EPI Research

T

he Employment Policies Institute (EPI) is a nonprofit research organization dedicated to

studying public policy issues surrounding employment growth. In particular, EPI research focuses on issues that affect entry-level employment. Among other issues, EPI research has quantified the impact of new labor costs on job creation, explored the connection between entry-level employment and welfare reform, and analyzed the demographic distribution of mandated benefits. EPI sponsors nonpartisan research that is conducted by independent economists at major universities around the country.

Dr. Mark Turner, former Research Scientist at Johns Hopkins University, is currently President of Optimal Solutions Group LLC and Adjunct Professor at the
Living wage ordinances vary considerably across the country in coverage, the wage level mandated, and possible add-ons such as health care coverage mandates.3 What the living wage programs generally have in common are (1) a requirement to pay workers a wage based on the poverty threshold, usually for a family of four, and (2) employers covered by the statute are usually only those who receive contracts from the government or receive some favorable treatment from the government (e.g., a tax abatement or zoning change). As of June 2002, 82 jurisdictions had living wage ordinances. Living wage mandates differ from a traditional minimum wage in that the living wage is, at least theoretically, tied to meeting some standard of living and only applies to employers who receive some benefit from the government. There are a number of issues of policy interest that can be explored regarding the living wage, and a number of efforts have been undertaken to address these issues. Recent studies have looked at the impact of living wage statutes on employment, the impact on government services, and the effects on uncovered workers.4 In this project we compare the target efficiency of living wage ordinances with an alternative, the earned income tax credit (EITC), in terms of each strategy’s ability
For example, the Survey of Income and Program Participation, another large national data set, also includes detailed information on workers’ hourly rates and demographic characteristics but lacks detailed information about employers and provides substantially fewer observations than the CPS-OR. Moreover, there are no national data sets that provide information on employers’ government contracting status or whether an employer received a government subsidy. The CPS-OR provides a sufficient amount of information to predict whether respondents are likely to be affected by living wage ordinances. However, the number of individuals and families estimated to be affected by living wage ordinances may be too high because we are unable to exclude low-wage workers in cities where living wage coverage is based on employer government contracting status or receipt of government subsidy. The last column in Table 2 describes our methods for mapping each living wage ordinance’s specifications to the CPS-OR data. We matched the occupation classification with the closest corresponding variable in the CPS. For jurisdictions in which the living wage ordinance refers generally to contractors, we impute coverage based on the following industries; construction and the service industries: transportation (excluding U.S. Postal workers); communications,