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LivingWages & Communities: Smarter Economic Development, LowerThar� Expected Costs Background:What I� a"Living Wage" Law? Over the past decade, increasing numbers of cities and counties across the United States have adopt- ed "living wage" laws.' These local laws typically require that in order to receive service contracts or business subsidies from the local government, employers must agree to pay their worlcers a wage high- er than the current federal and state minimum wages. The "living wage" label communicates that the higher wage levels required—typicallyfrom $8.00 to $12.00 per hour—are closer to the pay that Full- time worlcers need to support themselves and their families at a subsistence leve�,2 The goal of living wage laws, according to many local governments, is to create city contracting and business subsidy programs that prioritize high-wage job creation and do not inadvertently perpetuate poverty. Frequently, [iving wage laws index the "living wage" at or above the federal poverty level and require employers to provide benefits, such as hea�th care and paid leave. Cities and counties have long relied on private contractors to provide a range of services for both the government and the public. In recent decades this practice has only increased. Work needed by local governments such as guardin� and cleaning; public buildings, maintaining public parlcs, and staffing publicly-owned facilities ranging from parlcing garages to convention centers is now often performed by employees of private contractors. For some local governments, especially counties, sexvice-con- tracting programs may also include the purchase from non-profit agencies of human services such as childcare or home healthcare for low-income local residents. When localities adopt living wage laws, firms that hid for and win city contracts must agree to pay their worlcers the wages and benefits specified. While many of the first generation of living wage laws exempted from coverage human services contracts performed by non-profit agencies, recent ordi- nances—especially those adopted at the county level—have increasingly included such programs in their coverage. In promoting living wages for contracted human services worlcers, local governments emphasize that this sector contains some of the largest concentrations of publicly subsidized low-wage worlcers, and that low pay in human services programs contributes to staff retention and recruitment problems that can compromise the quality of care p r+x��i��t� ' Many living wage laws also cover local business subsidy programs. Such programs are generally designed to attract or retain desirable jobs in a localiry by providing taxpayer-funded subsidies—usu- ally in the form of grants, tax abatements or below-marlcet bonding or loans—to businesses that pledge to open or retain facilities there. Some local business subsidy programs focus chiefly on attract- ing individual firms to the community Others focus on subsidizing development projects that will attract clusters of businesses or large numbers of consumers, such as sports stadiums, convention cen- ters or large-scalecommercial zones. Local governments explain that by applying living wage standards as eligibility criteria for companies seeldng city business subsidies, they maximize the return on tax- payer dollars by targeting the subsidies to employers that create better paying jobs. Living wage laws vary considerably in coverage and scope. Some laws exempt certain categories of city contractors, such as��r.-� rnFi r agencies. Many apply the requirements only to service contracts or business subsidy awards above a specific size, or to firms with at least a certain number of employees. Most laws require employers to pay the higher wages and benefits only during the time that ernploy- ees actually perform the publicly funded worlc. Under some laws, the city or county may grant exemp- tions to individual firms that demonstrate that they cannot reasonably afford to pay their employees a living wage due to budgetary or other constraints. 3