Taking Responsibility for Low Wages

June 1, 2001By Jeff Thompson

More than 100,000 working households in Oregon are poor. Thousands more experience considerable hardship from housing problems, food insecurity, and the lack of health insurance, even though they make more than the absurdly low official federal poverty level. This was true at the height of our hard-charging economy of the late 1990s, and it is even more true today, as growth falters and unemployment rises. We can now add the unfortunate reality that the Oregon Legislature wants to squash an important and increasingly popular policy designed to raise the wages of the working poor. House Bill 2744 short-circuits the efforts of communities to develop responses to the problem of low wages. The bill appears headed for the Governor's desk.

In the late 1990s, one out of seven Oregon working families with children were “officially” poor (income under $17,000 is poverty for a family of four). Those who think the official poverty figure is too low are in good company. A recent national survey shows that 92 percent of Americans believe a family of four needs at least $25,000 per year to make ends meet. Seventy percent think families need $35,000.

Living just above poverty is no picnic. A new study by the Economic Policy Institute shows that nearly 30 percent of “near poor” American households, with incomes above poverty but less than 200 percent of poverty, experience critical hardships. These near poor households, which account for one out of every six households, faced eviction, had utilities disconnected, skipped necessary medical treatment, or went hungry because they didn't have enough money.

The reality of so many working families remaining in and near poverty, and broad agreement that this is unacceptable, has led to an effort to do something about the problem. Over 60 communities nationwide, including Corvallis, Portland, and Multnomah County, have enacted living wages -- evidence that the polls are accurate.

These communities decided it was unacceptable for local governments to pay wages so low that families could not afford to live on them. Most of these ordinances apply not just to city or county employees, but also to the workers employed indirectly on service contracts with these governments. The simple message: “to do business with the city, a company must pay its workers a living wage.” In many cases the ordinances also cover businesses that receive public subsidies, such as property tax abatements or tax increment financing.

Typically the opposition to living wage ordinances stresses the cost of the ordinances and reflects a quasi-religious devotion to the “free market.” As for the market ideologues, they miss the point. The living wage is one of many cases where citizens have determined that the “free market” produces socially unacceptable results that can, and should, be rectified through government action. Analysis of the impacts of existing living wage ordinances shows that the cost is relatively small and easily absorbed. The cost is manageable because it is shared by contractors and the local government, and because it is offset to some degree by higher worker productivity and decreased turnover, and a shift toward contractors that have an easier time adjusting to the new wage requirements in their service contracts.

A number of Oregon communities have already jumped at this opportunity to raise wages for their lowest-paid employees and contract workers. Ashland and Salem are currently considering enacting living wages. House Bill 2744, however, would derail living wage policies by exempting 80 percent of Oregon companies (businesses with fewer than 50 employees) from coverage by local living wage policies. Just because the Legislature has abdicated its responsibility to make work pay and reduce poverty among working families, doesn't mean that they should stand in the way of local communities wanting to do the right thing.