Agenda - 03-05-1997 - 10c - Laserfiche WebLink

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wages. Less competition will lead to further cost increases. A Chicago Sun-Times editorial asserted that although "proponents argue that [Chicago's proposed living wage] ordinance would make the ' bidding process more equitable for companies already paying a living wage, it is likely that the higher cost of doing business would instead reduce the number of companies bidding."' And the Boston Herald claims that"for a business in a competitive industry (and most are), increasing the cost base ' with [a living wage] requirement could simply lead it to drop the city as a customer."9 Creation of a Hostile Business Climate. One of the most prominent arguments of critics is that businesses in general, not just those bidding on city contracts, will interpret the passage of a ' living wage law as a "bad signal" in terms of the city's overall business climate, leading to capital flight from the city. At a time of bitter competition for job-creating investment, the argument goes, a municipality would be placing itself at a grave disadvantage by passing a law that implies a lack of commitment to keeping costs for businesses under control. According to a Boston Herald editorial, "the [Boston ] proposal couldn't be better calculated to drive business out of the city.s10 The Los 1 Angeles Business Journal opined, "Simply put, the living wage threatens to derail the economic revival that the City of L.A. has been enjoying," referring to the proposal as, Ja]nother bad,job- killing idea."" The Minnesota Retail Merchants Association claims that "mandating wages like this ' will have a chilling effect on business development."12 Concerning Denver's ballot initiative to raise the city's minimum wage, a City Councilman called it "retail suicide. . . . What we're going to do is watch a lot of our economic base walk out of the city to the suburbs."" I These arguments, and their variants, have been raised wherever living wage legislation is under consideration. If they are correct, the case for this legislation would be severely weakened. The purpose of this study is to determine, based on the experience of one of the first cities to pass a living wage requirement for municipal contractors, whether the stated concerns of critics about negative economic and fiscal consequences are or are not well-founded. We assessed the impact of Baltimore City Ordinance 442, which went into effect on July 1 of 1995, in the following areas: the cost of city contracts, the numbers of bidders seeking city contracts, the number of workers employed by city contractors, administrative costs, and the overall business climate of the city of Baltimore. It is our hope that the results of this analysis will be of use not only to the citizens of Baltimore, but to elected officials and members of the public in other locales as they evaluate present and future proposals for living wage requirements. 4 'June 23, 1996. 9September 5, 1996. ""bid. i I "Another bad,job killing idea,"Los Angeles Business Journal,September 30, 1996 12 Judy Cook,Main Retail Merchants Association,quoted in"Can Government Ensure a"Living Wage,"' Investor's Business Daily,April 3, 1996, in reference to proposed state-wide Minnesota living wage law 13 Bartels,Lynn."Voters Will Decide on Wages,"Rocky Mountain News,August 6, 1996,p. 1. 5 I