SAN FRANCISCO -- Home health care worker Claudia Arevalo says her life changed for the better in 2000, when San Francisco enacted its living wage law.
In 1998 she earned $6 US an hour, rented out a room in her apartment and worked 300-hour months which included night shifts as a janitor. Now Arevalo, 37, works a regular schedule.
"I have more time for my family, for myself. I have a better life," she said Wednesday. "It's the living wage that made the changes come."
According to a national study, Arevalo isn't alone. Cities like San Francisco that boost minimum wages above the federal floor are reducing poverty rates for the working poor, even as they increase unemployment, the study says.
More than 60 U.S. cities, counties or public agencies have adopted a "living wage" since 1994, despite criticisms that paying more than the federal $5.15-per-hour minimum leads to layoffs while benefitting only a fortunate few who keep their jobs.
The new study, published Thursday by the San Francisco-based Public Policy Institute of California, will encourage living wage advocates -- not least because its author is a noted minimum wage critic.
"Living wages actually reduce poverty," said author David Neumark, an economics professor at Michigan State University. "If someone's getting up on a soapbox saying these are a disaster, they may believe it, but there's really no evidence."
Living-wage ordinances often are not as radical as they sound. None of them applies to all workers in a city -- most cover only city employees or private firms with significant government contracts. And Neumark said that the average pay raise equals around 3.5 per cent, though it may be significantly higher for some workers.
Still, the movement has been growing.
California has at least 10 living wage cities, according to the study, including Los Angeles, Oakland, San Francisco and San Jose. Baltimore passed the first living wage law, with Boston, Chicago, Denver, Detroit, Milwaukee, Omaha and San Antonio among the large cities that followed.
Urban poverty rates fell from 1996 through 2000, the span Neumark studied using Census Bureau data. But the living wage accelerated the drop in those cities, he said.
Neumark concluded that cities where the living wage is 50 per cent higher than the federal or state minimum see poverty drop 1.8 percentage points.
There are losers, too. According to Neumark's projections, the 10 per cent of workers who earn the least in these cities would experience a seven per cent increase in unemployment.
On balance, however, "it looks like the winners win more than the losers lose," Neumark said.
San Francisco's living wage of $10 an hour is about 50 per cent higher than the state's $6.75-an-hour floor. Over a 2,000 hour work year, that could mean a $6,500 raise to $20,000 -- and the difference between official poverty and a lifestyle less desperate.
The government says a family of two adults and one child needs $15,020 a year to stay out of poverty, though that is low for a high-cost region such as the San Francisco Bay area.
Critics counter that there are better ways, such as the earned income tax credit, to help the poor.
Workers who hover around the poverty line can lose valuable federal benefits if they earn just a few thousand dollars more, according to Richard Toikka of the Washington-based Employment Policies Institute.
"It's not the best way to go," Toikka said. "The workers that are harmed are the ones that have the most serious skill deficits."
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