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Estimate
900 Homeless
in Alachua County
Alachua
Post, October 4, 2001
By HARRIET LUDWIG
Working
people and their families sleep in the streets of the richest country
in the world. Their low wages won’t pay the current market rents.
In Alachua County, an estimated 900 people are homeless each night;
25 percent of them are children.
For 30 years, workers’ wages have failed to keep up with the rising
cost of living. Nationally, the situation has spawned a living wage
movement. Last week the Gainesville City Commission took a partial
step in the right direction. They adopted a living wage of $8.59
per hour --but for direct city employees only. "This leaves the
door open for privatization of contracting services and threatens
the replacement of union jobs," charged Carpenter’s Union business
representative Elsie Allen. "I think the commissioners are well
intentioned, but if they don’t follow through and extend the living
wage requirement to contractors, later elected commissioners could
privatize both services and jobs."
The city’s new living wage carries with it substantial health insurance
and pension benefits and an annual 3 percent cost of living increase
for the regular 1,800 employees. The city’s temporary workers are
excluded. As of mid-August, the city had 293 temporary workers who
were hired directly and 50 who were contracted through agencies.
Commissioners directed staff to report on the temporary worker situation
six months from now.
Allen is a member of the Living Wage Coalition, begun three years
ago with activist Emily Browne’s survey of local living costs. Her
calculation: those costs demanded an hourly wage of at least $11
per hour. She knew that 35 percent of the guests of St. Francis
House homeless shelter are employed, but can’t afford housing. She
pulled together a coalition that met with individual city commissioners.
They proposed a living wage ordinance to cover employees of both
the city and firms who contract for city business. The coalition
opposed the use of public funds to support low-wage businesses.
Commissioners supported the proposal and directed staff to meet
with the coalition to work out details. At this point, Chamber of
Commerce and Council for Economic Outreach officials came on the
scene. Their opposition was strong. They predicted costs too high
for the city to meet. They saw businesses failing under the burden
of higher wages. They were sure it would mean employers would hire
fewer workers.
The coalition had compared the cost of living to the federal minimum
wage of $5.15 per hour. They knew the federal poverty level for
a family of 4 is $8.40 per hour. And they read the state study,
published in January, 2000 that says a Florida family of 3 needs
a wage of $12.25 per hour to cover basic living costs. The local
Chamber and CEO favor $8.48 per hour, the current poverty level.
So in a two-parent family, both adults work, maybe two jobs. They
can’t afford child care, so the kids are raising themselves. But,
hey, they can always apply for food stamps, subsidized housing and
child care, medical assistance or welfare.
At least those subsidies were once available. Food stamps, being
a federal program, are still there, but waiting lists are long for
housing and child care. Millions lack any medical insurance and
aren’t quite destitute enough for Medicaid.
For years, Congress has been hacking away at the supply of public
housing. The country now has a crisis in the lack of affordable
housing. And society has put tough limits on welfare, so that safety
net is gone for most people. In other words, social subsidies are
decreasing for employees of low-wage businesses. An Internet search
turns up a study of the estimated effects of a minimum wage increase
in California in 1998. Done by FSU economist Dr. David MacPherson,
its report of negative effects sounds like those cited by local
officials.
But when the real results of living wages are examined, a very positive
picture emerges. The Employment Policy Institute study found no
evidence of jobs lost under living wage ordinances in 40 locations
nationwide. Nor were any businesses closed. Also, employers reported
that wage increases were absorbed by improved efficiency of workers.
By raising wages, they decreased employee turnover rates. This,
in turn, decreased recruitment and training costs.
It harks back to Henry Ford in the early 1900’s. He paid his workers
the then-unprecedented $5 per hour so they could afford to buy his
cars. Higher wages return to the local economy. Living wages, the
study found, promote responsible economic development policies.
Business leaders and investors who are members of Responsible Wealth
share the view that paying employees a living wage is good business.
It creates stronger communities and better customers, they say.
The RW group is a project of United for a Fair Economy.
"These policies have the potential to counteract the destructive
race to the bottom wherein cities and counties try to attract businesses
by offering larger subsidies than their neighbors," the study said.
"The more prevalent living wages are, the fewer firms will be able
to shop around for the cheapest locality on the basis of cutting
wages."
