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Realistic & Fair Wages:
State Legislative Models

Below you’ll find a menu of model state legislation (most of which has passed in at least one state) as well as guidelines for state legislators and advocates relating to paid and strengthened unpaid family leave programs that can be tailored for use in their own states. 

Here are a few key legislative models enacted or proposed in various states (for more details, read below):

THE BIG PICTURE OF REALISTIC & FAIR WAGES:  The reality for working Americans is that wages have been largely stagnant for over three decades.  The federal minimum wage, adjusted for inflation, has steadily declined in the last forty years.  Yet states are promoting policies to make sure work pays a living wage, including:

  1. Raising the Minimum Wage
  2. Using Government Contracts to Raise Wages
  3. Better Enforcement of Wage Standards
  4. Prohibiting Discrimination against Employees with Family Responsibilities

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1. Raising the Minimum Wage 

To assure that families have the wages to take care of their families, states have been acting to assure that minimum wages are reasonable-- and creating innovative strategies to expand beyond traditional wage laws, including:

Raising the Rate:  States and local governments have been raising the minimum wage across the country.  The key decision in each state has been how high to raise the rate.  The highest general minimum wage rate is $8.82 per hour at the city level in San Francisco and $7.63 at the state level in Washington State.   Historically, the highest inflation-adjusted rate for the minimum wage was $9.31 at the federal level in 1968 and $9.66 per hour in New York in 1970, so even the highest current minimum wage rates are far below those historic rates.  

Indexing the Minimum Wage to Inflation: The other important policy goal should be to index the minimum wage rate to inflation, so that its value does not erode year by year, as has happened over the last three decades.   Washington State, Oregon, Florida, and Vermont now index their state minimum wage rates to inflation. 

Eliminating the Tip Penalty:  While many states force tipped workers to count tips received as part of their wage, effectively creating a lower minimum wage for those workers, seven states have eliminated this tip penalty and created a uniform minimum wage for all workers. 

Creating Living Wage Standards for Particular Industries:  A number of cities and states have begun establishing higher minimum wage rates for specific industries and defined groups of employers.  These include the City of Berkeley requiring firms operating in its pricy Marina tourist zone to pay $9.75 per hour plus benefits to the City of Santa Fe enacting  an ordinance requiring all businesses with twenty-five or more employees -- roughly 9% of employers in the town -- to pay a higher minimum wage ($10.50 per hour by 2008) to Emeryville, CA approving a ballot measure that requires large hotels to pay at least $9 per hour in compensation.  Most recently, the Chicago City Council voted for a ground-breaking  ordinance that would require large retailers to pay $10 per hour plus $3 per hour in benefits to all employees.

Guidelines and Models for Raising the Minimum Wage

Talking Points on the Minimum Wage

  • Thirty-five percent of workers who receive a minimum wage are their families’ sole earners.  Sixty-one percent are women, and almost one-third of those women are raising children. 
  • If the minimum wage had increased at the same rate as the salary increase CEOs have received, the minimum wage rate would now be $23.03 per hour.
  • Extensive analysis in multiple states by scholars like David Card and Alan Krueger and groups like the Economic Policy Institute have documented that minimum wage increases have little effect on employment but large effects on improving the lives of working families.  In fact, there is good evidence that by increasing the purchasing power of working families, wage regulation can increase employment, especially in lower-wage communities that most need it.
  • Small businesses perform better in states with higher minimum wages. Between 1998 and 2004, the job growth for small businesses in states with a minimum wage higher than the federal level was 6.2 percent compared to a 4.1 percent growth in states where the federal level prevailed.
  • Historically, there have been different federal minimum wage rates for different industries and larger firms versus smaller firms.  State law and wage commissions have often created different minimum wage levels both between and within different industries.
  • Multiple courts, including in New Mexico and California, have emphasized that US Supreme Court precedent establishes that wage regulation in a single industry, or even a subset of firms within an industry, is perfectly legal and often appropriate, since economic policy often needs to be flexible in setting different wages rates depending on the size of the firm or the needs in particular industries. 

