Innovation in policy-making in city governments: Openings to change minimum wage
policy in Mexico City and Los Angeles
Graciela Bensusán*
Elizabeth O’Connor **
Table of Contents
Introductory Section ...................................................................................................... 1
Principal debates regarding the role of the minimum wage and the main causes of low wages 5
Theoretical Framework ......................................................................................................... 7
The Minimum Wage Initiative in Mexico City ................................................................. 9
1. How did the movement start and what did it accomplish? ................................................. 9
2. What changed and why? What explains the shift to a more public interest-focused local
labor policy? ....................................................................................................................... 12
Context and Agency .................................................................................................................. 13
3. The Limitations of the Campaign: Apparent Consensus, but Few Results .......................... 14
3.1. Institutional Restrictions: Centralism in Wage Policy ....................................................... 14
3.2. Actors: Incentives, Preferences and Resources ................................................................. 16
3.2.1. Federal Government and Political Parties....................................................................... 16
3.2.2. Los actores sociales ........................................................................................................ 18
The Minimum Wage Campaign in Los Angeles: ............................................................ 20
1. How did the movement start and what did it accomplish? ............................................... 21
2. Chronology and arguments.............................................................................................. 26
2.1. What was won? .................................................................................................................. 28
3. What make this initiative emerge now and why was it successful? ................................ 28
4. The Political Game: Los Angeles................................................................................... 29
4.1 Institutions and the rules of the game ................................................................................ 29
4.2. Actors and incentives ......................................................................................................... 30
4.2.1. Government .................................................................................................................... 30
4.2.2. Social actors..................................................................................................................... 31
Conclusions: ................................................................................................................ 33
1.
2.
3.
4.
5.
State vs Federal Dynamics. ........................................................................................... 33
Government Incentives ................................................................................................ 34
Interplay between grassroots/worker organizing and policy campaigns. ....................... 34
Campaign duration. ..................................................................................................... 35
Presence of grassroots and social actors. ...................................................................... 36
5.1. Investment by grassroots and social actors ....................................................................... 36
5.2. Political weight of grassroots and social actors ................................................................ 37
6.
The incentives of grassroots/social/labor organizations: ............................................... 37
Annex I: Supplementary Graphs and Figures ....................... Error! Bookmark not defined.
Sources: .............................................................................. Error! Bookmark not defined.
2
Index of figures
Figure 1: Mexico: Evolution of the real minimum wage .................................... Error! Bookmark not defined.
Figure 2: Median Salary and Real Minimum in Mexico, 1995-2010 ................... Error! Bookmark not defined.
Figure 3: Labor Productivity and Minimum Wages in Latin America, 2010 ........ Error! Bookmark not defined.
Figure 4: Mexico: Labor Productivity, Real Minimum Wage, Real Manufacturing Minimum Wage and
Median Real Wages 1972-2010 ................................................................ Error! Bookmark not defined.
Figure 5: México: Index of Annual Real Minimum Wage and Labor Productivity 1991-2013Error! Bookmark
not defined.
Figure 6: Mexico: Percentage Wage Participation in Total Aggregate Value, 2011Error!
Bookmark
not
defined.
Figure 7: Mexico: Wages as a Percentage of GDP, 2003-2012 ........................... Error! Bookmark not defined.
Figure 8: Change in Pay for Fulltime Workers in the city of Los Angeles since 1979Error! Bookmark not
defined.
Figure 9: Hourly Pay of Wage and Salary Workers City of Los Angeles, 2007-2011Error! Bookmark not
defined.
Figure 10: L.A. Wage Increase from 2015 to 2020 ............................................ Error! Bookmark not defined.
3
Introductory Section
The decline in trade union strength and their ability to collectively bargain, as well as the
increase in the number of the working poor, in the developed as well as the developing
world, has placed the need to address minimum wage levels in the center of the public
agenda. This is especially true after the 2008-2009 financial crisis. Germany, which has
seen the collective bargaining coverage decline since 2000, has for the first time
introduced a minimum wage level, something which has reactivated a debate in Europe
about the importance of labor institutions such as this in reviving aggregate demand and
social cohesion and reducing poverty and inequality (ETUI, 2015, p. 45).
