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Obama's "High Road" Contracting Policy Builds on Chicago's Living Wage Law: Now, Can Chicago Learn From Its Own Success?

05/18/2010 05:12 am ET | Updated May 25, 2011

"The president made it clear that he is committed to reforming government contracts to save taxpayers money while protecting workers and the environment," White House spokesman Bill Burton told the New York Times. The Administration's High Road procurement plan, still in the works, involves giving federal contracting preference to companies that pay employees well, and offer health coverage and other benefits, while excluding companies with a record of chronic labor, environmental and other violations. The policy is informed by the success of living wage laws in Chicago and across the country, which have raised the wages of low-income workers and improved productivity at contracting business without harming employment or substantially raising municipal contracting costs.

President Obama knows good policy when he sees it. But it begs the question: can Chicago build on its own success? A soon-to-be introduced bill to expand the living wage to companies that directly or indirectly benefit from city subsidies such as tax increment financing will put the city to the test.

Today, security guards, parking attendants, day laborers, home and health care workers, cashiers, elevator operators, custodial workers, and clerical workers who work for companies that contract with the city of Chicago earn at least $11.03 an hour, a wage that adjusts annually based on the federal poverty guidelines for a family of four. When the law was passed in 1998, it raised wages for covered employees by more than $2.00 an hour, providing a substantial boost to some of the city's lowest paid workers and their families. The problem is that too few workers are covered: Chicago taxpayers are continuing to subsidize jobs that pay poverty wages through tax increment financing and other economic development deals. At time of lean budgets, the last thing Chicago can afford to do is forgo revenue in favor of companies that keep their employees poor.

Chicago's current living wage debate frequently threatens turns into a referendum about Wal-Mart and its plans to build additional stores in the city. But living wage laws tap into a principle that goes beyond any one company: if the public is supporting a private business, whether through contracting or subsidies, that company should be expected to give something back - at minimum by paying its employees enough to afford a basic standard of living. President Obama is working to make the principle into policy at the federal level. Now we'll see if Chicago can build on its own success.