|Decision Makers:||Local Government State Government|
|Population Reach:||10-19% of WI's population|
|Impact on Disparities:|
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A living wage is a locally mandated wage that is higher than state or federal minimum wage levels. Living wages are often set at the level needed for a family of four to meet the federal poverty level ($24,300 for a family of four in 2015 (US DHHS-Poverty)). Living wage ordinances typically apply only to companies under contract with or receiving assistance from cities with such an ordinance. Some ordinances mandate or encourage firms to provide health coverage and other benefits to workers.
There is some evidence that living wage ordinances increase wages for covered workers and modestly reduce poverty rates (Urban-Holzer 2008b, Clain 2008, Adams 2005). Additional evidence is needed to confirm effects.
Living wage laws appear to help workers just below and just above the poverty line the most (Adams 2005). In some cases, living wage ordinances can lead firms to layoff workers or reduce workers’ hours (Urban-Holzer 2008b, Clain 2008, Adams 2005), often displacing the lowest-skilled workers (Fairris 2008). To minimize the likelihood of displacing the lowest-skilled workers, some researchers suggest setting wages close to market rates (Bartik 2004).
Moderate living wage requirements applied to local government, and to contractor and grantee employees funded by local government, are the most likely to reduce poverty rates (Bartik 2004). Ordinances with relatively lower costs to firms reduce the likelihood of unintended consequences such as firm relocation and employee displacement (Pollin 2005).
Living wage laws can be implemented without significant negative effects on employment or business growth (Lester 2011, Pollin 2005). A study of Los Angeles’ living wage, for example, found that participating businesses realized reductions in employee turnover, absenteeism, overtime hours, and job training needs compared to other businesses (Fairris 2005). Research suggests that including living wage advocates in monitoring and enforcement can enhance implementation (Luce 2005).
Living wages may improve mental health among workers: in a study of London’s living wage, service sector employees who work for a living wage employer appear to have greater psychological wellbeing than those who do not (Flint 2013).
Local conditions determine optimal wage levels and implementation strategies. As of 2013, over 140 communities across the country have adopted living wage ordinances (COWS-Living wage).
As of 2014, a living wage in Wisconsin has been estimated at $8.87 per hour for one adult without children (Living Wage Calculator). Some cities and counties in Wisconsin have living wage ordinances. For example, the city of Madison has a living wage of $12.45 per hour for 2014 that applies to city employees and employees associated with many service contracts or groups receiving financial assistance from the city (Madison-Wage).
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