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As part of the county code, it will harm growth
Monday, July 03, 2000
By Frank Gamrat
After weeks of negotiations, Allegheny County Council and County Executive Jim Roddey have compromised on an administrative code. It appears that Roddey has been forced to accept a number of issues on the Democratic agenda. One of those issues is the "Living Wage," a super-high minimum wage of more than $9 per hour. Proponents such as the Alliance for Progressive Action have been very vocal and insistent that the living wage be included in the county's operating manual. With the help of the Democrats on council, they succeeded. The wording of the code states that "it shall be the goal of Allegheny County to promote Living Wages for all employees supported by tax dollars."
Frank Gamrat is a senior research associate at the Allegheny Institute for Public Policy.
There are 46 cities or counties with living wage ordinances. Not one of them is embedded in that government's operating manual. They were all passed either through initiative or referendum as separate legislation. The key difference is that ordinances and laws can be amended or overturned much more easily than an administrative code. The placement of a living wage "goal" in Allegheny County's administrative code and its broad language will surely cause an endless stream of controversy, since "living wage" is not defined and "all employees supported by tax dollars" can be interpreted in many ways.
As currently written, the county's living wage "goal" would blanket any firm that receives any form of government assistance. Another look at living wage ordinances around the country reveals that all are more restrictive in coverage. For example, the ordinance in Orange County, N.C., only covers county employees, as does the law in Dayton, Ohio. One of the most inclusive belongs to Miami-Dade County, Fla., which covers all contractors and subcontractors, county employees and airport employees. Not one current ordinance covers all recipients of city or county tax assistance.
By including the above phrase, the proponents of the living wage are clearly setting their sights on the city's use of tax-increment financing (TIF) to subsidize commercial development. Completed developments, such as Lazarus, could be expected to comply immediately. The consequences would be ominous to a retailer that cannot even meet sales goals needed to begin repayment of its publicly funded debt. City projects, such as The Market Place at Fifth and Forbes, which rely heavily on TIFs, may be in jeopardy. Retailers may require more subsidies or they may back out of development agreements.
The generality of the living wage clause in the code will be detrimental to Pittsburgh's growth. Analysis of living wage ordinances suggests that cities with such laws are lagging in job growth, salary growth, and tech output. In the annual Forbes ranking of the 200 best places for economic growth, only 24 of 36 cities with living wage ordinances made the list. The average rank of Northeastern cities with a living wage law is 125th. Pittsburgh currently ranks 147th. The addition of a living wage "goal" in Allegheny County may push Pittsburgh even further down the list.
So, if a living wage is not in the best interest of the residents in Allegheny County, why is it embedded in the administrative code? The main reason given for the living wage push is the employee turnover in county social service departments.
The turnover rate is blamed on inadequate wages, which in turn are blamed on inadequate state funding. Social service departments receive funding from three sources: county, state and federal. And 90 percent of the funding comes from state and federal sources. A growing economy and competition for employees in the private sector have given social workers better paying alternatives to their government jobs. This competition from the private sector has left positions unfilled and turnover rates high.
But forcing the county to raise wages for all employees being paid with tax dollars, in an attempt to force the state to increase funding of social service programs, is cutting off one's nose to spite the face.