The privatization of services formerly provided by public sector
workers often results in pay cuts when those workers move to the
private sector. A study by the Chicago Institute on Urban Poverty
compared wages and benefits of that city’s employees to contractual
employees for low skill jobs. It found privatization cost entry-level
workers pay losses ranging from 25% to 46%.
Wages for the bottom 10 percent of wage earners fell by 9.3 percent
between 1979 and 1999. The number of jobs with wages less than that
needed to support a family of 4 above the poverty line also grew
in the same years from 23.7 percent to 26.8 percent. Living wage
ordinances gave low-income workers much-needed raises.
Another interesting fact revealed by the studies: living wage ordinances
have the potential to counteract the destructive race to the bottom
as cities and counties compete on subsidies offered to attract businesses.
Where living wages are more prevalent, firms are less able to shop
around for the cheapest locality on the basis of cutting wages.
The argument that living wages create a hostile business climate
also does not hold water. Most living wage ordinances cover too
small a proportion of the labor force to have that effect. Most
ordinances apply to less than 1 percent of the local workforce.
Also, for most firms, the increase in labor costs is expected to
be less than 2 percent of total production costs.
Living wage ordinances had no negative effects on a locality’s contracting
process. An EPI evaluation of the ordinance in Baltimore, the first
city to pass such an ordinance, found no significant cost increase
to city government. The 1.2 percent cost increase for the contracts
examined was less than the rate of inflation for the same period.
Another study of the Baltimore ordinance, by the Preamble Center,
found the contract process did not suffer any loss of competitiveness.
EPI studies found no loss of jobs where the ordinances were in effect.
Workers interviewed reported no change in the number of hours they
worked.
What follows is a summary of existing research on the economic impact
of living wage laws now in effect.
BALTIMORE: First city to enact a living wage. The 1994 ordinance
mandated minimum hourly wage of $6.10 for anyone working on a city
service contract. Increases were set to $6.60 on July 1, 1996 and
$7.70 by 1999. Real costs of city contracts decreased since the
ordinance went into effect. Business investment in the city increased
substantially in the 1996-97-business year. Cost to taxpayers was
minimal with the city allocating about 17 cents per person annually
for this purpose.
The number of workers directly affected was about 1,500. Payroll
evidence indicates that higher wages and hours improved the stability
of the workforce. Workers reported a greater sense of recognition
for their work, which was in turn linked to increased job commitment,
reduced turnover, and increased productivity.
SAN JOSE: First six-month report after the ordinance was enacted
Nov.17, 1998 found no small businesses adversely affected by the
policy. It also reported no evidence that contractors were unwilling
to make bids as a result of the policy.
DETROIT: This study (June, 2000) covered 64 of the 96 non-profit
organizations covered by the Detroit ordinance. Three out of four
non-profits had little problem implementing the law. For those that
did, the financial difficulty with funds from the city was not large.
Funds to cover the wage increase for these firms were less than
one percent of total funds allocated to the affected non-profits.
LOS ANGELES: This study (Oct. 1996) reviewed federal and state minimum
wage laws plus existing living wage and prevailing wage regulations.
It concluded that these measures did not result in either unemployment
or significant cost to the affected cities. In fact, the prevailing
wage laws led to increased worker training and helped turn the construction
trades into a well-paid field.
It found that the proposed ordinance would not cause a net increase
in the city budget, employment loss or loss of city services to
city residents. It also reported that the ordinance would bring
a 50.4 percent reduction in public assistance received by affected
workers and their families, as well as growth in spending, home
ownership, and small business markets in areas where affected workers
are concentrated. Other advantages: the living wage would encourage
competition among businesses, characterized by decent wages, increased
productivity, reduced turnover, and increased efficiency. It would
not increase unemployment among less-skilled workers and would not
place small business at any disadvantage. Nor would it discourage
businesses from locating in Los Angeles or doing business with the
city.
MIAMI-DADE: This study estimated the impact of a living wage ordinance,
which was passed in May, 1999. County costs would total 0.1-0.2
percent of the county operating budget for the first year and .01-.02
percent of the budget for the second and third years of implementation.
Costs to Miami-Dade taxpayers are small because they already pay
a substantial "hidden subsidy" to maintain the lives of low-wage
workers and their families through federal and state aid.
For
more information on ways you can pro-actively help the Homeless
the following links are provided.
See
October 5, 2001 issue of Alachua Post for original article.
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