The Facts Are In: Living Wage Makes Good Economic Sense

By Vivian Rothstein

Flora Andrade is a housekeeper at a high-end hotel in Santa Monica. Despite working full time, she struggles to provide the bare necessities for her family and has no health benefits for her or her children.

There are hundreds of stories like Flora's in the Santa Monica hotel industry, stories of hard-working men and women who clean rooms, scrub floors and wash dishes yet don't earn enough to get by.

Many Santa Monica voters like myself are deeply moved by these stories. They know that something's wrong when a person works hard, yet still has to rely on charity or anti-poverty programs to make ends meet.

Sadly, as voters consider Measure JJ -- the living wage proposition on the November ballot --they are encountering a slew of misinformation from opponents of the living wage.

Luckily, solid scientific data is at hand. The report of Professor Robert Pollin is the most comprehensive and objective analysis of the impact of the living wage on Santa Monica. Giving it a fresh look can clear up a lot of campaign confusion.

For example, who benefits from the living wage? Pollin's survey of 200 low-wage workers in Santa Monica's tourism zone offers a compelling portrait. The typical hotel worker in Santa Monica is Hispanic and, despite working full-time, is eligible for many poverty-relief programs. Almost all these workers support at least two children, some as single parents. Many have been at their jobs for nearly 20 years.

That information is only part of a 254-page report commissioned by the Santa Monica City Council to study how the living wage would affect the city's workforce and economy. Prof. Pollin, the author of the study, is co-director of the Political Economy Research Institute of the University of Massachusetts, Amherst. He is the author of dozens of articles ranging from macroeconomics to debt and is a Research Associate for the Economic Policy Institute in Washington, D.C.

Pollin's study provides the best information available on how Santa Monica's economy will be affected by the living wage. His conclusions clearly support the living wage ordinance. Pollin found that this law would significantly benefit low-income families and would result in minimal job loss. Furthermore, he found that many tourist businesses, particularly beachfront hotels, benefited so much from public funding and growth restrictions that their resulting high profits readily allow them to pay a living wage to their employees.

To fairly analyze the impact of a living wage law in Santa Monica, Pollin studied government labor statistics, city government records and business records. He gathered information from public discussions as well as private meetings with both advocates and opponents of the living wage. He solicited the comments of academics and adjusted his research to accommodate the additional viewpoints and analysis.

To ensure the highest level of professionalism, Prof. Pollin invited peers in the field to review his methodology and conclusions. One reviewer, Professor Richard Freeman, is regarded as one of the world's foremost labor economists. The author of 25 books and 300 articles, he holds the Herbert Ascherman Chair in Economics at Harvard University, directs the Labor Studies Program at the National Bureau of Economic Research, and has consulted for the World Bank, the Congressional Budget Office, and the U.S. Department of Labor.

Prof. Freeman's appraisal of Prof. Pollin's study is unequivocal. He lauds the report as "a fine piece of applied economic analysis" and a "well-done empirical investigation," and offers the following conclusions:

* The proposed living wage will benefit low-wage workers.

* Affected businesses can afford to pay higher wages. Prof. Freeman concludes that "city policies restricting growth in the Coast[al] Zone create extra profits for hotels," and that these profits can fund wage increases.

* The living wage will likely lower employer turnover, thus saving employers money and partially offsetting wage increases.

* The living wage proposal will not cause significant job loss.

Those who have studied the living wage know that it will do much good. Santa Monica's growth from a sleepy seaside city to one of the nation's top resort destinations has inadvertently created a class of working poor people. Maids and janitors who clean the luxury hotels are not asking to live in luxury, but simply to be paid decently so they can support their families without having to rely on poverty relief. Measure JJ will help them achieve that modest goal.

Measure JJ, the living wage, is the right thing to do. It has been studied, debated and refined. It's time to make it official.