Agenda - 05-21-1997 - 10b - Laserfiche WebLink

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.y APPENDIX 5. 43 Proposals to require municipal contractors to pay a living wage have met with strong opposition from business interests and some political leaders. Their most prominent arguments include the following: Higher Costs for Contracts. Critics argue that requiring city contractors to pay employees wages substantially higher than the federal legal minimum will drive up the costs of city contracts, imposing substantial new burdens on local taxpayers. The office of Los Angeles Mayor Richard Riordan claims that the proposed Los Angeles living wage ordinance"will have a major impact on the city's budget and may make it impossible to restructure the way the city delivers services."2 The Chicago Chamber of Commerce has advanced the same argument during the debate on the Chicago living wage ordinance. A spokeswoman claimed that "[t]he new ordinance will. . . hurt the city by creating artificially high wage rates. . . and increasing city procurement costs."; In Baltimore, Mayor Kurt Schmoke, contemplating a veto of the living wage ordinance passed by the City Council, expressed fears that the contract cost increases would be so high the city would not have the funds to pay for them.` Fewer Workers Employed. Opponents also claim that because living wage laws will raise labor costs, many contractors will seek to do the same work with fewer employees, thus costing some low-wage workers their jobs. Economist Stephen J.K. Walters' arguments during the Baltimore living wage campaign were fairly typical: "the big losers are all the states that have done the most to make unionization easy and labor costly. . . . [The living wage would] price many of the workers right out of their jobs."' According to the chief economist for the University of New Mexico Bureau of Business and Economic Research,"the ones who are fortunate enough to keep their jobs will benefit [from Albuquerque's proposed law], but we would see quite a few people at the minimum wage who would lose their jobs."6 High Enforcement Costs. Critics claim that taxpayers will be further burdened by substantial new costs to monitor and enforce employer compliance with the law. During the debate on the St. Paul living wage proposal, a board member of the Chamber of Commerce stated, "The initiative mandates that the city follow up on all projects after two years and impose fines and penalties for noncompliance. Who do you think would end up paying to administer this ordinance" We would — the taxpayers. . . . This new burden would be added at a time when taxpayers are demanding that we reduce the price of government."' Loss of Bidders. Opponents also claim that competition for city contracts will be reduced, as fewer companies believe that they can place a competitive bid under the requirement of higher 2 7b"Living Wage"Isaac-Fact Sheet,Office of Mayor Richard Riordan 3F06,Rosa."Group Wants City Contractors to Pay 57.60`Living Wage,'"The Press,June 19, 1996. "Wage Bill Depends on Schmoke,"Baltimore Sun,December 4, 1994 5Watters,Stephen J.K"Is BUII.D Trying to Tear Down?"The Baltimore Sun,June 22, 1994,p. 11 A. 6Dom=a1ski,Dennis.and Vukelicb,Dan."6.50 City Minimum Wage Advocated,"Albuquerque Tribune, August 15, 1996,p. 1. 7Given,William"Should City Jobs Initiative Pass?"Saini Paul Pioneer Press,October I0, 1995,p. 7A. 4