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Academics offer differing opinions on the effects of municipal living wage policies

As employees and activists continue to squabble with administrators over whether the University's contracted employees ought to be paid a living wage, opinion on the merits of living wage ordinances are no less divided in academia.

Although the local debate applies directly to University employees, dozens of municipalities nationwide require either that government employees or all employees who work in their jurisdiction be paid living wages.

Mark Brenner, an assistant research professor at the University of Massachusetts-Amherst's Political Economy Research Institute, said his studies have shown that most living wage laws make economic sense.

"We have found, by in large, the costs are far offset by the benefits," Brenner said.

He said minimum wage workers usually are better off with living wage laws in place than without them, with increases in their disposable income often ranging from 20 to 30 percent.

Both anecdotal and qualitative evidence show the increase in income is large enough to have substantial effects on the way poor people live their lives, he said.

"We have anecdotal evidence that people can quit their second job or go back to school" after living wage ordinances are enacted, Brenner said.

Some academics, however, disagree with Brenner's assessment.

University Economics Prof. William Johnson said municipal living wage ordinances often do not benefit the people they are intended to help.

Instead, Johnson said living wage laws either can cause higher levels of unemployment generally or lead businesses to seek out more skilled workers, resulting in higher unemployment among the workers the laws are intended to benefit.

If businesses "are forced to pay a lot more for labor, you are going to get the best labor you can," Johnson said.

Johnson also said when municipalities adopt living wage laws it can harm the businesses of the area and the overall economy of the area.

"Obviously some businesses can move, or if the businesses can't move then customers can," he said.

Brenner said, however, that while the impact of living wage laws varies by industry, negative effects of such laws are often counterbalanced by positive results.

Brenner said businesses often see increases in worker productivity and retention rates as well as decreases in training costs because of living wage laws.

"Even though indirect labor costs may, go up, indirect labor costs decline," Brenner said. "I don't know of any case where a living wage put someone out of business."

Johnson, however, said he did not think businesses would pay workers less than what was in their best interest.

"You'd have to believe that a lot of businesses don't know what's best for them" to think that living wage laws would benefit businesses, he said.

Brenner said once living wage laws are enacted locally, state and federal governments benefit from having to pay less in social services to the poor.

"There's a dramatic decline in total transfer from government to citizens," Brenner said.

Johnson disagreed, saying such indirect benefits were not substantial enough to make living wage laws worth pursuing.

"There might be some benefit, but it wouldn't offset the cost of a living wage," Johnson said.

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