Minimum Wage Resources

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2. Using Government Contracts to Raise Wages

One of the oldest tools of government for raising wages is requiring that companies doing work on behalf of the public pay a wage that reinforces strong wage standards for that industry.  With state and local governments purchasing over $400 billion in goods and services and handing out economic development subsidies and leases worth tens of billions of dollars more, there are a variety of models for states leveraging their spending power to strengthen wage standards throughout the economy.

Prevailing Wage Laws:  Predating even the minimum wage are laws at the federal government and thirty-three states which require that work done on public works -- transit and public building construction primarily -- meet "prevailing wage" standards, usually the union wage for any occupation, thereby strengthening the high-wage construction industry in the United States.  While less common, state and local prevailing wage laws have been extended in a number of states to other kinds of government services contracts.  

Living Wage Laws for Government Contractors:  An alternative model to prevailing wage laws -- which set separate wage levels for each occupation -- are living wage laws which require that all government contractors pay at least a living wage, usually on the order or $10, $11 or $12 per hour plus health care benefits.    Over a hundred cities and counties have enacted living wage laws around the country. The Maryland and California legislatures approved state living wage bills in 2003, only to see them vetoed by their governors.

Wage Requirements on Government Leases: A number of governments have attached living wage requirements to businesses leasing government property.These lease ordinances include airports in a number of cities such as Oakland, Los Angeles and San Francisco.   And the results can be dramatic; a recent research reportfound that the proportion of San Francisco airport workers earning under $10 per hour fell from 55 percent before the ordinance was enacted down to just 5 percent afterwards -- and the cost to the businesses effected was just 0.7% of revenues.

Leveraging Economic Development Funds: With state and local governments handing out over $50 billion in state and local subsidies to promote economic development, those governments have powerful leverage in the labor market when they require that recipients pay a decent wage.   Just in 2006, Idaho began requiring that any business receiving "Workforce Development Training Funds" to train new employees must use that money to create jobs paying at least $12 per hour, plus benefits.  Virginia earlier this year passed  S 109, a bill that requires that jobs created under its "Governor's Development Opportunity Fund" pay at least the average wage paid all workers in the county where the jobs are created.  California in 2001 passed SB 975, which requires that any construction funded with public money, including most tax credits and tax-exempt bonds, must pay the state's prevailing wage to employees.  

Guidelines and Models for Using Government Contracts to Raise Wages

Talking Points on Using Government Contracts to Raise Wages

  • Some critics worry that prevailing wage laws might drive up costs for state government, but, in fact,  show that paying a decent wage leads to a more skilled workforce, less turnover and higher quality work-- and ends up saving the government money over the long term. 
  • Similarly, governments that have implemented living wage laws have seen little if any increased costs from requiring increased wages by contractors, according to a number of recent studies (see here and here),
  • Applying wage standards to public contracts can save governments money, since the employees of contractors paying a prevailing or living wage are less likely to end up needing local welfare or health care services.

Other Resources on Using Government Contracts to Raise Wages

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3. Better Enforcement of Wage Standards

While a strong wage rate is important for workers, that gains little if the laws are not enforced.  And unfortunately, the facts of widespread illegal violations of our wage laws have been clear for years:   The U.S. Department of Labor found in 2000 that 60% of US nursing homes routinely violated overtime, minimum wage, or child labor laws. Another 2004 study from DOL data found that 54% of contractors in the Los Angeles garment industry violated the minimum wage law. And in 2005, a survey of hundreds of New York City restaurants found that more than half were violating overtime or minimum wage laws. 

In response, states and local governments have been developing a range of tools to crack down on wage law violators. 

Increasing Penalties for Breaking Wage Laws: In practice, the punishment for violating the minimum wage law and getting caught is usually at worst just paying what is owed or maybe a small fine on top of that. Compared to the profits from underpaying the rest of their employees, such tiny fines in the few instances where a business get caught is just a cost of doing business. 

  • A number of states have increased penalties for violations of the law, with New York State establishing one of the toughest penalties -- up to a $20,000 fine for repeat wage law violators. New York, Massachusetts and a number of other jurisdictions also require that employers caught violating the law pay three dollars for every dollar they illegally failed to pay workers, or three times the financial costs from lost pay if they are illegally fired for demanding payment, plus legal fees.  
  • A few states and cities now deny public contracts to wage law violators (see Los Angeles and Michigan for examples), while San Francisco authorizes city agencies to revoke permits or licenses for businesses that violate its recently enacted city minimum wage law. 
  • Police department in Austin, Denver, Phoenix and Santa Cruz have begun enforcing criminal "theft of wages" statutes against lawbreaking employers. 
  • To end the incentive for employers to exploit undocumented workers, California and New York have clarified that all workers, regardless of immigration status, have full protection against retaliation for reporting violation of labor laws.

