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LivingWages & Communities: Smarter Economic Development, LpwerT}�an Expected Costs Introduction In one of the most pronounced local policy trends in recent years, scores of cities and counties across the United States —more than one hundred as of July 2003 —ha�e adopted local "living wage" laws. Under these laws, employers receiving ciry contracts or ciry business subsidies must pay full-time workers a wage sufficient to support themselves and their families at a subsistence level. The policy goals driving these initiatives—thathard work should be rewarded with adequate pay and benefits, and that taxpayer dollars should not support jobs that leave workers and families in pover- ty haue found broad support among local lawmakers and the public. Questions Asked In assessing the value of living wage laws as policy tools, it is important to understand their costs and benefits for communities. Especially in a time of budget deficits and job losses, local policymakers have had two key questions about these laws: . Will they increase the costs of city contracts? • Will they limit the abiliry of cities to use business subsidies to increase the number of good jobs in their communities? To answer these questions, we asked local government officials in communities with living wage laws to examine the impact of these laws after they were implemented. We have collected their findings in this report. Significantly, local government officials found: • Only small increases in city contract costs as a percentage of city budgets —and Eess than initially expected. No significant adverse effects on city business subsidy programs—and in some cases such pro- grams were actually strengthened. By collecting the actual findings of government officials in communities that have implemented liv- ing wage laws, this report provides detailed information that may be valuable to other communities considering whether to enact similar laws. Jo6s Covered by �.iving Wage Laws The living wage (aws analyzed in this report apply to jobs generated under two types of city programs: City Contracts City Business Subsidies Cities (and other local governments) employ private In orderto attrattor retain ja6s in their communities, cohtractors to provide a range of services for the gov- some cities offer Eaxpayer-funded business subsidies— ernmentand the public. Living wage laws requirefirms usually in the form of grants, tax abatements o r that perform city service contracts to pa�r their work- below-market bonds or Ioans---to employers that ers a"living wage�'--generally set between $8 and $12 pledge to open or retain facilities in the community. per hour—and to provide health benefits. Livingwage laws require employersreceivingcity busi- ness subsidies to pa�r their workers a living wage and to provide health benefits.