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Li�ingWages & Communities: Smarter Economic Development,l�4WerThar� Expected Costs Key Findings For city contracts, Loca1 officials reported that cost increases have �een small and less than ini- tially expected. • For most cities, contract costs increased by less than 0.1 % of the overall local budget in the years after a living wage law was adopted. See Table 1 on page 6. • Generally, in each ciry a few contracts involving large numbers of low-wage workers —for exam- ple, contracts for janitorial or security guard services—increased substantiallY in price. For these few contracts, the contracting businesses submitted higher bids, or negotiated for higher prices, to perform the ciry work once the living wage requirement took effect. • But ��e officials interviewed found that most contracts increased little, if any, in cost. In rnany cases, contracting employers were reported to have absorbed much or all of the additional labor costs without demanding increased funds from the cities. • Living wage requirements encouraged some local governments to institute competitive bidding for contracts that had not been put out for hid in many years, reportedly yielding savings for the cities. • In localities that extended living wage requirements ta contracts for human services such as home healthcare or child care, cost increases were sii�htly larger—ranging from 0.3% to 2.79% of local human services budgets —althoughstill quite moderate overall. See Table 2 on page 7. • These increased costs reflect both the high concentrations of low wages among city-contracted caregivers, and the fact that cities have sometimes agreed to automatically pay for some or all of the increased wage costs for such contracts because of the vital nature of human services and the budgetary constraints faced by the non-profit agencies that often provide these services. For city business subsidy programs, local officials reported that they could still attract desired business development, and that living wage laws often reinforced smarter economic develop- ment focused on creating higher quality jobs. • Local officials reported that only in a very few instances did living wage requirements that applied to business subsidy programs limit their ability to attract desirable employers to their communities. See Table 4 on page 12. Many business subsidy programs already emphasized attracting high-wage jobs, so living wage laws effectively formalized and reinforced existing practices. Some local officials reported that a living wage requirement increased public support for their business subsidy programs by assuring taxpayers that public funds would be spent to attract only high-wage jobs. Relatively few local officials reported using their business subsidy programs to attract jobs in low- wage sectors such as retail, since such jobs are less beneficial to local residents and the economy than higher paying jobs. The few that did use subsidies to attract retail jobs reported that theY were still �enrislly able to attract such employers, although some cities renegotiated subsidy _�,..1;.�1., or chose to exempt some businesses from the living wage requirement.