Living Wages: Protection For or Protection From Low-Wage Workers?
Living wage laws, which were introduced in the mid-1990s and have expanded rapidly since then, are typically touted as anti-poverty measures. Yet they frequently restrict coverage to employers with city contracts, and in such cases apply to a small fraction of workers. This apparent contradiction leads to the question of whether there are alternative motivations for various economic and political actors to seek passage of living wage laws. This paper considers the hypothesis that unions representing municipal employees work for the implementation of living wage laws to maintain or increase rents. 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 municipal employees, hence increasing the bargaining power of municipal unions and leading to higher wages. The empirical analysis leads to evidence that the wages of unionized municipal workers are increased as a result of living wages. This evidence does not imply that living wages offer no assistance to low-wage workers or low-income families. However, it suggests that alternative policies intended to achieve the goal of reducing urban poverty may be more effective, as living wage laws may result more from considerations of self-interest of narrow but politically-powerful groups of workers than from consideration of the optimal way of achieving this goal.
|Date of creation:||Jul 2001|
|Publication status:||published as David Neumark, 2004. "Living wages: Protection for or protection from low-wage workers?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 58(1), pages 27-51, October.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Leibenstein, Harvey, 1978. "On the Basic Proposition of X-Efficiency Theory," American Economic Review, American Economic Association, vol. 68(2), pages 328-332, May.
- Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, vol. 68(2), pages 246-250, May.
- Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 87-104, August.
- Daniel P. Kessler & Lawrence F. Katz, 2001.
"Prevailing Wage Laws and Construction Laborc Markets,"
Cornell University, ILR School, vol. 54(2), pages 259-274, January.
- Daniel P. Kessler & Lawrence Katz, 1999. "Prevailing Wage Laws and Construction Labor Markets," NBER Working Papers 7454, National Bureau of Economic Research, Inc.
- Daniel R. HOLLAS & Stanley R. STANSELL, 1994. "The Economic Efficiency Of Public Vs. Private Gas Distribution Utilities," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 65(2), pages 281-300, April.
- Arunava Bhattacharyya & Elliott Parker & Kambiz Raffiee, 1994. "An Examination of the Effect of Ownership on the Relative Efficiency of Public and Private Water Utilities," Land Economics, University of Wisconsin Press, vol. 70(2), pages 197-209.
- David Neumark & Scott Adams, 2003. "Do Living Wage Ordinances Reduce Urban Poverty?," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).