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Living Wage Legislation is Affordable, Study Suggests

By Kathleen Scalise, Public Affairs
Posted October 13, 1999

The first comprehensive picture of the impact of living wage legislation on San Francisco is complete with release of the final segment of an independent study by Berkeley researchers.

The study reviewed consequences of proposed city legislation that would require firms located on city property to pay employees a minimum of $11 per hour plus health benefits. This legislation would affect three groups of workers: contractors working in the city, home health care workers and employees on city-leased properties such as San Francisco International Airport and the Port of San Francisco. Findings released cover fiscal impacts at the airport and port. Prior findings covered the other affected firms and workers.

"The costs of applying the living wage legislation to the airport and port came out quite a bit lower than earlier commentators had suggested," said economics Professor Michael Reich, who wrote the study with graduate student Peter Hall.

Researchers found the fiscal impact would be minimal for business, while providing real benefit to thousands of working families.

Revenues at both highly profitable business locations are growing, Reich said, but large numbers of workers have yet to share in the success. Many wages remain below poverty level.

"SFO is United Airline's most profitable location in the United States," Reich said. "Yet it has the fourth lowest runway fees of the 10 largest U.S. airports."

Under the new legislation, firms operating at the airport would incur a cost increase of $59 million, or about 2.7 percent of their business costs. This averages less than $1 per passenger, the researchers found, and the impact on airport revenues and employment would be negligible. About 11,500 workers would see an average wage increase of $2.55 per hour.

Low-wage earners at the airport include baggage screeners, who are the first line of defense against airport terrorism, said Reich. They earn $6 to $7 per hour and typically don't stay on the job long. Others at the bottom of the airport pay scale include cabin cleaners, parking cashiers, retail and food workers, security patrols and skycaps.

San Francisco airport revenue is growing substantially, Reich said. Airline traffic was up 18 percent from 1993 to 1997 and is expected to jump another 25 percent by 2006.

Port tenants would incur an increased cost of $18 million, which is about 4.6 percent of their total business costs or $1.40 per tourist visitor in 1998. About 2,600 workers would be affected, with an average wage increase of $3.60 per hour.

The cost to port restaurants would depend on whether tips are credited toward the higher wage. If so, restaurants would see costs go up 3 percent. If tips don't count toward the proposed wage, costs would go up 13 percent.

Restaurant wages varied widely and had little correlation with menu prices, said Reich. "The starting wage for dishwashers ran from $6.43 to $10.12 at restaurants with similar price structures."


October 13 - 19, 1999 (Volume 28, Number 10)
Copyright 1999, The Regents of the University of California.
Produced and maintained by the Office of Public Affairs at UC Berkeley.
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