An Argument Against Living Wage Laws— and in Favor of a Sound Alternative

Abstract

Since Baltimore passed the first “living wage” in 1994, unionfunded activists have engaged in a well-financed and highly coordinated campaign to mandate artificially high wages in dozens of American cities. Initially, these campaigns focused on mandating a wage for workers employed by businesses contracting with the city government. Now, the policy has evolved into a mandated minimum wage imposed on all businesses within the city limits. Broader living wages such as these were recently passed in Santa Fe and in San Francisco, and activists are gathering signatures for a similar referendum in Madison, Wisconsin. Living wage campaigners argue that because employees cannot afford to support themselves—much less a family—on the federal minimum wage, cities must mandate a wage sufficient to meet local cost-of-living expenses. Armed with a battery of cost-of-living statistics, the activists argue that a living wage will make up the difference between the minimum wage and the local cost of living. The facts tell a different story.