Living Wage Laws

It's been about two-and-a-half years since the city of Irvine passed a living wage ordinance for contractors doing business with the city. And, how many other cities in Orange County have followed Irvine's lead, especially in these tough economic times? Zero.

No other city has taken up the cause, despite a call by UC Irvine Prof. John Hipp in a comprehensive report released in January of 2009 that details the squeezing of Orange County's middle class. One of Hipp's suggestions to combat the glaring inequality that has manifested in the county between the haves and have-nots is for government to set wage standards that reflect the cost of living. Living wage laws in San Diego and Los Angeles counties, as well as around the nation, have helped raise the wage floor for tens of thousands of underpaid service workers and Orange County should follow suit, Hipp asserted in his report. He backed up this claim with the statistic that nearly 45% of all individuals classified as being in poverty are actually working.

While the minimum wage is set by the federal government, and applies to most employers, a living wage is typically set by local and state governments to provide wages that reflect the cost of living.

So, why haven't other cities or the county followed Irvine's lead? According to Eric Altman, Executive Director of OCCORD (Orange County Communities Organized for Responsible Development, an economic justice community-based advocacy organization which advocates on issues that impact Orange County's working families),  the absence of more living wage laws is based on two prime reasons. First all the effort has to come from the grass roots level, which has not happened yet, and second, there is not a lot of political will among elected officials for living wage laws.

"There's a tendency to dismiss these things out of hand,” Altman said. "A lot of elected leaders in Orange County are too ready to listen to business interests crying wolf. That's a real problem. Government doesn't work if it's not government for everyone. That includes working families, as well as businesses. And, we don't see a lot of that kind of balanced view among elected leaders in Orange County. Some certainly, but I think they're probably in the minority.”

In response, county Supervisor John Moorlach, points to the fact that Orange County has always been business-friendly.  He says that the federal minimum wage, combined with a competitive marketplace in retaining an appropriately skilled labor force, should be sufficient. "In this current economy, I would not even want to consider putting more demands on employers,” Moorlach said.

Although Moorlach's attitude is common among elected officials, it is not borne out by the results in the counties that have passed living wage laws. In Los Angeles, for example, employers have recovered some of the increased costs of the living wage through reductions in employee turnover and absenteeism, according to a report on the impact of the county's living wage ordinance on workers and businesses.  This report was conducted by four researchers from UC Riverside, UCLA and the Los Angeles Alliance for a New Economy. On average, firms recovered 16% of the increased cost of the mandatory wage increase through turnover reductions, according to the report. What's more, employers found a variety of ways to adapt to the remaining costs of the living wage, such as reducing fringe benefits and overtime, hiring more highly-trained workers, and passing the costs to the city or to the public, the report found.

For workers, the results were especially beneficial, according to the report. The Los Angeles living wage increased pay for an estimated 10,000 jobs with minimal job reductions, which critics had predicted.

In San Diego County, fears that the city would incur more than $3 million during the first year the law took effect did not come to pass either. It only cost about $1.2 million during that time, which was closer to the city's estimate.

In Irvine, The Committee for a Living Wage - comprising Claire Donovan, Dennis Short and Paul Flanagan – was successful in getting the council to adopt a living wage ordinance. This law requires that employees of any company the city contracts with are paid the minimum wage, as determined by the California Industrial Relations Commission. But the effort was not without critics, who claimed such a law could send the Great Park price soaring higher than the $1.1 billion estimate, cause city services to be eliminated and cause higher taxes because of increased government costs.

None of those things happened, according to Craig Reem, the city's Director of Public Affairs and Communications.

In other cities, the situation is not as sanguine. The Committee for a Living Wage was able to convince the Costa Mesa Human Relations Committee to ask the City Council for a living wage ordinance, but the council ultimately abolished the commission before anything came to fruition. The council eliminated the commission in 2005, led by efforts by then Mayor Allan Mansoor because he didn't feel it was a function of city government. Mansoor said at the time that he felt human relations issues were best handled through private means.

In Fountain Valley, there's so little money available from real estate taxes that the city must contract out services to the lowest bidder, according to City Manager Ray Kromer. That leaves janitors, groundskeepers and others in these kind of service jobs struggling to live in affluent Orange County, according to Flanagan.

For Flanagan, a living wage represents family values by making it so that only one parent has to work, so the other parent can stay home with the children. This paradigm creates "a better educated group of people, better able to solve problems, confident they can solve problems, and those are family values,” Flanagan said. Ideally, a living wage would apply to everyone who works within a city's limits, he added.

There are some current efforts to get a living wage adopted in the county. But they are initiatives linked to specific projects, not on a city-wide or county-wide level. OCCORD pursues a living wage as part of community benefit agreements, according to Altman. These are project-specific, negotiated agreements between a developer and a broad community coalition that outline the project's contributions to the community and ensure community support for the project, according to OCCORD's Web site. Currently, OCCORD is trying to get a living wage as part of an agreement with the city of Anaheim, the developer of the Platinum Triangle. This is a multi-phase project that will ultimately be a high-density, mixed-use urban environment encompassing about approximately 820 acres at the convergence of Interstate 5 and State Route 57. While the first phase of this project was approved before OCCORD was created, the city is working on subsequent phases, and OCCORD wants to make sure a living wage is part of any new agreements.

Another living wage effort in the county is being undertaken by the Santa Ana Coalition for Responsible Development, which is working on a community benefit agreement for the Renaissance Plan area of Santa Ana. The goal of this plan is to redevelop a 450-acre, 120-block area that includes two districts­ (Civic Center and Downtown), three neighborhoods and a run-down industrial area next to a train station hub.

As these organizations continue to focus on getting living wage laws approved as part of these projects, Altman bemoans the lack of political will to address the crisis of working poverty in Orange County.

"I think it's a tremendous missed opportunity,” he said. 'I think living wage laws are just what we need right now.'"