University of Wisconsin–Madison

Wages & Benefits

Written by Griffin Beronio and Walker Kahn

What’s the Problem?

While the U.S. economy and labor productivity have both grown consistently, workers are struggling to keep up with the cost of living. The federal minimum wage (which sets the floor against which other wages are set) has been at $7.25 since 2009: adjusted for purchasing power, it's fallen by 30%. Wage theft was estimated at $15 billion annually in 2017, more than all robbery burglary, larceny, and motor vehicle theft in the United States combined. Even before COVID-19, income inequality in the United States was at its highest level in more than 50 years. This rising inequality was deepened by the pandemic, which disproportionately affected women and people of color.

America is the only high-income country that does not guarantee workers paid time off, forcing them to navigate a patchwork of state and employer rules. Over 40% of all workers had no paid time off to care for themselves or their families, and only 24% of private sector workers had paid family leave.

State and federal preemption pose significant barriers to local reform. Many corporations lobby for legislation that restricts the local community's authority to enact and enforce labor laws so that they can profit by exploiting workers. Local policymakers must navigate federal and state regulatory preemption, but ProGov21's Home Rule Roadmap provides strategies for doing so. Even with these challenges, local communities can improve wages and benefits through high road development strategies. Best practices include local minimum wage ordinances, paid sick and family leave ordinances, and enforcing workers' rights. These policies, and others included in this roadmap, create strong communities where workers can support their families and grow the local economy. 

What are People Doing?

Municipal governments in some states can set a higher local minimum wage, which lifts workers out of poverty, decreases income inequality, and strengthens families. While labor organizations have long worked towards a $15 per hour national minimum wage, the local minimum wage should reflect the prevailing cost of living, and be regularly adjusted to reflect inflation. Living wage ordinances, which match the local cost of living, solve this problem. For example, Washington D.C. recently passed an ordinance that increased the standard minimum wage to $17.50 per hour, raised the tipped minimum wages, and implemented annual cost of living adjustments. Researchers have found that living wage policies minimally impact municipal budgets, benefit working families, raise worker productivity, and decrease worker turnover. NELP has compiled a list of local living wage ordinances across the country, and the ProGov21 database has more resources. Where local ordinances are not possible, municipalities can use other strategies to encourage employers to meet living wage standards (see Taking it to the Next Level below). 

Policymakers in some states can also support their communities by passing local paid sick leave and paid family leave ordinances. Flexible leave benefits improve worker retention, mental health, and productivity. Chicago recently mandated that employers allow workers ten days of paid time off, including 40 hours of unspecified leave. Cities like San José that strengthened leave laws in response to the COVID-19 pandemic should maintain protections and expand workers' rights where possible. 

Project labor agreements (PLAs) are another tool local governments can use to support workers and strengthen communities. These agreements between developers and labor organizations require contractors working on major projects to pay living wages, offer stable employment hours, and provide high-quality benefits. In states where PLAs are allowed, municipal governments can mandate agreements for projects receiving public funds (discussed below). Localities should also promote transparency in the collective bargaining process, which benefits workers and taxpayers, and encourages trust in government. 

Without robust enforcement mechanisms, wage and benefits standards are significantly less effective. Cities and counties can create local enforcement agencies, establish private right of action and retaliation protections, punish violators with the same criminal penalties applied to other types of theft (including fines, jail time, etc.), and regularly report violations to the district attorney. Washington D.C. established wage theft and worker misclassification task forces that streamline investigations and facilitate inter-agency data sharing. Further, Washington D.C., and Santa Fe have instituted policies for punishing wage theft like other forms of theft -- penalties can include imprisonment. This report examines cities like New Brunswick, Princeton, and Seattle, where businesses committing wage theft may have their licenses revoked. Other cities, including Los AngelesEl PasoSan Francisco, and Austin have enacted wage theft ordinances that bar non-compliant employers from obtaining business licenses. This toolkit has strategies cities can use to enforce wage theft and minimum wage ordinances, such as creating an Office of Labor Standards and Enforcement with the capacity to access payroll records, interview workers, and inspect labor sites. 

Cities and counties can also ban salary history disclosure and enact pay equity and transparency ordinances to promote just worker compensation and reduce racial and gender pay disparities. 

Taking it to the Next Level

Local governments can leverage their purchasing power to improve wages and working conditions. Some cities, like Los Angeles, require contractors on public projects to maintain higher labor standards, pay adequate wages, provide health benefits, and offer quality paid leave. Denver requires city contractors to pay the "prevailing wage," or the wages paid on similar projects. Cincinnati and Cleveland use procurement policies to bar businesses with a history of wage theft and/or worker misclassification from bidding on public contracts. ProGov21's Procurement Roadmap provides more strategies for leveraging municipal spending to advance equity and create well-paying jobs. 

Project Labor Agreements (PLAs) are increasingly preempted by politicians controlled by corporate interests. In states where this is the case, local officials can promote Community Benefits Agreements (CBAs) between community stakeholders and developers to ensure that projects receiving public funds provide benefits to the communities they most impact. CBAs in Milwaukee mandate local hiring, living wages, and safe working conditions for service and hospitality workers, while providing mechanisms for holding developers accountable.

Helpers, Allies, and Other Useful Organizations

The following organizations provide useful, high quality, policy material related to wages and benefits policy:

  • National Employment Law Project (NELP) fights for a just and inclusive economy where all workers have meaningful rights and thrive in good jobs. 
  • Economic Policy Institute (EPI) is a nonpartisan think tank working against low wages and weak benefits for working people, slower economic growth, unacceptable conditions, and a widening racial gap.
  • Corporation for a Skilled Workforce (CSW) partners with government, business, education, and community leaders to cultivate good jobs and skilled workers by focusing on scalable improvements in worker skills, job quality, and access to opportunity.
  • The Los Angeles Alliance for a New Economy (LAANE) fights for economic, environmental, and racial justice by bringing together community and labor power in Los Angeles and Long Beach.
  • Policy Matters Ohio is a research institute creating a more vibrant, equitable, sustainable, and inclusive Ohio through research, strategic communications, coalition building, and policy advocacy. 

 

Mayor's Innovation home page

Mayors Innovation Project, our sister organization, is a national learning network for mayors committed to shared prosperity, environmental sustainability, and efficient democratic government.

Visit MayorsInnovation.org

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