Moreover, in both developed and developing nations, the governments of large
metropolitan areas are confronted with ever-greater numbers of working poor and those
trapped in informal and precarious employment. It is often the case that the legal
framework to establish minimum wage levels, labor laws and social protections, such as
access to health care or retirement security, are defined by federal laws. Yet cities and
local governments are left to cope with the effects of poverty-level incomes, with local
workers and their families requiring expanded health services, programs for the elderly
and other services. In some cases, cities have developed innovative policies to improve
job quality locally, like increasing minimum wages and improving other labor conditions
for their own workers, while in other cases, cities have done little to shape their own labor
markets, instead investing in expensive social programs which help ameliorate the effects
of precariousness for the working poor, without addressing their root causes.
In this context our question is therefore: Given the lack of action by Federal governments
on developing proactive wage policies, due to either inertia or opposition to the idea, can
cities compensate by developing their own minimum wage initiatives? Particularly, which
factors limit or facilitate the ability of local governments to develop new policy
approaches to increase minimum wages for the most vulnerable workers? How does the
political game, including the formal and informal rules of the game and the incentives and
preferences of both State and non-State actors, impact the success of local initiatives?
To answer these questions, this paper will compare two cases, Mexico City and Los
Angeles, using the analytical framework of the political game in each city. While this
framework has been often used to analyze the policy-making process at the national level
by the IDB and others, it is rarely used at the local level where the political game may be
just as complex, and perhaps even more so, given the interplay between national and
local governments as well as the complex local politics of today’s global cities. As such, we
will look at the main federal and local institutions which shape how the political game is
1
played in each city, and at the leading actors, particularly federal and local governments
and the social actors who play the game, all while examining a key aspect of labor policy:
the minimum wage policy.
While Mexico City and Los Angeles have important differences – one is in the developed
world, one is not – they also share some interesting similarities: sheer size, an economy
rooted in the service industry, large groups of vulnerable and low wage workers and both
have left-leaning city governments operating in a much more conservative federal
environment.
Another similarity is that in both countries the minimum wage falls far below the officially
defined poverty line, increasingly so since the 1970s, despite variations in this line in both
countries (GDF, 2014; Luce, 2012, p. 15). Moreover, both countries have a low, and
decreasing, rate of union coverage and collective bargaining, making the minimum wage
an even more important tool in addressing problems of poverty and inequality. In both
the United States and Mexico, trade union density hovers at around 10%, though in Los
Angeles the union density rate is slightly higher, reaching 14.8% of the total workforce.1
In the United States today, 29 states plus Washington DC have set their minimum wage
above federal levels,2 as well as 21 cities and counties3 and President Obama has come
out in support of a minimum wage increase, though he has been blocked by a Republicanled Congress. In contrast, in Mexico the Federal government has sustained a restrictive
minimum wage policy since the 1980s and states do not have the ability to set their own
minimum wage rates. Today, the general minimum wage is one national level (it changed
from three to two regional rates in 2012, and to one unified rate in 2015). While in the
United States, particularly in Los Angeles and many other cities, there has been a dynamic
campaign for decent wage levels for over 15 years, in Mexico the effort to address the
minimum wage is a recent phenomenon promoted by the local government of Mexico
City since May 2014.
The data allows us to see the importance of this piece of labor policy in both courtiers and
cities, particular in how it impacts low wage workers. The aftermath of a restrictive wage
policy in Mexico is that between 1976 and 2014 the acquisitive power of the minimum
wage has lost 71% of its value nationally and 77% of it’s value in Mexico City. While in
2013, 14% of the employed workforce nationally earned up to one minimum wage (6.9
1
Union Membership and Coverage Database, Barry Hirsch (Georgia State University) and David Macpherson
(Trinity University), using data from the Current Population Survey (CPS), 2015, http://www.unionstats.com
2
U.S. Department of Labor website, 2015, http://www.dol.gov/whd/minwage/america.htm#Consolidated
3
Economic Policy Institute, “Its Time to Raise the Minimum Wage,” 2015,
http://www.epi.org/publication/its-time-to-raise-the-minimum-wage
2
million workers, of which over 2 million work fulltime at 35 hours a week or more), and in
Mexico City this situation applied 9% (374,000 workers). This figure breaks down into 2.9
million (9%) and 200,000 salaried workers (8%), respectively. However, the percentage of
salaried (wage) workers who earn three or fewer minimum wages, who tend to be the
most closely affected by wage policies, reaches 62.1% nationally and 53% in Mexico City.