Expanding Funding for Enforcement:  States can also take action to expand their own budgets for enforcement and encourage other groups to step up to help low-wage employees bring actions against wage law violators. 

  • Some states have made it clear that local governments also have full freedom to apply additional sanctions against wage law violators, encouraging additional enforcement dollars from local governments.
  • Since many legal services agencies work with exactly the populations suffering these wage violations, yet often lack the funding to assist them, state funding is crucial in supporting legal services organizations that can effectively help their low-wage clients.
  • Unions and other workers advocates can be encouraged to help bring actions against wage law violators through laws modeled on California's Labor Code Private Attorneys General Act, which encourage private organizations to devote resources to enforcing state labor laws and has the additional bonus of increasing revenue for the state when those private lawsuits are successful, again adding additional funds for enforcement.

Holding Employers Accountable in Nonstandard Work Situations:  Special measures are needed to target employers who evade labor laws by shifting employees into small fly-by-night subcontractors or using other means to escape formal legal responsibility. Often employees are cheated of wages but find they don't have a legal employer or that their actual legal employer has declared bankruptcy to avoid liability, even as the main company that benefited from their exploitation is immune from lawsuit.

  • To deal with this problem, states like New York and California have both enacted laws making garment contractors liable for wage and hour violations by their subcontractors, an approach that can be extended to all industries with pervasive wage violations where subcontractors are used. 
  • Laws like New York's Business Corporation Law § 630, holds larges shareholders in sweatshops personally liable for wage claims by employees, preventing shady businessmen from dissolving companies and reforming them under a different name to escape liability. 
  • States can also block employers from illegally misclassifying employees as "independent contractors" to evade wage laws. Similarly, day labor work should be better regulated to discouraging day labor abuses.

Guidelines and Models for Better Enforcement of Wage Standards

Talking Points for Better Enforcement of Wage Standards

  • Unless penalties for wage law violations are more severe, companies treat the occasional small fine for violating wage laws as a cost of doing business made up for not getting caught paying illegally low wages to other employees.   
  • Larger penalties protect law-abiding employers who face unfair competition from companies that violate the law. 
  • Theft of wages from poor workers should be considered as serious a crime as other thefts-- and should be punished accordingly.
  • Workers in nonstandard work situations face lower pay and fewer benefits than full-time permanent workers, greater discrimination, dangerous working conditions, and an almost complete lack of job security.  Most belong to vulnerable populations -- women, minority, immigrant, and lower-skill.
  • The rise of exploitative nonstandard work relations has thrived in an environment of almost total lack of enforcement of labor and employment law for these workers, as well as state laws that often undermine the rights of nonstandard workers.

Other Resources for Better Enforcement of Wage Laws

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4. Prohibiting Discrimination Based on Family Responsibilities

While roughly half the states prohibit discrimination in hiring or wage rates based on a person's marital status, only Alaska and the District of Columbia include being a parent or having family responsibilities as a class protected within their state anti-discrimination laws, although most states protect employees against retaliation when they take advantage of specific family leave laws.  Without specific protection against discrimination based on family responsibilities, those with family responsibilities can easily face discrimination in pay or hiring from employers who prefer employees who are less likely to demand family-friendly policies or use them when provided. 

Guidelines and Models for Prohibiting Discrimination Against Parents

Talking Points for Prohibiting Discrimination Against Parents

  • In many workplaces, when employees have obligations outside the office, employers question their values as employees, even if they remain productive and effective. The result is that those who have family obligations are too often subject to discrimination in promotions and even losing their jobs.
  • Problems with child care are the most common cause of conflicts and anxiety for parents at work and often result in some kind of work sanction being taken against the parent.
  • While mothers have been the predominant group affected by these practices, increasingly this discrimination also affects fathers. 

Other Resources for Prohibiting Discrimination Against Parents

Go to MomsRising Realistic & Fair Wages Page

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