Abstract
What do these cities now have in common? Seattle. New York. San Jose. Chicago. San Francisco. Washington, D.C. Since my paper “Labor Standards and Local Economic Development: Do Living Wage Provisions Harm Economic Growth?” was completed, I have watched these cities and many more pass or consider some form of living wage or minimum wage labor standard. For this reason, not only am I honored to receive the Chester Rapkin Award from among the many excellent papers in volume 32, but I am also excited that JPER has given labor standards a spotlight. My excitement stems from the fact that cities continue to be the critical arena within which the issue of rising economic inequality and its remedies are hotly debated. Planners can offer a unique perspective to these debates, which have often been dominated by economists and sociologists. As an inherently interdisciplinary social science field that maintains a close connection to the real problems that affect our cities, planning is well positioned to contribute to the dialogue over labor standards and their economic impacts.
This paper began as an extension of my dissertation research on the economic impacts and political origins of the living wage movement in San Francisco and in Chicago. After completing the dissertation, I quickly realized that the impetus for raising labor standards at the city level was not diminishing and was in fact increasing—particularly as national political gridlock and the Great Recession meant that federal efforts to intervene in the labor market would be unlikely. Thus, I wanted to extend my research on the impacts of raising labor standards on urban economic development to a national scale. The main research question was drawn directly from the public discourse occurring in city hall chambers and in the local media of cities considering a living wage. Specifically, I wanted to test the central claim of living wage opponents, namely that attaching wage mandates to economic development incentive programs would discourage business growth and ultimately reduce employment.
To test this claim I used a quasi-experimental design that analyzed employment levels and business establishment growth in all cities that passed “business-assistance” living wage laws. Those are laws that explicitly tie public incentive payments to private businesses to the businesses’ adherence to a living wage requirement that is typically well above the federal or state minimum wage. Because the set of cities that enacted such laws is not random and includes primarily large central cities with relatively progressive governing regimes in the Northeast or on the West Coast, my control group comprised cities that proposed but did not actually enact similar living wage standards. Thus, my research design controlled for potentially confounding institutional factors that might also have influenced the economic development outcome variables of interest. Ultimately, the analysis indicated that attaching labor standards to economic development programs did not result in job losses or stall business growth, particularly in industry sectors considered most “at risk” for job losses.
As a planning researcher, I am also gratified that my work has a life beyond the academy. I was fortunate to partner with the Center for American Progress to release my findings in a widely circulated policy brief. In addition, I was invited to provide testimony based on this research to the New York City Council on two occasions when the city was considering and revising a business-assistance living wage law that ultimately passed in 2013.
Looking forward, I am continuing to study the issue of local labor standards regulation and their impact on urban economic development. Given the findings of this paper and others that I’ve completed in collaboration with coauthors on the minimum wage (Dube, Lester, Reich 2010; 2013), a key question that arises is why we don’t see a negative impact on employment in firms that are forced to raise wages or other labor standards. Specifically, I seek to understand what the mechanisms of adjustment are inside the firm—such as lower turnover or higher productivity—that may allow for improvements in job quality while sustaining competitiveness. As the issue of economic inequality remains on the agenda of city leaders and policy makers, answers to these types of questions and evaluations of policies aimed at reforming economic development practices will be fundamental.
As with nearly all my work, this paper was conceived of and carried out in close consultation and collaboration with a group of economic development scholars, labor economists, and policy experts without whom I could not have successfully completed this work. I would specifically like to thank Ken Jacobs, David Madland, Nichola Lowe, Arindrajit Dube, Michael Reich, and Daniel Hartley for critical comments and advice on this paper. I also had excellent assistance from two graduate researchers: Jason Kajer at UNC-Chapel Hill and Julia Watson atUC Berkeley. I would also like to thank ACSP, which hosted the conference where I presented this work, and to the anonymous reviewers and the JPER editorswho provided invaluable critical feedback and helped guide the manuscript quickly through the publication process.