Moreover, in Mexico City the tendency since 2008 has been that the number of workers
earning up to 2 minimum wages has grown while the number who earn three or more has
decreased. Nationally, the number earning three or more minimum wages has decreased
while the rest have gone up (GDF, 2014, p.18). Mexico finds itself in the lowest México
minimum wage level in the region - along with Nicaragua and Bolivia- despite having a
productivity level on par with that of Chile, and it is the only country in the region with a
minimum wage below the poverty line, reaching only 0.66% (CEPAL, 2014, p. 154).
In the United States, the minimum wage in 2014 registered as 24 percent below its 1968
level, despite the fact that productivity more than doubled in the country over that period
and that low-wage have often reached higher education levels than they had in 1968.4
Another way of stating this is to note that the 1968 minimum wage’s value in today’s
dollars would be $9.54 (rather than $7.25), and that while the minimum wage reached
100% of the 1968 Consumer Price Index in 1968, today it represents only 76%. As
percentage of net productivity, the minimum wage was 33.7% of average hourly output in
1968, while in 2014, it is 13.3%.5
At its 1968 high point, the federal minimum wage was equal to 52.1 percent of the
median wage of full-time workers. As of 2014, the minimum wage had fallen to 37
percent of the median wage. The erosion of the minimum wage has contributed greatly
to the increase in inequality between low-and middle-wage workers, especially the gap
between the median and the 10th percentile earner. This is particularly true among
women, the group for whom the wage gap in the bottom half grew the most. 6
In this work, we are interested in observing the political game surrounding the arenas,
processes and actors of the labor policy sub-system involved in setting wage policy,
examining their incentives and the interactions between different level of state
intervention. We also hope that the mirror provided by the case of a North American city,
with a long history of successful campaigning for improved wages and job quality, helps us
to better understand how to improve upon the meager, though not insignificant, results
achieved in Mexico. The hypothesis we maintain throughout this paper is that both the
4
http://www.epi.org/publication/its-time-to-raise-the-minimum-wage/
http://www.epi.org/publication/we-can-afford-a-12-00-federal-minimum-wage-in-2020/
6
http://www.epi.org/blog/tight-link-minimum-wage-wage-inequality/
5
3
rules of the game and the characteristics of the actors involved explain the differences in
the results, playing a positive role in Los Angeles and the opposite role in Mexico. On one
hand, the initiative in Mexico City was the result of a shift in local labor policy, promoted
by the city government, which, without the existence of a previous campaign led by
unions or civil society actors, sought to distinguish itself from previous administrations.
The social policies pursued by earlier city governments to address poverty are producing
fewer results and also the current leader, facing declining popularity, sought to improve
his public perception and earn a presence on the national stage beyond the limits of
Mexico City. At the same time, local social policy – a source of innovation and identity as
a left wing or at least progressive government - had reached levels where increased
spending was no longer feasible and provided diminishing political results, opening a
degree of space to consider a revitalized labor policy. In this context, there was a
favorable atmosphere to change labor policy in the city, in the progressive direction, and
there was an actor with the necessary incentives to assume the cost of nearly certain
failure in the issue. This was due to the fact that both the formal and informal rules of the
game around minimum wage policy imposed serious restrictions on the Mexico City
government, while at the same time the absence of social actors invested in improving
wages and rather, the presence of unions interested in mainlining the status quo, allowed
the federal government to maintain is restrictive wage policy.
In Los Angeles, a markedly different set of preferences and incentives led to the effort to
increase the minimum wage, and contributed to its success. First, and most importantly,
the minimum wage ordinance was the product of a sustained, organized and broad
grassroots campaign. While the city’s Mayor Garcetti put forth the legislative proposal in
2014, it came on the heels of a campaign win by organized hotel workers who won a
minimum wage increase for the hotel industry after long negotiations with industry
representatives. Trade unions, community and immigrant rights organizations, and other
civil society actors began organizing and advocacy work to improve wages and job quality
in Los Angeles over 30 years ago, investing resources and developing political relationships
over time. As such, they slowly reshaped the city’s political map and institutions, building
power within the policy-making process, meaning that political actors were motivated to
respond to grassroots demands, rather than develop labor policy in isolation, and the
minimum wage proposal became a substantial piece of legislation rather than a rhetorical
position.
