All factors of production should be obtained at competitive rates. To achieve public
purpose of producing the most public service in exchange for the taxes and user fees provided, it
is necessary that all factors of production --- capital, labor and land --- be obtained for the
competitive rate. Thus, there should be no government specification of contractor employee
compensation, benefits, work rules or other arrangements. Contractors should simply be required
to comply with the existing body of employment law and regulation that apply to all commercial
enterprises, including producers of competitively tendered service.
"Living wage" ordinances: Recently, some local jurisdictions have enacted special purpose
"living wage" ordinances that require public contractors to pay super-minimum wage rates, or to
comply with other anti-competitive employment market practices.
Living wage ordinances violate public purposes by imposing more costly than necessary
employment arrangements, thereby reducing the amount of service that can be provided.
Living wage ordinances are inherently discriminatory. They give a certain class of
employees economic privileges that are not provided to other workers. If a government is to
guarantee contractor employees a super-minimum wage, why not also similarly protect fast-food
outlet employees, office clerks, and other workers? What is worse, the artificially high labor rates
mandated by "living wage" ordinances are paid for by the very workers against whom such
ordinances discriminate, through higher taxes and lower levels of service.
"Living wage" ordinances limit job creation. Because they reduce the amount of
public service that can be produced, "living wage" ordinances reduce the number of jobs in the
public transit industry. This is particularly onerous, in that inner city neighborhoods in which job
creation is reduced have the highest unemployment rates in the nation.
Special compensation privileges are anti-democratic. No argument consistent with
the fundamental value of equality under the law can justify legal provisions that single out
particular groups of employees for higher compensation. Such provisions serve private purposes,
at the expense of public purposes.
Minimum Wage Laws & Living Wage Ordinances: Both minimum wage laws and living wage ordinances
are flawed economic and social tools. But living wage ordinances are by far the most inappropriate. Despite the jobs and
opportunities that minimum wage laws destroy, at least minimum wage laws do not single out a particular class of
worker for higher compensation than others. The principle of a minimum wage is that all employees shall be paid no less
that a statutorily established amount. The principle of a living wage ordinance is that some employees shall be paid no
less than a statutory amount, which is more than other employees are paid. "Living wage" ordinances discriminate
against the vast majority of workers to provide benefits to a privileged few.
Savings occur in all factors of production. Finally, it must be recognized that there is
much more to competitive contracting savings than labor savings. Because management in the
competitive market is faced with the potential for financial failure, there is an incentive to obtain
more from virtually all factors of production.
Serving legitimate employee interests: Legitimate government employee interests
can be served by requiring contractors to provide hiring preference to separated employees who
are qualified. The already superior to market severance packages and pension benefits earned by
such employees must, of course, be granted.
