Living Wage Issue Causes Battles in States
By Greg McDonald, Senior Writer
Ethiopian immigrants Temesgen Hagos and Makonen Habtemarian brought their families to the United States more than eight years ago hoping to free them of the poverty and political turmoil they had endured all their lives. But after arriving in this country, they found the shadow of poverty was still with them. Thanks to a "liveable wage" ordinance passed last year in the community in which they live, both men's financial situation has improved dramatically. But a heated debate about such measures rages in many states.
But after arriving in this country, they found the shadow of poverty was still with them even though they landed jobs in Northern Virginia, which has the highest median household income level ($90,937) in the nation.
Saddled with $800-a-month rents and other costly living expenses, the two men soon had to augment their $6 and $7 an hour parking attendant jobs with second full-time jobs. But the money still wasn't enough, and their older children had to drop out of high school and go to work full-time as well.
That led to other problems. The constant work ate up family time, and their kids grew frustrated at not being able to fulfill their dreams of going to school in America.
The situation for Hagos and Habtemarian changed dramatically last year, though, when the Alexandria City Council adopted a "living wage" ordinance that forced companies with city contracts to pay at least $9.93 per hour.
"My dream was to come to the United States from Ethiopia and send my children to school so they can become useful citizens. I could not make my dreams come true with the wages I was getting," Hagos told Virginia lawmakers last month as they considered a measure to outlaw similar ordinances statewide.
The Virginia assembly opted to leave local matters in the hands of local politicians. But other state lawmakers are under pressure from various business interests to oppose - and in a few cases even repeal living wage legislation.
Orchestrated by local and national conservative groups such as the American Legislative Executive Council, the campaign has been successful in at least four states - Arizona, Colorado, Louisiana and Missouri.
In general, a living , or livable wage as it's sometime called, is defined as enough to lift a family of four above the national poverty threshold of $17,650 per year. That comes to about $8.49 an hour. Living wage advocates are pushing states to establish or raise their state minimum wage rates, which usually mirror the national average of $5.15 an hour, as a first step.
But the movement is increasingly confronted by well-bankrolled campaigns aimed at reversing hard-fought gains on wages. Efforts to beat back any wage increases are underway now in Kansas, Michigan, Oregon, South Carolina, Tennessee and Utah.
The move in Virginia almost succeeded last month. But a last-minute appeal from a coalition of citizens, labor unions and local politicians convinced lawmakers to kill it.
"For us, it boiled down to an issue of preserving local autonomy," says Alexandria, Va. Mayor Kerry Donley who testified before a state Senate committee that establishing living wage rates "is a socially responsible thing " for governments to do.
"It also has economic benefits... Most of the people (who would be helped by living wage measures) are lower-skilled workers...These people have been left high and dry at the station during the recent economic boom we've seen," Donley told Stateline.org .
Hagos and Habtemarian illustrate how paying unskilled workers a livable wage can pay off, advocates say. Habtemarian, who at 68 was having a tough time working two jobs, says he now has "peace of mind" and is no longer holding down a second position. Hagos' four daughters are headed for college, and he's thinking about taking a computer class to develop some more useful skills. And both men are proud to say that they are now able to have dinner with their families at night.
Their success story is just one example of how the living wage movement is beginning to make a difference to poor people all across the country. But living wage advocates are still having a hard time convincing legislators that millions of workers are worse off now than they were 10 years ago in the last recession.
"Most people don't understand that the economic benefits we've had these last few years haven't trickled down. People making minimum wage now are struggling more than ever," says Kim Cartron, a policy analyst with the North Carolina Justice and Community Development Center.
According to a recent center report on North Carolina working families entitled "Working Hard is Not Enough," nearly one-third of the state's tax-paying households do not earn enough to support even a "bare bones budget of necessities."
"In spite of the economic boom, over one million North Carolina workers cannot earn enough to support their family's needs," says Sorien Schmidt, a co-author of the report. "For these families, the prosperity of the last several years is merely an illusion. They are working more and earning less."
According to the Economic Policy Institute in Washington, D.C., relative wages for the bottom 10 percent of the country's hourly workforce fell by 9.3 percent between 1979 and 1999. Meanwhile, the number of jobs where workers made less than what it takes to support a family of four above the poverty line threshold grew from 23.7 percent in 1979 to 26.8 percent in 1999. Government studies and census figures show that about 12 percent of the American population, or more than 32 million people are living in poverty.
The national poverty level for a family of four, which is set by the U.S. Department of Health and Human Services using census data and inflation figures, is $17,650 in 48 states. The threshold for Alaska is $22,070 while the cutoff in Hawaii is $20,300. That comes to a little over $8.49 per hour based on a 40-hour workweek of 52 straight weeks. A single person is expected to get by on $8,590, which comes to about $4.12 per hour.
The minimum wage rate in 27 states reflects the national standard of $5.15 an hour. Ten states have set their minimum wage rate above the federal limit established by Congress, while six states have set their cutoffs much lower.
Seven states (Alabama, Arizona, Florida, Louisiana, Mississippi, South Carolina and Tennessee) don't even have minimum wage laws. Companies that locate in those states, even if they take advantage of government tax breaks, are allowed to pay workers as little as they can get away. If they engage in interstate commerce they are subject to the federal minimum wage law. But some companies take advantage of loopholes in the statute to get around it.
Living wage advocates, led by such liberal groups as the Washington, D.C.-based Association of Community Organizations for Reform Now (ACORN), are trying to regulate what they call government-run "corporate welfare" systems that help subsidize a company's expansion with taxpayer dollars. With help from some state lawmakers, they are pushing for laws that hold businesses more accountable for what they pay their employees.
If companies aren't willing to pay higher wages, advocates say, then they should be forced to offer other benefits, such as help in paying employee transportation, child care or health insurance costs.
Minnesota and Maine are the only states that have adopted corporate accountability laws. But they have been slow to enforce them because of opposition from business interests that claim the increased wages are too costly and hurt competition.
Minnesota's law, which was strengthened last year by eliminating some enforcement loopholes, is considered model legislation.Although the law does not set a wage floor, it does include strict accountability rules that make it difficult for companies to qualify for public funding or tax breaks unless they provide livable wages or other benefit guarantees.