Do Living Wage Ordinances Reduce Urban Poverty?

46 Pages Posted: 21 May 2000 Last revised: 15 Oct 2022

See all articles by David Neumark

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Scott J. Adams

University of Wisconsin - Milwaukee - Department of Economics

Date Written: March 2000

Abstract

Many cities in the United States have recently passed living wage ordinances. These ordinances typically mandate that businesses under contract with the city or, in some cases, receiving assistance from the city, must pay their workers a wage sufficient to support a family financially. To date, there has been no empirical analysis of the actual effects of living wages on the expected beneficiaries low-wage workers and their families. In this paper, we estimate the effects of city living wage ordinances on the wages and hours of workers in cities that have adopted such legislation. We also look at the effects of the ordinances on employment and poverty rates in these cities. Our findings indicate that living wage ordinances boost wages of low-wage workers. The estimated elasticities are small, however, which seems consistent with the fact that living wages have limited coverage, and may also have limited compliance and enforcement. In addition to the wage effects, we find weak negative hours effects of living wage ordinances on low-wage workers, and strong negative employment effects. Finally, our estimates of the effects of living wages on poverty rates indicate that living wage ordinances may help to achieve modest reductions in urban poverty.

Suggested Citation

Neumark, David and Adams, Scott J., Do Living Wage Ordinances Reduce Urban Poverty? (March 2000). NBER Working Paper No. w7606, Available at SSRN: https://ssrn.com/abstract=228083

David Neumark (Contact Author)

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Scott J. Adams

University of Wisconsin - Milwaukee - Department of Economics ( email )

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