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Win-Win from paying a living wage – quality increases offset higher costs

April 13, 2010

Five years ago, San Diego’s City Council passed an ordinance requiring contractors to pay a living wage to their workers. A study released last month shows mostly positive effects for both employers and employees.

Prior to the ordinance’s passage, only a small percentage of contractors paid what could be considered a living wage – and the majority of those paid it were performing highly-skilled work such as accounting and technology services. At the time the law was passed, the minimum wage in San Diego was just $6.75/hour – just $14,040 per year. Now, contractors are paying $11/hour, plus $2.20 if the employer provides health benefits. If they don’t, the wage is boosted to $13.20/hour, or $27,456 per year.

Opponents predicted the requirement would be a “colossal mistake” with “dire implications”, costing both employers and city tax payers far too much. In fact, a City Hall survey from March 2010 showed that the cost of the ordinance has been relatively low for the city and that a number of contractors have reported benefits from the higher wage. Since the law has gone into effect, nearly 50% of contractors have reported increases in quality along with decreases in absenteeism and employee turnover.

A living wage requirement lifts people working full time out of poverty, and makes long-term financial sense. In San Diego, just as in any city, a living wage allows workers to live and work in the same city, supporting local businesses by driving their wages right back into the local economy.

How many times does the business community have to cry wolf on the catastrophic consequences of providing minimum benefits to workers before someone cries foul? Just like a living wage, providing paid sick leave gives a similar boost to productivity by reducing absenteeism and turnover while keeping businesses profitable and strengthening family economic security. Learn more about paid sick days.

Via Washington Policy Watch

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