Fox News, July 13, 2005

link to FoxNews.com video clip

LOS ANGELES — For the past decade, some of the least-skilled and lowest-paid workers in America have benefited from controversial programs known as living wage ordinances.

Under these laws, companies with city contracts are forced to pay workers enough to live in that city, often $2 to $3 more than traditional minimum wage.

But a new study shows the initiative as having mixed results in combatting poverty.

“When you look at when these laws are passed and see whether or not there are wage or employment impacts, we actually do see wage increases with some offsetting employment declines,” said University of Wisconsin-Milwaukee professor Scott Adams.

A 6 percent employment decline in cities that require a living wage, according to the study.

Critics say it's no surprise that making companies pay higher wages results in their hiring fewer employees.

“They [the laws] don't work. They don't help the people that they are intended to help,” said Anthony Archie of the Pacific Research Institute (search). “They're supposed to help low-skilled workers and they actually crowd them out from getting jobs.”

But supporters of the ordinances find the study's methodology flawed. Instead of using city-wide data, as this report does, a more accurate barometer would be to examine just those workers affected by the laws, they say.

Doing so would show a silver lining in what they call “the bigger picture."

“You could realistically have some folks get hurt by the policy, while overall the net effect is positive — that is, a small minority may be displaced from their jobs ... while the majority keep their job, earn higher wages and escape poverty,” Jared Bernstein of the Economic Policy Institute said.

More than 100 cities and counties across the nation have living wage ordinances, and while supporters hope the data from the new study encourages other cities to follow suit, opponents are using the employment declines to try and talk them out of it.