An online story posted this morning at the Arlington Sun Gazette reports, "Legislation percolating in Richmond would effectively gut efforts by Arlington and a number of other localities across the commonwealth requiring government contractors to provide what advocates call a “living wage.”
The story goes on to report:
"A bill introduced by Del. Glenn Davis (R-Virginia Beach) would prohibit the commonwealth’s counties, cities and towns from imposing a living-wage requirement on contractors after Jan. 1, 2017.
"Such a measure, if passed, would impact the Arlington government, whose contractors are required to pay employees at least $13.13 per hour (81 percent higher than the minimum wage) under certain conditions.
"Arlington’s living-wage ordinance has been in place for years, but has been opposed by the Arlington Chamber of Commerce. In its 2016 public-policy statement, the Chamber reiterates its opposition to government efforts to “coerce” businesses to provide wages levels, benefits or working conditions outside applicable federal and state labor law.
"Whether local governments even have the authority to impose living-wage requirements on contracts in Virginia is an open question. The Fairfax County Board of Supervisors in 2007 applied a living-wage standard to its own workforce, but determined that it “cannot legally mandate a living wage for vendors and other employers.”
"Davis’s measure, if enacted, would grandfather in existing contracts, even if they renew in 2017 or later, and would allow local governments to require that businesses receiving economic-development incentives provide specific wage levels.
"The bill would have no effect on localities, like Arlington, that also use living-wage ordinances to set minimum pay for their own government workforce."
You can read the remainder of the story, which discusses living wage computations made by Massachusetts Institute of Technology (MIT) here.
The legislation, HB 264, was the first bill patroned by Del. Glenn Davis in the 2016 General Assembly session. Here's the bill's summary, according to the General Assembly's Legislative Information System:
"Prohibiting certain local government practices that would require contractors to provide certain compensation or benefits. Prohibits local governing bodies from establishing provisions related to procurement of goods, professional services, or construction services that would require a wage floor or any other employee benefit or compensation above what is otherwise required by state or federal law to be provided by a contractor to one or more of the contractor's employees as part of a contract with the locality. The prohibition shall not affect contracts between a locality and another party that were executed prior to January 1, 2017, or the renewal or future rebids of services thereof. Also, localities shall not be prohibited from entering into contracts for economic development incentives in which the company receiving the incentives is required to maintain a certain stated wage level for its employees." (highlighting in the original)
The bill is currently co-patroned by Senators Richard Stuart (R-Montross) and Frank Wagner (R-Virginia Beach).
What are the consequences of a "living wage?" In a July 2010 op-ed in the Baltimore Business Journal, Michael Saltsman, who is identified as the research director for the Employment Policy Institute (EPI) at Wikipedia, writes:
"Despite the damage done to businesses already in the city of Baltimore, a living wage mandate also kills jobs by erecting a big red “Keep Out” sign for larger retailers looking to locate inside city limits. Given the chance to pay $7.25 an hour to entry-level employees in the county, or over $3 more in the city, it’s far more attractive to put down roots just outside that city line. Jobs and tax dollars will both flee the city for the friendlier confines of Baltimore County.
"Chicago’s Democratic mayor, Richard Daley, understood this. A few years back, the Chicago City Council passed similar living wage legislation, and Daley promptly vetoed it (his first veto after 17 years in office). Why would a business open in a locale that imposes unnecessary costs upon them?"
In an op-ed about the lower minimum wage for Forbes magazine, dated November 26, 2014, Mike Patton concludes:
"Even though it’s true that raising the minimum wage would result in more money for those who receive it, because it is so low (hence the word minimum), it would have very little effect on the U.S. economy. Therefore, I think this is more about class envy than anything else. And, like so many arguments today, you can’t overlook the political component. (emphasis in the original)
"Despite efforts to the contrary, America is still the “Land of Opportunity” for those who will roll up their sleeves and work hard to obtain the necessary skills for a higher paying position. A minimum wage job, after all, should never be the end game. Rather it should be a beginning step in the career path for those inclined to improve their circumstances. Unfortunately, we have a country filled with individuals who are satisfied with a welfare check, but who are fully capable of working and becoming a productive member of society. If government really wants to help our economy, it’ll focus on getting people off of entitlements and back to work. How long will it take before the electorate starts to figure out that the game played by many elected officials is not intended to boost the economy, but rather to garner votes. How long?"
The Cato Institute has a concise 1-page presentation of four reasons for not raising the minimum wage.
A so-called 'living wage,' according to Investopedia, is defined as, "A theoretical wage level that allows the earner to afford adequate shelter, food and the other necessities of life. The living wage should be substantial enough to ensure that no more than 30% of it needs to be spent on housing. The goal of the living wage is to allow employees to earn enough income for a satisfactory standard of living." However, you can think of it as the minimum wage on steroids.
This is not the first year that Delegate Davis has sponsored The February 19, 2015 Augusta Free Press reported on the floor debate that focused on his HB 1608 legislation.
Arlington County has a living wage policy, and currently mandates a living wage of $13.13 per hour, and applies to service contracts with an estimated annual value greater than $100,000. It is defined in Article 4-103 of the Arlington County Purchasing Resolution. Further details can be found here.
We will growl more about Del. Davis' HB 264 in the coming days. However, we wanted to alert Arlington County taxpayers about the context for Del. Davis' legislation.