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Living Wages: Protection for or Protection from Low-Wage Workers?

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  • David Neumark

Abstract

Living wage laws are touted as anti-poverty measures. Yet they apply to only a small fraction of workers, most commonly covering only employers with city contracts. The apparent contradiction between broad anti-poverty goals and narrow coverage suggests that goals other than poverty reduction may partly underlie living wage campaigns. This paper considers the hypothesis that living wage laws act to maintain or increase rents among unionized municipal workers. By raising the wages that city contractors would have to pay, living wage laws may reduce the incentives for cities to contract out work that would otherwise be done by unionized municipal employees, hence increasing the bargaining power of municipal unions and leading to higher wages for their members. The evidence presented here, from an analysis of CPS data for 1996–2000, indicates that the wages of unionized municipal workers are indeed increased as a result of living wage laws covering contractors.

Suggested Citation

  • David Neumark, 2004. "Living Wages: Protection for or Protection from Low-Wage Workers?," ILR Review, Cornell University, ILR School, vol. 58(1), pages 27-51, October.
    • Handle: RePEc:sae:ilrrev:v:58:y:2004:i:1:p:27-51
    DOI: 10.1177/001979390405800102
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    1. David Neumark, 2004. "Living Wages: Protection for or Protection from Low-Wage Workers?," ILR Review, Cornell University, ILR School, vol. 58(1), pages 27-51, October.
    2. Scott Adams & David Neumark, 2004. "The Economic Effects of Living Wage Laws: A Provisional Review," NBER Working Papers 10562, National Bureau of Economic Research, Inc.
    3. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 833-867, October.
    4. Scott Adams & David Neumark, 2005. "Living Wage Effects: New and Improved Evidence," Economic Development Quarterly, , vol. 19(1), pages 80-102, February.
    5. Timothy J. Bartik, 2002. "Thinking about Local Living Wage Requirements," Upjohn Working Papers 02-76, W.E. Upjohn Institute for Employment Research.
    6. Addison, John T., 2006. "Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals' Costs (Even Lowering One's Own?), and Interjurisdictional Competition," IZA Discussion Papers 2381, Institute of Labor Economics (IZA).
    7. N/A, 2002. "Working in America: A Blueprint for the New Labor Market, by Paul Osterman, Thomas A. Kochan, Richard Locke, and MichaelJ. Piore," ILR Review, Cornell University, ILR School, vol. 55(4), pages 715-745, July.
    8. Murgai, Rinku & Ravallion, Martin, 2005. "Is a guaranteed living wage a good anti-poverty policy?," Policy Research Working Paper Series 3640, The World Bank.

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    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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