Mandated Living Wages: A Short-Sighted Effort to Help the Working Poor

Seattle – Washington Policy Center has released “A National Movement Hits Close to Home: The Living Wage Proposal Comes to Washington State.” The report outlines the living wage proposal that proponents introduced in the city of Spokane in 2006 and gathered signatures to place on the ballot in 2007, but came up short.

The in-depth study examines the veracity of the claim that workers would benefit if retail businesses larger than 95,000 square feet within Spokane city limits paid wages anywhere from 135% to 165% of the state minimum wage in order to mitigate so-called economic damages caused by the presence of the retail businesses.

“The idea of a ‘living wage’ is not a new idea, but our research shows it is a bad idea,” said Carl Gipson, study author and director for small business at Washington Policy Center. “Proponents are attempting to impose price controls on labor in an effort to alleviate poverty. It is a noble idea but one that is proven not to work. In fact, price controls will hurt those the regulation is intended to help.”

Among the study’s findings:

* Most of the benefits of a living wage would go towards households that are not below the federal poverty line;
* Living wage ordinances force the least skilled workers out of the labor market;
* Economic evidence from other states shows there would be a net job loss within Spokane’s retail workforce;
* Basing wages upon an employee’s need could drastically escalate labor costs.

The study concludes that retail businesses subject to the living wage ordinance would have to take drastic steps to stay in business including layoffs, cancellation of expansion plans and more.

The study is available online.