scantthe first such law, in Baltimore, has been on the books for only seven years. But the few studies that do exist point to generally insignificant economic effects. Wider labor market wage rates don’t rise, bidding for municipal contracts doesn’t fall, unemployment among low-wage workers doesn’t jump, affected businesses don’t pick up en masse and move away, and subsequent business investment shows no signs of suffering.
A different brand of opposition comes from the Employment Policies Institute, a Washington, D.C., think tank (funded partly by industry) that spends much of its energy making the case against living-wage laws. Its chief economist, Dick Toikka, concedes that the research points to little impact as a result of living-wage laws. The Institute argues, however, that impact aside, living-wage laws are poor public policy because there are more efficient ways to raise disposable income for low-wage workers. Toikka says that because some beneficiaries of living-wage laws are not in poor households, it would be better to target relief through the earned-income tax credit or through traditional means-tested avenues such as housing subsidies and food stamps.
But if the laudable goal of living-wage advocates is to see that taxpayer-funded public-sector jobs enable low-wage earners to move toward financial independence, then this “efficient” preference for welfare is a tragicomic diversion, coming as it does from a conservative think tank financed by the very segments of society who condemn welfare with shrill regularity.
Living-wage opponents in Nashville are mounting an intellectually hollow battle against the simple idea that our tax dollars should not be subsidizing poverty. They fear dramatic negative effects that simply have not occurred in the dozens of citiessome very comparable to Nashville in size and situationthat have similar laws. When asked to identify a specific locality where the feared consequences surfaced as a result of enacting a living-wage law, neither Purcell spokesman Patrick Willard nor Council member Briley nor Pitts of Associated Builders and Contractors could name a single one. For opponents of this commonsense proposal, there is, it would seem, no “there” there.
Nevertheless, the pressure to back off is coming down hard on Council members sympathetic to the bill. Majors concedes that he expected this all along, and says his goal is to bring together players from all sides to try to hammer out a compromise that can avert a mayoral veto. He allows that “this ordinance is not written in stone,” and clearly there is some room to negotiate.
But a potential problem is that Purcell’s opposition is not merely to the provisions of this particular bill; he opposes the whole idea of a municipal living-wage ordinance because, Willard says, “it artificially sets a minimum wage for Metro.” Purcell also may insist that the just-released consultants’ study of Metro salaries by the firm William H. Mercer Inc. will lead to adjustments that make a living-wage law somehow moot, or at least less necessary. Majors isn’t buying that, because even if fully implemented, the Mercer study recommendations will not raise wages of the lowest-level workers above the poverty threshold.
All of which leaves the proposed living-wage ordinance as an impressive achievement for having gotten this far, but also as an emerging political drama with an uncertain outcome. Opponents are exasperated at the prospect of using the moral and economic weight of city government to advance the idea that people working full-time should be able to support a small family without descending into poverty or requiring public assistance. For supporters of a living wage, what’s truly exasperating is that Nashville’s supposedly progressive mayor is standing in their way.
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