Monday, September 13, 2004
Initial success wanes with Lawrence living wage
By Patrick T. Lafferty and Stephen Lynn
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Lawrence made history on October 28, 2003, when commissioners passed the first living wage ordinance in the state of Kansas. Almost a year later, little has changed. The living wage, affordable housing, and health care continue to elude the vast majority of working families, while the city has not experienced the exodus of firms predicted by opponents of the ordinance. This has caused some speculation that the passage of the ordinance was a largely symbolic decision. Nevertheless, the Kaw Valley Living Wage Alliance (KVLWA) remains focused. David Smith, associate professor of Sociology at the University of Kansas and board member of the KVLWA, said that the law would serve as a springboard for discussion and reform of other issues facing the Lawrence community today. He said that the network of individuals and local groups brought together by the KVLWA campaign will continue to educate the community. "We think that people need to know more about the issues confronting us as a community. We hope to co-host some community wide forums on affordable housing and health care," said Smith.
The KVLWA stands firm on the issue that sparked its creation in September of 2000. "We also plan to pay attention to the city's ongoing implementation of the living wage policy," said Smith.
Lawrence's ordinance is the 114th of its kind across the United States. Codified as the wage floor and health insurance requirements, the ordinance mandates that all firms receiving city tax abatements or equivalent financial incentives pay workers a living wage. The city defines the wage floor as 130% of the federal poverty line plus health benefits. For 2004, the law has set the wage at $9.79 per hour plus health benefits. Provisions in the law call for officials to re-index the living wage annually to coincide with the national poverty line.
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The law requires firms to provide workers with health benefits, 70% of which employers must fund. Yet the ordinance allows employers to opt out of providing health insurance by paying workers $1.50 per hour above the living wage. This adds up to an additional $3,120 of income per year, before taxes. The most recent per capita personal health care expenditure data for the state of Kansas is from 1998. It shows an annual cost to the individual of $3,707. This means workers would have to pay $587 out of their already limited disposable income to attain the average expenditure. Additionally, the ordinance makes no mention of pre-tax health savings accounts or any program designed to help employees achieve group buying power for health insurance.
David Burress, Research Economist at the Policy Research Institute (PRI) at the University of Kansas, said that the policy needs improvement.
"Few firms have been affected and only 5-10 percent of the workforce has been affected," said Burress.
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According to Burress, city governments must follow the "but for" policy. That is, design the tax abatement policies so that companies will not come to Lawrence but for the tax abatements. He said the current policy hardly provides an incentive for companies to locate in Lawrence. "These tax abatements are not high on the list when a company makes a decision to come to Lawrence," said Burress.
Expanding on the relative insignificance of these tax abatements, Burress said, "the abatements won't drive a firm away, either, because they become even less important. Symbolic politics, however, might drive a firm away."
Even when firms locate to a new place, Burress said the outlook for new job creation is not promising. "If a firm decides to move to Lawrence, they will bring most of their labor force."
Cities such as Denver, Colorado have a better chance of attracting firms. Firms tend to achieve better production in areas where competing firms have clustered themselves, such as Denver's Technical Center. To combat this competition, Burress said that Lawrence should develop firms locally.
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In spite of the work left undone, KVLWA board member Stephanie Harsin said that workers' situations have improved since the passage of the ordinance. "Last year, the city voluntarily raised the wages of the majority of those city workers who were making below a living wage. We hadn't asked them to and they didn't call it a living wage. However, we believe the idea of a living wage and our movement had something to do with that," said Harsin.
Harsin and Smith look forward to continued improvements in the Lawrence community through education and interaction. "When large, diverse groups of people work together, they have a much better chance of being heard and getting things accomplished," said Harsin.
For more information about the Kaw Valley Living Wage Alliance, or to join the group's mailing list, email kawlivingwage@yahoo.com.
