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Fear of Wages

Ordinance may force city contractors to pay fair

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By Kim Phillips

If you want to see what a typical Chicago factory is like today, you could do worse than look at the Farley Candy Company on the northwest side. One of the many candy factories in Chicago, it pays workers in its production facilities a starting wage of $4.25 an hour and doesn't offer any benefits. When Teamsters Local 777 tried to organize a Farley warehouse a little over a year ago, the company brought in dozens of security guards and fired five workers who were involved in organizing the union. Subsequently, Farley was charged with unfair labor practices by the National Labor Relations Board and offered three of the workers their jobs back. One accepted.

While Farley isn't unique in its labor practices, it differs from other firms in one respect: it's generously supported by the Chicago city government. In 1994 Farley received $3 million in tax-increment financing to build a new storage building at 43rd and Damen.

But on Thursday, May 9, Fourth Ward alderman Toni Preckwinkle intended to introduce the Chicago Jobs and Living Wage Ordinance in the City Council. Its mandate is simple: any business in Chicago receiving assistance from the city worth more than $50,000, or a contract from the city for more than $5,000, must pay its workers at least $7.57 an hour--a wage that will provide a family of four with an annual income meeting the federal poverty line of $15,100. Over the past year, there have been campaigns for similar legislation in cities across the country. A law passed in Baltimore last summer established a minimum wage of $6.10 an hour for all businesses with public contracts, and that minimum will increase over the next four years to $7.27. Last fall saw a bitter contest in Saint Paul, where business organizations called a living-wage initiative "Stalinesque," outspent community organizers ten to one, and ultimately sent the initiative to defeat at the polls. In Chicago the campaign for the living-wage ordinance has been, in one sense, a classic grass-roots organizing campaign.

"We've been going door-to-door, standing on busy intersections, making phone calls," says Ted Thomas, president of the Association of Community Organizations for Reform Now (ACORN). But the big reason that the ordinance stands a decent chance of passing in Chicago is that ACORN's been able to harness widespread support from organized labor. The ordinance has been endorsed by the Teamsters, Service Employees International, United Steelworkers, United Auto Workers, United Electrical Workers, United Commercial and Food Workers, and the American Federation of State, County, and Municipal Employees; at a raucous April 25 demonstration in the Loop, the unions were out in full force. As a result, the ordinance has met with considerable support from aldermen. According to ACORN organizers, 36 out of 50 say they'll vote to pass it. The mayor's been coy--his press office said he wasn't quite sure what he thinks about the ordinance, but he hasn't returned calls from Thomas.

The Living Wage Ordinance arrives as the national debate over the minimum wage comes to a tepid simmer, with Democrats suggesting an increase to $5.10 an hour and liberal Republicans emerging as the radicals of the day with a hike to $5.25. Conventional wisdom has it that raising the minimum wage will only raise unemployment rates and that the present minimum wage is high enough since teenagers are the only people who receive it. In recent months, the notion that raising the minimum wage will necessarily increase unemployment has come under heavy fire. A book by Princeton economists Alan Krueger and David Card, Myth and Measurement: The New Economics of the Minimum Wage, took New Jersey--where the state minimum wage was raised to $5.05 in 1992--as a natural testing ground. Not only did their study fail to show any drop in employment or exodus of jobs from the state--there were actually slight increases in employment rates in certain regions of New Jersey after the raise. As for the idea that the minimum wage is just for kids at summer jobs, there are 40,000 families in Chicago living below the poverty line despite a working householder. And if you look at the amount of money a family needs to get by comfortably, suddenly even the living wage starts to seem rather Spartan. An alternative poverty line devised by Kathleen Shankman at Northern Illinois University took into account the average rent in Cook County ($593), average monthly utility bill ($166), and monthly transportation, health care, and child care costs ($59, $145 and $583 respectively), in addition to a low-cost food budget ($283) and a little extra for personal care. Shankman suggests that an adequate gross income for a family of three (one parent, two kids) would be about $27,415 a year. Think of that as $13.71 an hour for 50 weeks a year--nearly three times the current minimum wage and substantially more than the $7.57 that would get you to the federal poverty line. As Andy Stern, new president of the Service Employees International Union, says, "You think the minimum wage is high enough? Try living on it for a while."

It's often suggested that raising wages or taxes will drive industry out of the city. University of Chicago sociologist Terry Clark says, "Chicago has been losing jobs for 20 or 30 years because it has high wages and a reputation as a city with strong unions. A living-wage ordinance would only hurt the city's reputation." But others point out that many of the businesses that would be directly affected by the living-wage ordinance are in the service sector and depend upon a vibrant urban economy. Whole Foods, for example, has a well-documented antiunion policy, yet it's received $10 million in local tax-increment financing. Living-wage proponents suggest the grocery chain came here because it wouldn't have anyone to sell its expensive organic produce to in a dirt-poor but union-free southern hamlet. What's more, businesses that have contracts with the city are the least likely to go anywhere. Alderman Preckwinkle says, "City workers are protected by unions. But people who the city contracts out to--health care workers, child care workers, home attendants--all these folks are hardworking people who ought to earn a living wage. The idea that we should pay people as little as possible in order to attract as much business as possible doesn't seem like the best idea to me, unless you want to have a third world economy."

Some believe wages in cities like Chicago might actually have to fall, claiming that city governments are powerless before market forces. As Clark says, "The living-wage ordinance flies in the face of the main trends in Western Europe and the United States, which have been in the direction of global competitiveness and the international economy. This means that wages will be--I wouldn't say lower--they'll be more competitive by industry and by job." In other words, there's nothing city governments can do about unemployment, low wages, or the urban economy--except introduce job-training programs and tax breaks all around and hope for the best. Not surprisingly, the theory of market inexorability finds its strongest proponents in the corporate leaders who stand to gain from the policies it encourages. As Gregory Baise, president of the Illinois Manufacturers' Association, said after winning a $400 million package of tax cuts from the city in 1993, "We're pleased that the leaders have recognized the need to try to improve the economic climate to encourage manufacturers to locate and expand in Chicago." And as Stan Pepper of Pepper Construction said after the city passed legislation grant-ing businesses $17 million in tax cuts in 1995, "You really need to be competitive if you want to expand the job base."

Yet the armies of the working poor will not be disappearing anytime soon. A Chicago Urban League report shows that half the occupations adding the largest numbers of jobs to the Chicago economy annually require no more than a high school diploma; average wages in these occupations range from $5.40 for service employees (currently the largest area in job growth) to $8.57 for transportation workers. ACORN says the Living Wage Ordinance would on balance do far more good than harm to the 10,000 or so workers it would affect. But what about the thousands of working poor whose wages won't be touched? It's worth remembering that there was a time when most jobs in Chicago paid a wage that would support a family of four. The reason--as Terry Clark agrees--was widespread unionization. Though nationally union membership has been falling since the mid-1950s, workers in unions still earn $150 a week more than nonunion workers--not counting benefits. As Stern said at the April 25 rally, "The best antipoverty program is unionization." Or to quote a young man from Service Employees Local 880 who brought five nonunion friends to the demonstration with him, "There's power in numbers, you know."

Art accompanying story in printed newspaper (not available in this archive): photo/Jon Randolph.

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