Research Shows Living Wage Laws Could Displace Low-skilled Adults, According to EPI

Apr 16, 2001, 01:00 ET from Employment Policies Institute

    WASHINGTON, April 16 /PRNewswire/ -- Living wage laws like the one
 proposed in Nashville could displace low-skilled adults from their jobs,
 according to five living wage research reports, three of which were written by
 nationally recognized living wage proponents.
     The Employment Policies Institute (EPI) today released the findings from
 the five living wage studies which show that mandating ultra-high minimum
 wages could have the unintended consequence of displacing low-skilled adults
 from their jobs.
     Three leading supporters of living wage mandates agree that low-skilled
 workers might get crowded out.  The following quotes are from taken from
 research reports written by nationally recognized proponents of living wage
 laws:
 
      *  "It would be expected the living wage law would encourage contractors
         and firms using city financial assistance to become the premier firms
         in their industries.  With better wages and health care coverage, they
         should attract and retain the best workers, have the most productive
         work force and, over time, deliver the highest quality of services."
 
      "The Impact of the Detroit Living Wage Ordinance"
      David Reynolds, Wayne State University, September 1999
 
      *  "One can somewhat confidently predict that the wage increases and the
         newly offered health care benefits will result in a higher caliber of
         worker and measurable increases in efficiency."
 
      "The Impact of a Living Wage Ordinance on Miami-Dade County"
      Bruce Nissen, Florida International University, 1999
 
      *  "Productivity is also known to respond to wage increases, as recent
         economic theory and research findings have emphasized. ... Some of
         the (productivity) increase can arise because new hires may come from
         a more experienced or skilled labor pool."
 
      "Living Wages at the Port of Oakland"
      Michael Reich, University of California, Berkeley, December 1999
 
     Independent economists also expect this "crowding out" effect.  The
 following quotes were taken from research reports written by impartial
 researchers or research organizations:
 
      *  "There is, however, another possible job 'loss' effect worth noting
         ... If there are wage increases for just over 15,000 workers on
         current city contracts, there will be significant new competition for
         these (relatively) well-paying jobs from others in the labor market.
         It is reasonable to expect that employers will find a wider pool of
         better qualified (in formal terms) applicants for these jobs.  Thus,
         currently employed low-wage workers may be displaced by better-
         qualified workers at the higher wage, independent of the job loss
         predicted above."
 
      "The Living Wage in San Francisco"
      San Francisco State University, October 1999
 
      *  "Higher wages and benefits enable employers to recruit workers with
         stronger skills to the jobs affected by the Ordinance ... It is also
         well established that employers gradually change the composition of
         their workforce when wages go up.  This, again, is common-sensical: if
         a job suddenly pays more, then when employers advertise and opening,
         they will get more applicants and applicants with stronger
         'credentials' -- more years of schooling, more relevant experience,
         and so on."
 
      "An Empirical Analysis of the Proposed Los Angeles Living Wage Ordinance"
      Dr. Richard H. Sander, UCLA, January 1997
 
     For more information or for complete copies of these reports, please
 contact John Doyle at 202-463-7650 or doyle@epionline.org.  For more general
 information on the issue, visit http://www.livingwage.org .
 
     The Employment Policies Institute is a non-profit research organization
 dedicated to studying policies that affect entry-level employment.
 
 

SOURCE Employment Policies Institute
    WASHINGTON, April 16 /PRNewswire/ -- Living wage laws like the one
 proposed in Nashville could displace low-skilled adults from their jobs,
 according to five living wage research reports, three of which were written by
 nationally recognized living wage proponents.
     The Employment Policies Institute (EPI) today released the findings from
 the five living wage studies which show that mandating ultra-high minimum
 wages could have the unintended consequence of displacing low-skilled adults
 from their jobs.
     Three leading supporters of living wage mandates agree that low-skilled
 workers might get crowded out.  The following quotes are from taken from
 research reports written by nationally recognized proponents of living wage
 laws:
 
      *  "It would be expected the living wage law would encourage contractors
         and firms using city financial assistance to become the premier firms
         in their industries.  With better wages and health care coverage, they
         should attract and retain the best workers, have the most productive
         work force and, over time, deliver the highest quality of services."
 
      "The Impact of the Detroit Living Wage Ordinance"
      David Reynolds, Wayne State University, September 1999
 
      *  "One can somewhat confidently predict that the wage increases and the
         newly offered health care benefits will result in a higher caliber of
         worker and measurable increases in efficiency."
 
      "The Impact of a Living Wage Ordinance on Miami-Dade County"
      Bruce Nissen, Florida International University, 1999
 
      *  "Productivity is also known to respond to wage increases, as recent
         economic theory and research findings have emphasized. ... Some of
         the (productivity) increase can arise because new hires may come from
         a more experienced or skilled labor pool."
 
      "Living Wages at the Port of Oakland"
      Michael Reich, University of California, Berkeley, December 1999
 
     Independent economists also expect this "crowding out" effect.  The
 following quotes were taken from research reports written by impartial
 researchers or research organizations:
 
      *  "There is, however, another possible job 'loss' effect worth noting
         ... If there are wage increases for just over 15,000 workers on
         current city contracts, there will be significant new competition for
         these (relatively) well-paying jobs from others in the labor market.
         It is reasonable to expect that employers will find a wider pool of
         better qualified (in formal terms) applicants for these jobs.  Thus,
         currently employed low-wage workers may be displaced by better-
         qualified workers at the higher wage, independent of the job loss
         predicted above."
 
      "The Living Wage in San Francisco"
      San Francisco State University, October 1999
 
      *  "Higher wages and benefits enable employers to recruit workers with
         stronger skills to the jobs affected by the Ordinance ... It is also
         well established that employers gradually change the composition of
         their workforce when wages go up.  This, again, is common-sensical: if
         a job suddenly pays more, then when employers advertise and opening,
         they will get more applicants and applicants with stronger
         'credentials' -- more years of schooling, more relevant experience,
         and so on."
 
      "An Empirical Analysis of the Proposed Los Angeles Living Wage Ordinance"
      Dr. Richard H. Sander, UCLA, January 1997
 
     For more information or for complete copies of these reports, please
 contact John Doyle at 202-463-7650 or doyle@epionline.org.  For more general
 information on the issue, visit http://www.livingwage.org .
 
     The Employment Policies Institute is a non-profit research organization
 dedicated to studying policies that affect entry-level employment.
 
 SOURCE  Employment Policies Institute