Why a living wage?

Lately, while Democratic legislators in D.C. have been talking about the minimum wage, Chicago politicians have been talking about a living wage ordinance. The ordinance would apply to big box retailers and require that they pay their employees $10 per hour plus another $3 an hour in benefits (a total compensation that exceeds the federal minimum wage by $7.85/hr). According to ChicagoFairTrade.org, the full City Council is expected to vote on the proposal on July 27 (maybe as early as the 26th?).

The Chicago Tribune, at least on its editorial page, has been a strident critic of the measure. This past week, they questioned whether it would even be constitutional, citing a recent court decision on a similar ordinance in Maryland. However, I think the comparison to the Maryland law is an apples-and-oranges arguement; the Maryland law was very specific about what one particular employer (Wal-Mart) must spend on certain benefits, whereas the Chicago ordinance affects a larger class of employers and more broadly defines a level of compensation.

The Tribune also ran an article this week that was somewhat misleading. The headline is: "Clerics slam big-box wage law." For those who tend to read the headline and the first few paragraphs, it gives the impression that there is a broad consensus against the measure. The article is actually balanced, but to find the balance, you need to read to the end. Here I'll quote the final seven paragraphs:

Supporters of the proposal set up a telephone conference call Monday afternoon in which politicians and experts from across the country weighed in about their experiences with such ordinances.

David Coss, mayor of Santa Fe, said retailers and the Chamber of Commerce were concerned about the effect on businesses after the New Mexico city passed a living wage law three years ago.

"The Wal-Mart in Santa Fe has never skipped a beat," Coss said. "At least here in Santa Fe they have learned to live with the law after all."

Coss said the chamber predicted employers would flee the city for the surrounding area, "and that just hasn't happened."

In fact, Coss said, Wal-Mart has won permission to build its first super center in Santa Fe. The Santa Fe ordinance requires all businesses with 25 employees or more to pay workers at least $8.50 an hour. Under the ordinance, the wage rose this year to $9.50.

Chicago Ald. Freddrenna Lyle (6th) said the pattern and practice of the large retailers in other communities leads her to believe that their threats to not build stores "are disingenuous and disrespectful of the city and its residents."

Lyle said the city represents more than $1 billion of untapped buying power to the retailers. "Make no mistake, Wal-Mart and Target will open stores in Chicago, because the money is here," she said.

Why a living wage? If we can draw any conclusion from the Santa Fe example, the answer is: because it works. It really does help those it was intended to help.

As for the idea, implied by the headline, that the measure lacks popular support, the item from ChicagoFairTrade.org cites a mid-June poll in which 84% of registered voters said they supported a living wage. (N.B., there is no information given on who conducted the poll or on the methodology used.)