Living wages are key to poverty eradication

LATimes.com – Opinion/Commentary – The poor need not always be with us. That goal can be achieved if we ensure that workers are paid enough to feed their families.
June 14, 2010.   Joyce Appleby

Advocates for the poor are pushing against the same obstacles that 18th century opponents of slavery confronted: acceptance of an evil because of its familiarity. It’s hard to be outraged by a condition that’s been around for millenniums. Even the Great Emancipator despaired of ending poverty.

Quoting Scripture, Abraham Lincoln said that the poor will always be with us. That attitude once applied to slavery. Then, with remarkable suddenness, the idea of abolition aroused a cadre of reformers who changed public perceptions in less than a century.

So do we really have to accept that poverty is too firmly entrenched to ever be dislodged?

A worldwide movement is gaining momentum to disrupt complacency about poverty, and one of its centers is right here in Los Angeles. For nearly two decades, a robust social movement has been devising creative solutions that meld progressive ideals with a pro-business approach to ensure that people with jobs can actually provide for their families.

Its first victory came when it guided through the L.A. City Council a living-wage ordinance in 1997. Today more than 100 municipalities from San Diego to New York have passed ordinances mandating living wages for city employees and those employed by companies doing business with the city. Wages vary depending on prevailing local rates and which benefits are included.

Like slavery, the issue the Los Angeles Alliance for a New Economy addresses is an old one. Two hundred years ago, the British radical William Cobbett denounced the cruelty of jobs that kept sober and industrious workers fully employed but did not pay them enough to feed their families.

Arguments against raising pay through legislation come up every time Congress tries to raise the minimum wage. At $7.25 today — even after the increase passed by Congress in 2007 — the purchasing power of the minimum wage is 17% lower than it was in 1968. Raising wages is clearly an uphill battle.

Negotiations to transform the Kingsbridge Armory in the Bronx into a shopping mall foundered recently when the developer refused to accept a provision that all tenants in the proposed mall pay their prospective employees a living wage of $10 an hour plus benefits. New York City’s Bar Assn. urged the City Council to stop linking community benefits packages with zoning approvals for new developments. The bar report also asked Mayor Michael Bloomberg to rethink his support of the concept.

Opponents of living-wage ordinances and benefit packages have real concerns. In our highly competitive world economy, individual companies or nations are only going to get pounded if they let their labor costs get out of whack with their competitors’.

But paying a living wage can benefit businesses too. A study of L.A.’s 1997 living-wage law, for instance, funded by the Ford Foundation and undertaken by LAANE in conjunction with the University of California, discovered that the ordinance had increased pay for an estimated 10,000 jobs. Employment reductions amounted to 1%, or an estimated loss of 112 jobs. Most firms gained from reduced employee turnover, which can be costly and disruptive.

Findings from such follow-up studies have gone a long way toward mitigating worries about the downside of raising wages. Yet fear of pressure on wages with our present high unemployment has led reformers to stress the urgency of coming out of the recession with a stronger workforce.

More recently, a coalition of groups led by the Strategic Actions for a Just Economy and LAANE secured a groundbreaking community benefits agreement involving L.A. Live, one of the city’s largest development projects in the last 20 years. The agreement guarantees living-wage jobs for the majority of the permanent employees in the project’s two hotels, numerous restaurants and half a dozen theaters and clubs. It also secured affordable housing for local residents and a fund for neighborhood parks from this massive complex.

Taking a pro-development stance has aligned living-wage advocates with the most powerful anti-poverty force in the world today: capitalism. Market growth in Korea, Taiwan, China, Malaysia, Indonesia and India has lifted 300 million people out of poverty during the last 30 years. And though many of the world’s most impoverished people still have no shot — yet — at any employment, much less something that pays a genuine living wage, we’ve seen remarkable progress.

There’s even light at the end of the tunnel of capital flight to impoverished areas. The pools of cheap labor that have depressed wages for the last three decades are beginning to dwindle. Chinese workers are now gaining bargaining power, achieving substantial wage increases from major employers like Honda and Foxconn, and recently, the Beijing municipal government raised the minimum wage 20%. While some producers have moved factories to Vietnam and Bangladesh, it’s only a matter of time before those places too start to understand the importance of living wages. Economic development raises expectations among workers.

Nobel laureate Muhammad Yunus, whose Grameen Bank began micro-lending, insists that one of the underpinnings of poverty is the widespread conviction that it is an ineradicable evil, like dying. “I firmly believe,” he says, “that we can create a poverty-free world if we collectively believe in it.” In a poverty-free world, Yunus has remarked wryly, “the only place that you would be able to see poverty is in a poverty museum.”

When that happens, L.A.’s living-wage advocates can take some of the credit for convincing the public that the poor need not always be with us.

Joyce Appleby is professor of history emerita at UCLA and a member of the LAANE Resource Board. Her latest book is “The Relentless Revolution: A History of Capitalism, 2010.”

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