It's Time to Raise Wages: Local Leaders Should Follow the President's Example

Jan 28, 2014Alan Smith

Anchor institutions like universities and hospitals have the power to establish a living wage and a stronger economy.

The New York Times is reporting that President Obama plans to sign an executive order requiring workers under federal contractors to be paid at least $10.10 per hour. This move will be a key point in tonight's State of the Union, and folks across the United States will benefit in very real ways.

Anchor institutions (colleges, universities, hospitals, and other places that are tied to their location due to infrastructure or mission) should follow his lead. This is a concrete way that they can play a role as social leaders and put pressure on businesses and other institutions to raise the wage floor.  

We know the president can only do so much before Congress gets involved, and we know that Congress getting involved (at least in 2014) seems to be the kiss of death for progressive legislation. But anchor institutions don't need to wait for Congress, and they can be more useful than federal legislation when it comes to halting the race to the bottom for wages, at least in the short term. In the same way that President Obama has moved the federal government to lead by example, we should demand the same of our friendly neighborhood university, or of the hospital around the corner.

In the same way that anyone paid through a federal government contract will now be guaranteed a higher minimum wage, anchor institutions could adjust their procurement strategies so that the criteria for choosing providers and sub-contractors include a living wage for their employees. They could thus expand their role as an economic engine (which they already fill, even if they don't embrace it) beyond their direct employees.

It’s not hard to see how this sort of policy change could ripple outward. What happens if we look beyond the janitorial staff and the groundskeepers for a college? What happens if we go further, and demand a living wage for the workers who pick the food that the cafeteria purchases, for the people providing community childcare, or for the guy who made the memorial mug commemorating the class of 2005 (which I will probably acquire next year at my 10-year reunion)?

Because these anchor institutions are tied to the places where they are physically located, they stand to benefit from the community at large having more to spend. This can also drive positive social changes. A more vibrant, diverse, and safer neighborhood helps attract quality students and professors: look at Duke, which invested millions in local credit unions to help Durham develop, or the University of Pennsylvania, where the Netter Center has been working to procure more from West Philadelphia and buy from minority- and women-owned businesses that circulate money in the community.    

A living wage need not be a monolithic number. We don't need to follow President Obama with a universal $10.10 minimum. The flexibility of anchor institutions means that we could easily tie demands for a hospital’s contractors to local living wage calculations, or urge a university to peg wage increases to inflation.

On the way to full employment, the Obama administration can only stretch the power of the bully pulpit so far. It's up to a series of local leaders to step forward and inject life into local economies. Doing this can and should be a part of the challenge we issue to our anchor institutions, and they can and should step up to lead in the same way the president has led with this move.

Alan Smith is the Roosevelt Institute's Associate Director of Networked Initiatives.

 

Image via Thinkstock

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