Most of the first wave of living wage ordinances that were enacted in the mid-1990s involved minimum pay scales that were substantially above federal and state minimum wages. Typically they set a standard of $8.00 or more per hour when the minimum wage was $5.15. Policy makers generally assumed that a living wage policy could not work in trade-based goods- or service-producing sectors that were subject to the forces of technological change and global competition. Consequently, living wage ordinances typically covered only workers on municipal service contracts, or only about 3 percent to 5 percent of the low-wage workers in a city. The implementation of these ordinances often involved granting numerous waivers and exemptions, further reducing their impact. Consequently, the first ordinances were thought to have small spillover impacts on the local low-wage labor market (Freeman 2005).
Citation: In When Mandates Work, Michael Reich, Ken Jacobs, and Miranda Dietz, eds. University of California Press. January 2014.