Economists agree living wage won’t have negative effects
Calling it a major milestone in their campaign, supporters of the living wage measure on the November ballot announced that 119 economists have endorsed the proposed ordinance.
The economists — who are all familiar with living wages and come from throughout the United States, Europe, Mexico and Canada — agree that the living wage ordinance would help lift low wage workers in Santa Monica out of poverty.
“As economists, we believe that living wage legislation is an important tool for improving the living standards of working Americans,” the letter of endorsement states. “Research has shown that these laws can reduce poverty by providing higher pay to the working poor.”
Voters will be asked on Nov. 5 to set an hourly minimum wage of $10.50 without health benefits, or $12.25 an hour without health benefits, for employees of businesses that make more than $5 million in revenue and are concentrated in the coastal zone.
Opponents of the living wage say the economists failed to look at the intricacies of Santa Monica’s living wage ordinance, which is much different than the 80 or so other living wages that have been instituted throughout the country.
“None of them really looked at what Santa Monica’s law is really about,” said Tom Larmore, who opposes the measure and is speaking on behalf of the Chamber of Commerce, which also opposes the living wage. “It’s an entirely different kind of law.”
“None of them really looked at what Santa Monica’s law is really about. It’s an entirely different kind of law.” — — TOM LARMORE Living wage opponent
Santa Monica’s living wage differs from many minimum wages set in cities throughout the country because it targets specific businesses that are not funded by government, and includes tipped employees at hotels and restaurants, critics say. They also say it’s a bad measure because it will cost the city of Santa Monica $3 million the first year because it is an employer that will have to pay its employees the living wage, if approved.
337,“No economist would put their reputation on the line without looking at all the pros and cons,” countered Danny Feingold, spokesman for the Los Angeles Alliance for a New Economy, which is campaigning for the measure.
Economists said they read the ordinance in full, as well as a study commissioned by the city. The study was conducted by University of Massachusetts Ameherst Professor Robert Pollin and his colleague Professor Mark Brenner. The study found that the living wage ordinance would help lift low wage workers out of poverty, and that affected businesses, primarily luxury beach hotels, could afford to pay a higher wage.
Pollin’s study was reviewed by Harvard University Professor Richard Freeman, who is considered one of the top labor economists in the world. He affirmed all of the study’s major findings.
68B,“They put a lot of stock in Professor Freeman’s study,” Feingold said “We sent them all of the actual provisions of the law along with the study of Professor Pollin. They saw both sides.”
However, Former Michigan University Economics Professor David Neumark, who was paid by the city to review Pollin’s study, said there are risks involved in the proposed living wage ordinance that the other economists might have missed.
“Most living wage laws apply to businesses that get funding from the government,” he said. “This is a minimum wage to target big business.”
Ron Baiman, a professor at the University of Chicago Illinois, said the evidence proves that the living wage would not have a devastating effect on the city, or the businesses targeted, as critics suggest.
“I’ve looked at this stuff in some detail because it is a path breaking ordinance,” he said. “The study goes to great lengths to consider all possibilities and effects.”
Carol Zabin, the chairperson of the Center for Labor, Research and Education at the University of California Berkeley, said she thinks Pollin’s study was careful and Freeman’s review of it was judicious.
Zabin, who grew up in Santa Monica, said the city’s financial contributions to the downtown and beach areas has benefited luxury hotels significantly, which justifies the coastal zone provision in the living wage law. She argues that the hotels should pay their employees a decent wage not only because their success has partly hinged on taxpayers’ contribution but also because the beach is a public asset and the hotels benefit from being located on it.
Originally published in the Santa Monica Daily Press print edition on October 9, 2002. Read the original PDF.