The Orange Grove: Irvine's living-wage hypocrisy
Irvine's council majority, like all "progressives," only exercise their compassion with the cheapest currency available – other people's money.
By HOWARD J. KLEIN
Just when we thought that the city of Irvine had finally abandoned its goal of being a municipal vanguard of the proletariat, the City Council passed a "living wage" ordinance May 22. The council members who voted for it know this is bad law, bad policy and bad economics. But, like all "progressives," they simply can't pass up an opportunity to do something that makes them feel good, regardless of the consequences.
The "living wage" itself is a bogus construct. It is the brainchild of a far-left national activist group called ACORN (Association of Community Organizations for Reform Now), an organization best known for fighting to exempt itself from paying even the minimum wage to its employees.
Irvine's new "living wage" ordinance mandates that any company having a city contract worth more than $100,000 must pay its employees $10 an hour, plus about $2 in benefits. According to Councilman Larry Agran, this will provide workers "the opportunity to live [in Irvine]and enjoy the benefits of Irvine."
The problem is, $10 per hour amounts to $20,800 annually, meaning the only people who could afford to live in Irvine on that income are either living with parents or are married to someone making a lot more than that. Agran's statement, then, is pure silliness.
Yet while the ordinance will not actually help workers buy million-dollar condos, it will have a number of other economic effects, none of them good.
First, even the council admits the law will cost the city's taxpayers, all of whom must pay for these more-expensive contracts. The ultimate cost is unknown, but an extra $300,000 is already being set aside in the next city budget, and this doesn't include the skyrocketing cost of building the Great Park. The final amount could be much higher if those contractors with lower pay scales simply stop bidding in Irvine, leaving the field to bigger, more expensive companies.
Second, contractors might rationally conclude that Irvine's business is simply not worth inflating their payroll costs, which could make them too expensive to win competitive bids elsewhere. If no suitable "living wage" contractor is available, the city would then have to simply forgo certain services, have the work done by city employees (increasing the city's payroll, at taxpayer expense), or grant waivers on a case-by-case basis, undercutting the entire rationale for the living-wage ordinance.
Finally, without work from the city of Irvine some of the smaller companies may simply go out of business. Whatever they're paying their employees now is certainly more than unemployment benefits.
Obviously, the brains behind this plan ignored the experiences of other cities that have already walked this path. Baltimore, the first major city to implement a living wage, in 1993, saw its economy stagnate during the roaring 1990s; the city lost 58,000 jobs even as the rest of Maryland added 120,000 jobs, and other large cities across the Northeast boomed. Detroit and Milwaukee experienced similar results when city leaders tinkered with the free market in a similar fashion.
And the mandatory living wage in Los Angeles has yielded similar results. Multiple studies of the L.A. law, enacted in 1997, have concluded that the city, not its contractors, has borne all costs of the living wage as vendors have raised prices or reduced city services in order to comply.
The living-wage ordinance in Irvine, then, won't achieve its stated goals, but the members of the City Council majority will certainly feel good about their own supposed "compassion." Yet, like all "progressives," they only exercise their compassion with the cheapest currency available – other people's money.
Otherwise, in their private lives they would only patronize businesses that paid "living wages." Let's see them insist that the people who tend their gardens, wash their cars and serve them decaf mocha lattés are paid the "living wage."
Until they do, let's call this ordinance what it really is: a costly exercise in rank hypocrisy.
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