Getting to a living wage, raising minimum comes with maximum set of complications
Enthusiasm was high last summer for a Cambridge living wage law protecting anyone working for the city, either directly or through a contractor. Three city councillors in an Ordinance Committee meeting talked about acting fast, getting the law in place before a new council term starts in January.
But the Dec. 14 meeting of the Ordinance Committee ended with questions and a call for more study, like earlier discussions on the topic – and remained focused on a narrow category of city government employees and contractors.
Similarly, the year, and council term, ended without resolution on a $15 minimum wage for all people working in Cambridge.
While the city is trying to do its part by paying a living wage for its own workers (now risen to $15 an hour), why is it so difficult to ensure a living wage for all workers in Cambridge?
A living wage is the minimum a worker must earn to meet the most basic needs – such things as food, child care, insurance and health care, housing and transportation and some geographic concerns – without need for government support or poverty programs. For a single person in the Cambridge-Boston-Quincy metro area, the living wage is $13.30 an hour, and for a single person with a child it’s $27.26 an hour, according to the MIT Living Wage Calculator.
There are around 9,500 city workers in the hospitality, leisure and service sector, according to Community Development Department data from 2011, the most recent available, and averaging higher earners such as bartenders and waitresses with lower earners such as fast-food workers shows average pay of $12.37 an hour, adjusted for inflation, according to the U.S. Bureau of Labor Statistics’ economic summary for the area. An increase to $15 an hour would bring a worker another $5,471 a year. Economists say that when a low-wage earner gets a raise, it is usually spent on goods or services; a raise for Cambridge workers to $15 an hour could add $52 million to the local economy.
But at least some local business owners are chilled to think city officials pushing for a citywide minimum wage could be gambling that enough of that bump to the local economy will come to their shops to cover the thousands of dollars in additional wages they’d owe their workers. While that may be a safe assumption for services and restaurants, there’s no such sense of certainty at shops full of goods that more and more people are buying online, tempted by lower prices and increasingly fast delivery.
According to the Cato Institute, a libertarian think tank, a rise in wages would bring more, longer periods of unemployment for low-wage workers and encourage employers to cut worker training and fringe benefits. It would increase teenage crime rates as a result of higher unemployment, the institute says, and encourage employers to hire illegal aliens.
Arguments in favor
The counterargument in the paper “Local Minimum Wage Laws: Impacts on Workers, Families and Businesses” by Michael Reich, Ken Jacobs and Annette Bernhardt of the University of California at Berkeley Center for Labor Research is that wage increases reduce employee turnover, which translates into savings on recruitment, selection and training of workers, as well as on indirect costs such as lost sales, lower-quality service and a lag in productivity as workers learn on the job. Some studies have identified additional benefits of higher wages, they note: improved morale, improved work performance and reductions in absenteeism.
A study of a Los Angeles living wage ordinance found a 35 percent reduction in turnover in firms that increased wages as a result of the law; at the San Francisco International Airport there was a 60 percent decrease in turnover for companies that were affected by mandated pay increases. Most economists will tell you a better-paid worker is a happy worker – and a happy worker is a more productive worker.
Living wage concerns
Cambridge has long tried to do its part; its laws seek to ensure that “that employees of the city of Cambridge and employees of city contractors, subcontractors and beneficiaries of tax abatements, loans, grants, subsidies and other assistance provided by the city earn an hourly wage that is needed to support a family of four.” In March, councillor E. Denise Simmons introduced an order seeking further protections for custodial positions that have proven vulnerable to cruelly lowered wages in recent years, including through outsourcing and other contractor loopholes at city hotels and even at City Hall.
In June, Amy Sugimori, director of policy and legislation for the SEIU 32BJ, a union representing property-service workers, proposed a higher standard for contracted workers cleaning buildings owned by the city, as well as for health benefits and paid leave. City Manager Richard C. Rossi endorsed Living Wage Ordinance revisions in an Oct. 19 letter to the council, but not the time off and health benefits, which “could pose significant legal, operational and logistical concerns for the city.”
Minimum wage issues
Meanwhile, raising the minimum wage just in Cambridge involves petitioning the state and getting legislative approval, which sets up a further complication: The attorney general does not have jurisdiction over local ordinances, and therefore could not enforce the higher wage. The city would have to enforce the ordinance on its own.
There is precedent. San Francisco has an Office of Labor Standards Enforcement that acts as judge and jury if a violation is found and a case is developed against an employer. The office never negotiates away back wages, but may forgo penalties or recovering the cost of investigations, and its strategy focuses on fixing business practices in the long run, rather than fixing one-off issues quickly, which is the model used by state and federal agencies.
It can be time consuming, but it has a better chance of recovering full back wages for workers. Between 2004 and 2012, Sam Francisco got 616 minimum wage complaints and recovered $5.8 million in back wages on behalf of 3,004 workers.
Sean Mulkerrin is a Boston resident who has worked in Cambridge politics.