Grassroots Wages

Dear All, the second issue for the fall semester publication of the Harvard Political Review has been released. The online edition was released around the middle of January, and you can read my contribution here (or you can scroll down). The more detailed draft for this article is available here. Grassroots Wages is featured on the cover for the United States section of the Political Review. The intention is to analyze the political forces that moved this issue to the national level, it doesn't really try to discuss the idea itself (whether or not it is ideal to raise the minimum wage). Thanks for reading! :)


Grassroots Wages

Where the minimum-wage movement got its start

BY JASON WONG

In recent years, the nation’s lowest income earners have been effectively taking a pay cut as inflation and rising consumer costs have reduced the value of the federal minimum wage. But while the newly elected Democratic majority in Congress focuses on raising the minimum wage at the national level, they will find that many states and localities have beaten them to the punch. In fact, the majority of Americans now live in areas that require higher minimum wages than the federal government does. In an interview with the HPR, Rep. Jesse Jackson, Jr. (D-Ill.) hailed this development: “Local ‘livable wage’ campaigns…help Democrats and Republicans to understand that the American people are serious about raising the minimum wage.”

The Santa Fe Example

An example of one such campaign can be found in Santa Fe, N.M., home to the nation’s highest minimum wage. Passing the city’s Living Wage Ordinance was not an easy task and the first attempt in 2000 failed. However, Mayor David Coss told the HPR that through a “powerful coalition of labor groups, the faith community, some small businesses and the immigrant community,” the issue “became a really great movement,” and the resolution was passed by the City Council in 2003 with only one opposing vote. The Santa Fe Living Wage Ordinance increased the minimum wage to $8.50 beginning in 2004, and raised it again, to $9.50, in 2006.

A strong supporter of increasing minimum wages, Coss explained: “When employers don’t pay a living wage, then the community as a whole subsidizes that need.” This assertion has some evidence behind it, as the first year after the living wage ordinance went into effect in Santa Fe saw a 9 percent decline in the caseload for Temporary Assistance to Needy Families programs. Addressing critics who claim minimum wage laws hurt small business, Coss argued: “If anything, raising the minimum wage has helped the economy and helped working families.”

Indexing the Minimum Wage

Beyond Santa Fe, even more dramatic steps have been taken. Through the passage of Proposition L, San Francisco not only raised the minimum wage to $8.50 in 2004, but also indexed it with the local Consumer Price Index in order to stabilize its economic value. The current minimum wage, as of January 1, 2007, is worth $9.14 an hour. In an interview with the HPR, Aaron Peskin, president of the city’s Board of Supervisors, attributed the 2003 passage of Proposition L to San Francisco’s high cost of living, the static condition of the state minimum wage and “a national minimum wage so anemic as to be virtually meaningless.” Proposition L passed resoundingly in 2003 with 60 percent of the vote, in spite of fierce local opposition from organizations such as the San Francisco Chamber of Commerce.

Asked whether there has been economic fallout, Peskin told the HPR that, “Contrary to the fears of naysayers at the time, San Francisco’s economy has grown by leaps and bounds.” Peskin acknowledges that “this fact does not mean causation,” but he emphasizes that the threatened “negative economic impacts have not been realized at all.” This conclusion has been corroborated by researchers at UC Berkeley’s Institute of Industrial Relations, which found that the new policy did not affect employment growth in local businesses. Indeed, full-time employment increased and job tenure improved, health insurance coverage remained stable, and the policy did not spur business closures. Unfortunately for those dining out, though, the Berkeley study did find that relative to other restaurants east of San Francisco Bay, the price of menu items in city restaurants increased by approximately 3 percent more.

As the movement to increase the federal minimum wage has progressed slowly, it has ultimately been up to each individual state and locality to decide whether or not to enact higher minimum wage laws. But it is partly because so many states and localities have decided to enact higher minimum wages that politicians on the national level are finding it easier to support minimum wage increases. As Jackson told the HPR: “Most change in Washington comes when the grassroots gets active.”