City of Lincoln
City Council Office
Council Members Comments
LIVING WAGE ORDINANCE
by Terry Werner
On February 9th I introduced a "Living Wage Ordinance" to the Lincoln City Council. It states that:
What will the "Living Wage" Ordinance do? This is not a citywide minimum wage. It only applies to businesses that contract with the City, or to those receiving financial assistance from the City. They must then pay their employees a wage that is either equal to or above the federal poverty rate for a family of four. Currently that rate would be $9.73 per hour. If your company pays health insurance, then the rate would be $8.85 per hour.
Should government interfere in the private sector? Under this ordinance, we would not put any restrictions on private business unless they choose to compete for public dollars. All City contracts have certain requirements; this would be an additional requirement that makes recipients pay a wage above the poverty level. This ordinance is premised on the basic belief that people who work hard should not be poor. They should be able to support themselves and their families without dependence on public assistance. This is what family values are all about.
How does this effect the bidding process? This ordinance would make the process more fair. Currently, some businesses are able to undercut their bids because they pay low wages. If this ordinance passes, they would be forced to compete on the same level as employers who pay a wage above the poverty rate. This makes the playing field more even for those employers who recognize the value of keeping and retaining good people.
In addition, this ordinance recognizes that smaller businesses may not be able to compete fairly with larger, better capitalized businesses. Therefore, it will apply only to contracts that are $25,000.00 or larger and with 10 employees or more.
Will City costs increase? In the City of Lincoln it will affect only a few employees and will not increase our budget in any significant way. There is no evidence that service contracts have been impacted in other cities. Over 100 cities in the United States have legislated a "living wage" ordinance. In fact, Baltimore implemented its ordinance in 1994 and, according to research done by the Economic Policy Institute, its contracts rose by less than the inflation rate, 1.2% (August 2000 EPI issue guide on living wage).
Will this have a reverse effect and force businesses to lay people off? Again, research shows this has not been the case. In other cities with a "living wage" ordinance in place, businesses contracting with the City did not reduce hours or their labor force. They also report that there was no reduction in the number of bids received. Businesses recognize the value of government contracts.
Will this effect Lincoln's ability to recruit new business? Generally a company's highest concern includes the overall economic climate in the community and the availability and quality of the labor force. They look at the quality of life in the community for themselves and their employees. Such things as schools, parks, transit, arts and recreation are the highest priorities. In reality this may be a factor, but it will not be the sole deciding one. "Living Wage" laws in place across the country continue to attract new business and to prosper.
Will this ordinance really help low wage workers? Lincoln is home to approximately 25,000 people with incomes below the federal poverty level. According to Nebraska Appleseed, these people are found in two parent families with children (about 2,800 families) and in families with children headed by a single person (about 1,800 families). These families live in every census tract in the City. The people who would benefit from this ordinance are our neighbors and our friends.
I will conclude by reiterating the three basic premises of this ordinance:
I believe that the citizens of Lincoln share these basic values and will support a "living wage."
This issue is very important to the community. The Council will hear public testimony on February 23rd. Our meeting will start at 5:30 p.m. Please come and testify or just come to show your support.