4
Principal debates regarding the role of the minimum wage and the main
causes of low wages
Low wages and their impact on economic growth, poverty and inequality are a key item
on the agenda today for academics, governments and international organizations.
International financial and economic institutions have made adjustments to previously
held positions about structural adjustment based on deregulation, restrictive minimum
wage policies, weakening trade unions as solutions to labor market issues. In a sense, a
“new Washington consensus” is developing, supported by some governments and
international agencies, on the need to strengthen unions and adopt proactive wage
policies, though contradictorily also maintain other macroeconomic policies which limit
options for inclusive labor policies.
As such, according to a study by an award-winning IMF analyst, it has been shown that
inequality is largely due to, in addition to unemployment and a decline in the welfare
state, the growing gap between the highest and the lowest salaries and that this is the
result of weakening union power, among other factors (Francese and Mulas-Granados,
2015). In the same vein, a World Bank study in 2013 held that unions and collective
bargaining are instruments that can have an equalizing effect on incomes (World
Development Report, 2013) and the ILO in its numerous reports on minimum wages
recognizes that inequality begins in the labor market and that salaries are a decisive
factor. It therefore systematically reviews average wages, how they are set and their
consequences (ILO; 2015). At the same time, the 2013 World Bank report includes an
extensive literature review on the impact of labor legislation and minimum wages on
employment, finding that in the majority of cases this matters have little or no significant
impact, a finding confirmed in previous studies by the IDB (IDB, 2004).
A report published jointly by the ILO, OECD and the World Bank (2014), underscores that
the contraction in aggregate demand is the result of unemployment and de-linkage of
salaries to productivity levels an the majority of the Group 20 nations, concluding that
economic growth depends upon demand, and that this is dependent upon job creation
and improved wages.
In both developing and developed countries, reversing restrictive salary policies has in
recent years held a central place in public agendas, generating an intense debate among
governments, specialists and social actors regarding the advantages and disadvantages in
raising minimum wage levels. In many cases the debate has been initiated by
governments themselves and has led to policies designed to allow the minimum wage
rates to recover, as seen in the decade of 2000 in various Latin American countries
(Argentina, Uruguay, Chile and Brazil, among others). More recently, there have been
5
cases in developed countries such as Japan and the UK, who’s prime ministers have stated
that it is time to increase salaries (The Guardian, March 29, 2015). At the same time, in
2014 the President of the United States -a country where there have been campaigns for a
living wage for over two decades – supported a policy to raise the national minimum wage
rate, recognizing that the current minimum wage has lost a third of its real value between
1968 and 2014. Over 600 economists supported this assertion, as did the IMF whose 2014
report to the President recommended a minimum wage increase (Council of Economic
Advisers, EEUU, 2014, as cited in GDF, 2014, p. 22 and Moreno Brid et al, 2015).7
The impact of these proposals from political leaders within the business community, have
been diverse. As we will see, in the United States, the inability to raise the minimum wage
at the national level has left the matter in the hands of state and city governments.
However, the federal government has taken some steps within its jurisdiction and has
accompanied the various campaigns for a living wage or a minimum wage increase, to the
extent that 29 states plus the District of Colombia today have minimum wages above that
of the national rate. In contrast, Mexico, where the federal government completely
controls the mechanism to set minimum wages, shows how this capacity may be used to
restrict the minimum wage at all costs.
While this matter has only recently entered the public agenda in Mexico, via an initiative
put forth by the Mexico City government, the debate has been enriched by the empirical
evidence used in a series of studies carried out in the United States over the past 30 years
which examine the impact of raising the minimum wage. The majority of these studies
conclude contradict those who opposed the DF’s proposal. Studies that look at the impact
of minimum wage increases on employment levels between cities with an increase and
neighboring cities without an increase, find that the effect is negligible.8 At the same time,
a review of over 200 academic publications in the past 2 decades covering countries such
as the United States, the UK, New Zealand and other European countries show that a
modest in crease in the minimum wage (especially when its value is distant from the
average salary, as is the case in Mexico, where it reaches barely 19% of the median wage)
reduces wage inequality and benefits the most vulnerable groups of workers such as
women and the poor, while having a statistically insignificant effect on unemployment. As
a result, it has been recommended as an instrument of public policy with solid and lasting
benefits and few side effects (Belman and Wolfson, 2014).
