March 12, 2001

Group Recalculates Living Wage

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Ithaca’s Alternatives Federal Credit Union — a non-profit lending group — published an updated study last week that calculated a livable salary in Tompkins County at $17, 540, or $8.43 per hour for a 40-hour week.

In the past six years, the concept of a “livable wage” has been gaining popularity in city councils and county governments nationwide as a reference for setting wages.

“Like the minimum wage, this is an external standard to which workers can refer in collective bargaining,” said Bill Myers, manager of the credit union.

The first livable wage ordinances were signed into law in Baltimore in 1994, and have since been passed in more than 50 other cities including St. Louis, Boston, Los Angeles, Portland and Detroit.

In most areas, a livable wage ordinance requires government-hired contractors to pay their employees wages commensurate with local costs of living.

The wage rate “gives [workers] data to base an argument on, so it doesn’t seem like they’re just asking for a raise,” said Myers. “But it cuts both ways, an employer can also refer to it, and has no obligation to pay labor more than a livable wage.”

To determine the livable wage for Tompkins County, the credit union totaled basic costs of living such as rent, clothing, food and utilities, and then added in savings and entertainment expenses. The estimates for each category came from a variety of local sources and from statistics compiled by the U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture.

This figure is a 6.2 percent increase over the credit union’s 1998 calculation, primarily reflecting a 6 percent rise in inflation.

Other livable wage standards, such as those published by Wider Opportunities for Women, do not include recreation and savings. However, the credit union has emphasized the importance of accumulated savings for those who currently live from paycheck to paycheck.

In its original 1994 study, the Alternatives Federal Credit Union aimed to address internal concerns about its own salary structure. Since then, Tompkins County has adopted the group’s standard and has designated funds to pay employees of municipal contractors a living wage.

In December, President Hunter R. Rawlings III issued a statement committing Cornell to paying its employees a livable wage, using the rates published by the credit union.

“No one else in the area publishes a local standard,” Myers said. “We’ve tried to encourage others to take the job from us because we’re a financial institution, not a research institution. We’ve spoken to the [City of Ithaca] Chamber of Commerce and no one wants to pick this up because they realize there are political implications to the study.”

Although data is being collected, current research on the effects of adopting the livable wage is difficult to find, largely because legislation on it is so recent. Policymakers have turned to findings on minimum wage laws for guidance.

“Adopting a livable wage is basically an adoption of a new minimum wage, and has all strengths of a minimum wage,” said Prof. Robert Smith, economics in the School of Industrial and Labor Relations.

Archived article by Sana Krasikov