NS ORD-1997-045 Living Wage Ordinance

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APPEND IX 5. 1�51 According to Ken Dahms, janitorial contact buyer for the City of Baltimore, there has not been any decrease in bids outside of normal fluctuations in companies' bidding practices. It is perhaps worth noting that the two contracts whose labor costs for its lowest-wage workers had the highest rate of increase (55% - from $4.25 to $6.60 per hour) had an increase in the number of bidders, and the contract with the largest decline in bidders already pays workers more than the living wage. Surprisingly, contractors interviewed about the living wage gave generally positive responses. From bus companies to temporary agencies to janitorial services, the prevailing opinion offered was that the living wage"levels the playing field" and relieves pressure on employers to squeeze labor costs in order to win low-bid contracts. "We feel more able to compete against businesses who were drastically reducing wages in order to put in a low bid," said a manager of a bus company. In such cases, if more firms think they have a chance to win city service contracts, the number of bidders could actually increase over time as a result of the living wage hike. Others notice a marked change in worker morale and productivity brought about by the higher wage. "You get a better quality worker, which builds a better reputation for our company," said a human resources representative of a temporary agency. And according to another manager at a bus company, "workers seem happy (and) they come to work on time because they know that at $6.10 per hour, somebody else wants the job if they don't." Baltimore's Business Climate The argument that businesses will leave a city as a result of the living wage ordinance is based primarily on a somewhat intangible mechanism - the idea that such ordinances create the perception that a locality is unfriendly to business, thus discouraging new or continued investment. The direct effects of such ordinances on wages, since they affect such a small proportion of the workforce, could not discourage investment by raising costs broadly in the local labor market. However, claims of indirect effects are asserted with great frequency, find receptive audiences in a time of intense state and local competition for investment, and therefore cannot be ignored. In the case of Baltimore, there is no evidence that local businesses or potential investors have responded negatively to the ordinance. As noted above, even the city contractors interviewed for this study, who are diraxly affected, had no complaints about the ordinance. As for businesses in general, Table 3 shows the assessable base of personal property for businesses and corporations m the city of Baltimore, for the years 1990-95. This measures the value of local businesses' assets, other than real estate, for tax purposes. As shown in the Table, the value of business property declined in real terms in the four Years preceding the passage of Baltimore City Ordinance 442. It then increased sharply from 1994 to 1995, after the passage of the ordinance.''The experience of a single year since passage of the t''Ibe declines for 1991 and 1992 can be attributed to the national recession(though it is worth noting that real declines contim, d until the 4.6% real jump in 1995).