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LivingWages & Communities: Smarter Economic Development, Lower�han Expected Costs
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<br />City Contracts: LowerThan Expected Costs
<br />We interviewed administrators and lawmakers from a total of fourteen cities and counties to assess the
<br />degree to which living wage laws increased the costs of ciry service contracts. (SiY other localities from
<br />the total of twenry cities and counties studied were able to assess the impact of living wage laws on
<br />their business subsidy programs, but not on their service contracts.) One would expect that requiring
<br />higher wages would result in some increase in the cost of service contracts. However, as summarized
<br />in the following tables, the reported increases in service contract prices were consistently very sntall—
<br />generally ranging between 0.003% and 0.079% of the localities' budgets.
<br />Table I: Increases in City Contract CostsAfter Passageof Living Wage Laws, 2Qp�
<br />Ln�.Jit�- City Budget Contract Cast tncreasa Increase as a% of City Budget
<br />Alexandria,VA
<br />Berkeley, CA
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<br />H�r�oi d CT
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<br />$395,636,D04
<br />$289,546,000
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<br />$136.#S�,�CO
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<br />$265,000
<br />$229.000
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<br />0.067%
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<br />As expected, contract costs did increase modestly as a result of living wage laws:
<br />• Cost increases for mid-sized cities—Alexandria,VA, Berkeley, CA, Cambridge, MA, Hartford,
<br />CT, New Haven, CT, Pasadena, CA, and San Jose, CA—ranged from $40,000 to $265,000.
<br />Smaller cities — Ha�vard, CA, Madison, WI, Warren, MI, and Ypsilanti, MI —reported minor
<br />cost increases of between $10,000 and $60,000.
<br />• These service contract cost increases represent a very small proportion—in all cases less than
<br />0.08%—of the cities' operating budgets."
<br />• This modest impact led most administrators to report that contract costs as a whole did not
<br />increase significantly after passage of a living wage law.i3
<br />As Madison's comptroller stated, "[from a] citywide view, the actual fiscal impact [of the living wage
<br />law] has been nr�?�iui����_��-5
<br />However, administrators did note significant increases in costs for specific contracts in sectors involv-
<br />ing labor-intensive work performed by large numbers of low-wage workers. In some localities, several
<br />such contracts increased substantially in cost:
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