Proposed minimum wage hike in Milwaukee could cost taxpayers $365K

By Adam Tobias | Wisconsin Reporter

MILWAUKEE — A proposed minimum-wage hike in Milwaukee could cost city taxpayers as much as $365,000 over the next year and a half.

But it’s unclear how the lead sponsor of the ordinance implementing the wage increase plans to fund the proposal.

Alderman Ashanti Hamilton, who’s spearheading the effort to raise Milwaukee’s hourly “living wage” from $9.51 to $11.47, did not respond to questions from Wisconsin Reporter on how the city would cover the added costs.

“The money to pay for the increased wage does not fall from space,” said Anthony Davies, a Mercatus Center-affiliated senior scholar at George Mason University and an associate professor of economics at Duquesne University. “It’s got to come from somewhere.”

Alderman Bob Donovan told Wisconsin Reporter on Monday he worries the wage hike will result in higher taxes or cuts in government services, or both.

“These efforts sound good, but then the reality sets in,” Donovan said. “And there are consequences for the votes and decisions we make. So, I hope that wisdom can prevail here.”

The Milwaukee Finance and Personnel Committee is scheduled to take action on the substitute ordinance Tuesday. The measure also could be referred to the full common council at its meeting the same day.

Milwaukee’s living wage, which has been on the books since 1996, applies to all city staff and employees contracted with the city.

The current rate is $9.51 per hour and is equal to the U.S. Department of Health and Human Services’ most recent poverty guidelines for a family of three.

But Hamilton’s proposal would raise the wage to $10.10 per hour if the ordinance is passed and signed into law. That figure is at the federal poverty level for a family of four.

The hourly wage would then increase to $11.47 starting March 1, 2015, said Mary Turke, a former Milwaukee legislative fiscal analyst who now works with the city’s employee retirement department.

The wage hikes are estimated to cost taxpayers between $245,131 and $366,459, respectively, according to an April memorandum from Turke to Hamilton.

Turke told Wisconsin Reporter the dollar amounts fluctuate because the projected wages from service contracts are based on data from 2013 and assume the exact same agreements and staffing requirements.

If Hamilton’s living wage stays at the federal poverty level for a family of four, the rate would increase to $12.61 starting March 1, 2016, costing taxpayers an additional $487,853 to $607,557.

But Alderman Nik Kovak told Wisconsin Reporter on Monday he intends to propose a smaller wage hike at the Finance and Personnel Committee meeting so the increase is not as drastic.

Kovak said he hopes the committee can reach a consensus to set the living wage at the federal poverty level of a family of three-and-a-half. Kovak said he recently checked on U.S. Census Bureau data and found the average family size in Milwaukee is 3.3 members.

“We want to raise it responsibly, and we want to raise it in a way where we get a sense of what the consequences are as we’re doing it,” Kovac added.

Hamilton told Wisconsin Reporter by email that he would be willing to compromise if that’s the will of the Finance and Personnel Committee.

“If we can agree at committee then I’ll amend the proposal — if not we’ll push ahead with the $11.47,” Hamilton said in the email.

The Milwaukee County Board of Supervisors implemented a living wage of $11.32-an-hour earlier this year that’s expected to put taxpayers on the hook for $11.3 million through 2019.

The living wage ordinance, written by Supervisor David Bowen with help from Service Employee International Union officials, also could drain the reserves of the Milwaukee County Department of Family Care, likely causing the agency to shut down.

Bowen’s law also has forced the county to create three additional positions to oversee compliance of the living wage at a taxpayer expense of $218,000 a year.