Policy Factsheet

Living Wage Ordinances

Reasons for Policy

  • Federally or state set minimum wages are often insufficient to support a family, leaving low-wage workers stuck in a cycle of poverty.1
  • Living wage ordinances are cited as the most striking progressive achievement in labor and employment policy in the past 25 years. 2

Community Groups

  • Local Government
  • Local Government Contractors

Policy Components

  • A city ordinance mandating businesses under contract with the city, or receiving assistance from the city, must pay their workers a wage sufficient to support a family financially.
  • Living wage laws mandate a wage floor at a level that is intended to sustain an average household.
  • A minimum wage requirement higher than that set by federal or state legislation, which does not take into account family size or household income level of workers.

Desired Outcomes

  • Increase wages of low-wage workers
  • Increase financial security of workers and their family
  • Reduce urban poverty

Level of Evidence Available to Evaluate Effectiveness of Policy

For all policies we describe on this website, we have applied the Standards of Evidence as defined by Flay et al. (2005) in the Standards of Evidence document published by Prevention Science.

The effectiveness level of this policy is 2: Policies with Consistent Evidence from High-Quality Observational Studies.

The levels of effectiveness as noted are:

  1. meets criteria for policy effectiveness (consistent, positive outcomes from at least two high-quality experimental or quasi-experimental trials using a comparison group or interrupted time series design);
  2. consistent evidence available linking policy with positive outcomes from high-quality observational studies only;
  3. insufficient evidence available for policy or policy components.

Achievable Results

On average, living wage ordinances can achieve:

  • Positive and significant effects on the wages of low-wage workers 1
  • Increasing pay in low-skill jobs 2
  • Modest reductions in the likelihood that urban families live in poverty1
  • Reduction in turnover 2
  • Very little to no employment loss3

Estimates of the costs of living wage ordinances find that contractor operating costs would increase by 1%-2%, which would be borne by the city as less than 1% of municipal revenue 4

Community Examples

Links to Policy Examples

References


  1. Neumark, D, & Adams, S (2003). Do living wage ordinances reduce urban poverty? Journal of Human Resources, 38(3), 490-521.  

  2. Fairris, D, & Reich, M (2005). The impacts of living wage policies: introduction to the special issue. Industrial Relations, 44(1), 1-13.  

  3. Brown, C, (1999). Minimum wages, employment, and the distribution of income. Handbook of Labor Economics, vol. 3. New York: Elsevier.  

  4. Pollin, R (2005). Evaluating living wage laws in the United States. Economic Development Quarterly, 19(1), 3-24.  

  5. Flay, BR, Biglan, A, Boruch, RF, Ganzalez Castro, F, Gottfredson, D, Kellam, S, Moscicki, EK, Schinke, S, Valentine, JC, & Ji, P (2005). Standards of evidence: Criteria for efficacy, effectiveness and dissemination. Prevention Science, 6(3), 151-175.