Prices vs. Wages: A False Dichotomy

August 12, 2006

Prices Versus Wages: A False Dichotomy

August 12, 2006; Page A9
Your editorial on Chicago’s recently passed living wage ordinance for retail workers
("The Red Lining of Chicago,” Review & Outlook, July 31), suggests that Americans
must choose between low prices and decent wages. That’s a false choice. Cities such as
Santa Fe and San Francisco, which have raised their local minimum wages to $9.50 and
$8.82 respectively, have found that large retailers like Wal-Mart, Target, Sam’s Club and
Toys “R” Us have adjusted, and are still offering consumers low prices.
Contrary to your editorial’s claims, a study by the University of New Mexico found that
Santa Fe’s wage ordinance has “had no discernible impact on employment per firm, and
that Santa Fe actually did better than Albuquerque” in terms of job growth even though
the minimum wage in the neighboring city was just $5.15. A University of California
study found that San Francisco’s wage law “increased pay significantly” and resulted in
neither “increased rate of business closure nor employment loss.”
These studies were based on actual wage and employment data from the businesses
impacted by the laws. The study you cite by the restaurant-industry-funded Employment
Policies Institute used a far less reliable approach. It attempts to discern changes in the
local labor market from a national survey of individuals which contains only a very
limited number of responses from the region—let alone from affected workers.
Paul Sonn
Deputy Director, Poverty Program
Brennan Center for Justice
New York University School of Law
New York