Taubman conference debates living wage laws

Wednesday, October 17, 2007

Three sharply differing views on addressing poverty were on display yesterday at a panel discussion of living wage ordinances hosted by the Taubman Center for Public Policy, part of an annual conference on urban policy issues.

The discussion panel was titled “The Living Wage,” in reference to laws that cities have enacted in recent years that target employees of municipal sub-contractors and mandate payments above the prevailing minimum wage. But the discussion ranged broadly, touching on the national minimum wage, the earned income tax credit or EITC and the role of labor unions.

An audience of several dozen in Faunce House’s Leung Gallery listened to short presentations and posed questions to three national experts on wage policy: Paul Sonn, a minimum-wage advocate at the New York University School of Law’s Brennan Center; James Sherk, a labor policy fellow at the conservative Heritage Foundation; and Oren Levin-Waldman, a public affairs and administration professor at the Metropolitan College of New York. Assistant Professor of Political Science Scott Allard moderated.

Sonn spoke first, focusing on the national movement to raise minimum wage laws. The decline of these laws, he said, has contributed to a “stagnation of living standards” in the past 35 years.

Citing recent research, Sonn said that, contrary to the arguments of their critics, minimum wage laws do not cause job loss. In fact, Sonn said, allowing minimum wage laws to fall to well below their historic levels has had the effect of “artificially holding down wages for the entire bottom end of the economy.”

Sonn said a current congressional effort, spearheaded by Sen. Edward Kennedy, D-Mass., and others, to raise the national minimum wage and legislate automatic cost-of-living increases, Sonn said he is optimistic about the direction of American wage policy.

“It really does look like we’re within striking distance of returning the minimum wage to its historical level within the next ten years,” Sonn said.

Speaking next, Sherk said minimum wage laws are not a solution to the problem of poverty.

“I wish it were that simple,” Sherk said. “The fact is it’s not.”

Sherk argued that mandating higher wages does indeed lead employers to cut jobs, asserting that economists who support Sonn’s assertion to the contrary represent “a minority of the profession.” The unavoidable economic reality of the situation, he said, is that “when it becomes more expensive to hire workers, employers will hire fewer.”

Sherk cited statistics indicating that the unemployment effects following minimum wage hikes are greater than the growth in wages.

Sherk attributed the push for living wage laws for employees of municipal contractors in cities like Providence to the influence of unions, which he said have figured prominently in the movement. Their goal, Sherk said, is to protect high-paying government jobs from a recent trend towards municipal subcontracting.

“It’s in their self-interest,” he said. “It’s not this push for economic justice and solidarity.”

Instead, Sherk said the best approach to lifting people out of poverty is to ensure they have access to education and other training that will give them the better skills and higher productivity necessary to command higher pay in a competitive economy.

“Two-thirds of the eighth graders in Washington, D.C. are functionally illiterate,” making their prospects of earning a decent wage bleak, Sherk said. “The solution to poverty is to fix that problem.”

Levin-Waldman recast the question of the living wage movement as a “backlash” against policies taken by urban “regimes” to “create favorable business environments” and trim municipal budgets. The question also reflects the decline of national wage-protection institutions such as unions and the minimum wage, he said.

He presented data from his current research that he said suggests cities adopting living wage ordinances have less-educated and lower-skilled workers, more rapidly rising inequality and sharper declines in traditional urban industries such as manufacturing and transportation.

It is “the wrong question to ask whether the living wage is a good thing or a bad thing,” Levin-Waldman said. “I would say it’s actually been inevitable.”

“There has been an absence of serious wage policy in the last 20 years or so,” Levin-Waldman said, later emphasizing the importance of labor unions to bolstering such policies.

To kick off the question-and-answer session, Allard presented the findings of a Taubman Center poll conducted annually in conjunction with the conference. The poll found that 70 percent of Providence residents support the adoption of a living wage policy in the city that would require city contractors to pay workers at least $12.30 an hour, plus an additional $1.25 an hour for health benefits.

The poll also found that 90 percent of Providence residents support an increase in the national minimum wage from $5.15 to $7.25 an hour and that 74 percent consider poverty “a big problem” in society.

The poll was conducted Sept. 29-30 by Professor of Political Science Darrell West, director of the Taubman Center, and Professor of Political Science Marion Orr, director of the University’s Urban Studies Program. It was conducted from a sample of 491 Providence residents, and its margin of error was plus-or-minus five percentage points.

During the question-and-answer session, Sonn said wage laws, support programs like the EITC and education and job training “all play important roles” in alleviating poverty, but emphasized that the country’s wage policy has “gotten out of whack” with the other two components in the past 35 years.

But once again, Sherk emphasized that wage laws were the wrong strategy.

“Simply trying to get the government to come in and wave a magic wand doesn’t address the problem,” he said. “The key to lifting up low wage workers is to make them more productive.”

Levin-Waldman said labor unions used to play a key role in supporting both the poor and the middle class.

“It’s no coincidence that the deterioration of the minimum wage occurred at the same time as there was a large assault on labor unions,” particularly during the Reagan administration, Levin-Waldman said.

Asked to explain the effect of broad trends like international outsourcing and illegal immigration on wage policy, Sonn emphasized that globalization has a much bigger effect on higher-skill industries, but workers for whom minimum wage laws were most necessary – those in service industries – were not subject to international competition. He also urged the modernization of wage and labor law enforcement to mitigate the effects of illegal immigration.

Another questioner pressed Sherk to explain who would fill the service jobs once education and training raised the skill level of low-income workers, given that such jobs are labor intensive and may not be automated. But technological innovations are often “hard to foresee,” Sherk said.

Sonn called municipal living wage laws “an important but symbolic first step toward raising the minimum wage.”

When a Community College of Rhode Island student suggested that living wage laws might discourage skilled “paraprofessional” workers from pursuing education because they could potentially earn the same amount in service jobs without extra training, Levin-Waldman said the minimum wage benefits not only the poor but also the middle class.

“If we were to couch the minimum wage as a middle class issue, there would be a broader base of support for it,” he said. “It’s not just the wages of low income people that have fallen.”

But Sherk disagreed, saying so-called “ripple effects” do not exist, and instead “wages get compressed” at the lower end of the pay scale. Raising the minimum wage “doesn’t help someone earning $40,000 a year,” he said.

The panel was the eighth annual installment of the Thomas J. Anton/Frederick Lippitt Conference, organized by the Taubman Center, which aims to bring to campus each year “recognized national experts on significant urban problems, who will join with local audiences in discussing both problems and solutions,” according to promotional literature distributed in advance of the conference. Previous years’ topics have ranged from education policy to emergency preparedness.

The living wage was chosen as the subject of this year’s conference because in light of rising costs for housing, fuel, health care, and other daily necessities, discussion of how to help the working poor is crucial, Allard said.

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