A six-year struggle by ACORN, SEIU, and allies in a living wage campaign to raise the minimum wage in New Orleans ended on September 4 when the Louisiana Supreme Court ruled that only the state, not localities, can set wage standards. New Orleans would have been the first city in the country to enact a citywide minimum wage, a proposal that was overwhelmingly approved by public vote on February 2 and upheld by district court on March 25. Currently 86 cities and counties in the country have living wage laws on the books – laws which set minimum wages for certain workers, those on government contracts, at companies with government subsidies, or direct government employees.
Louisiana joins four other states (Utah, Colorado, Arizona, and Oregon) in banning local wage laws. In all five cases, these bans were put in place in reaction to a living wage campaign at the local level. With the exception of Oregon, in each of these cases the state has not set a minimum wage, but has continued to allow workers to earn the ever-shrinking federal minimum (currently $5.15 per hour). In contrast, eleven states and the District of Columbia have set state-wide minimum wage standards higher than the federal. In several of these states, localities have passed higher living wage standards. In a number of states, efforts to ban local wage standards have been blocked (Virginia, Michigan, and Missouri are examples). The Supreme Court of Missouri on September 5, the day after the Louisiana ruling, dismissed an appeal, letting stand a ruling that localities in Missouri can set wage standards.
The reason for all this activity at the state and local levels is, of course, that the federal minimum wage has failed to keep pace with inflation (it would need to be over $8 to be worth what it was in 1968) or with productivity (it would need to be about $14 if it had increased along with productivity). So Mayor Ray Nagin of New Orleans is, in one sense, right to say that this is a problem for the federal government. Congress members give themselves a raise every year but continue to allow the minimum wage for millions of hard workers to plummet. On the other hand, unless the Mayor knows how to force Congress to restore some value to the minimum wage (something that over 80 percent of Americans favor), we’re going to continue moving those governments over which we, the people, have the most democratic control. We’ve lost at the local level in New Orleans, but we have built a popular movement that is organized, confident, and ready to push for a statewide living wage in Louisiana.
The reason that there is so much disagreement among governments over the effects of wage standards is that governments are to greatly varying degrees bought out and willing to do the bidding only of their campaign contributors, which often include low-wage employers intent on pushing wages ever lower. Various myths alleging harmful effects of minimum wage laws are so pervasive that many people honestly believe them, but when a legislature or a court considers the evidence carefully, there can be no serious question but that these laws are beneficial.
In March, Judge Rose Ledet in New Orleans, for three days, heard the arguments of both sides.
Dr. Timothy Ryan, Dean of the College of Business Administration at the University of New Orleans, spoke on behalf of the business coalition that includes the Louisiana Restaurant Association and the Greater New Orleans Hotel-Motel Association, claiming that a local minimum wage would increase unemployment and raise fears of future additional increases. He claimed that small businesses would suffer, but failed to produce a single witness on behalf of any small business to support this claim. Ryan had also testified before the state legislature prior to its passage of a law banning local wage standards – the law that the Supreme Court just upheld, relying on Ryan’s testimony in doing so.
Dr. Robert Pollin of the University of Massachusetts and Dr. Thomas Weisskopf of the University of Michigan cited extensive research to show that the benefits of the minimum wage increase, especially to low-wage working families, but also to retail store owners in low-income neighborhoods and the federal government, would significantly outweigh the costs of the policy. See the study online:
In Ledet’s ruling, she gave weight to Pollin’s study and observed that Ryan “admitted that he conducted no specific study of the impact of a one dollar increase in the minimum wage in New Orleans and stated that it would be impossible to predict how the business community would react. Dr. Ryan’s opinion to the legislature that localized minimum wage ordinances would have a negative impact on business development is based on economic theory premised on his belief that there should be no mandatory minimum wage whether prescribed by federal, state, or local law. His bias is highlighted by the fact that the effect of a municipally enacted increased minimum wage is based on perception and speculation since no specific study was conducted.”
Between Ledet’s ruling and the Supreme Court’s reversal of it, Ryan’s claims did not become any less speculative. Nor was Ryan’s testimony before the legislature five years ago, on which the Supreme Court relied, any less speculative. The legislature had stated in passing its ban: “