8
Krugman, New York Times, http://www.nytimes.com/2015/04/03/opinion/paul-krugman-power-andpaychecks.html?emc=eta1
6
Efforts to raise the minimum wage in both Los Angeles and Mexico City were supported by
technical studies by experts. While in LA one important counterargument was the fear
that jobs and investment would flee to other municipalities or states, and that other
employment would be driven underground or off-the-books, in Mexico the main
counterargument was that a wage increase should only occur when accompanied by
increases in productivity. This argument flew in the face of substantial evidence of a
growing gap between productivity and wage (productivity is rising in Mexico, though
slowly, without a corresponding rise in wage levels). See Figure 4.
However, as will be seen in this work, experience tells us that academic debates do not
overcome obstacles to changing minimum wage policies. Rather it is sustained and
strategic mobilization by social actors - regardless of whether the arguments they put
forth are based on ethical, moral or economic considerations. The case of the city of Los
Angeles confirms the assertion by Hyman: “the power of argument demands as a
complement the argument of power.” (2015, p.12)
Theoretical Framework
The question we examine in this paper, however, is not necessarily whether an increase in
the minimum wage in either Mexico City or Los Angeles is justified or desirable for
workers and the economy, rather we seek to understand why proposals to raise wage
levels met with greater success in Los Angeles than in Mexico City. To provide a
theoretical framework for this examination, we will draw upon the new political economy
approach to decision-making and the policy-making process, in particular, the framework
of the political game, as developed by authors at the InterAmerican Development Bank
(Scartascini, Tommasi and others).9 Their focus is on the process of policy-making, rather
than its outcome, and provides tools for identifying the obstacles that exist in creating
policy reforms. To do this, they assert, one must look at the main actors in the policymaking process - their preferences, incentives and limitations, as well as the institutions
and laws that define how they interact. This conceptualization of the policy-making
process is often used as an orienting framework for the academic study of policy-making,
though most frequently at a national level. Studies at the city or local level are less
common, particularly for specific policy matters such as employment or job quality, an
important shortcoming given the role that urban centers play in the global economy. In
this case, therefore, we apply the political game framework to a metropolitan government
addressing minimum wage policy.
9
The description of the political game framework on the following pages draws heavily from Scartascini,
Spiller, Stein, & Tommasi, 2011.
7
A simplified set of elements within the policy-making process are considered here,
including the policy-making setting and its degree of formality, adaptability or rigidity, an
issue which is especially relevant when considering local vs federal jurisdictions as related
to wage policies. In addition we will consider the main players, or actors, in the policy
game. From a new political economy perspective, all actors in the policy process,
including political and non-governmental actors, are assumed to be rational in the sense
traditionally attributed to actors in classical economic theory, that is, their behaviors and
decisions are based on the preferences, incentives, resources and limitations of each.
In the urban labor policy sub-system, players in the policy-making game is the city’s
Executive, typically the Mayor and Cabinet. A Mayor directly elected and eligible for reelection will have a different relationship with constituents - whether from the private
sector, unions or civil society organizations – than will a Mayor installed via political party
negotiations. Also, large metropolitan areas today compete within the global economy to
attract foreign investment and its pursuit may restrict policy options locally, particularly
around employment standards (Sassen S. , 2001). Even within a local policy sub-system,
the Federal Government is an important player, as it will have policy preferences about its
major cities, which are frequently important national economic motors. However, if it’s
political orientation differs from that of the local government, it may play the political
game in an obstructionist manner.
There are also important non-State actors in the policy-making process; in this case the
two most relevant are employers and workers. Employers and businesses are
represented in the political process either directly or through interlocutors such as
chambers of commerce, industry associations and other organizations. Workers may be
represented by organized labor unions, and those who are not unionized or who are
outside the formal labor market may be represented by community or civil society
organizations. Civil society organizations may also represent other interests that touch
labor policy, such as concerns for economic development, inequality and other social
issues, and so workers may engage in the process in their role as workers or as citizens.
How these players interact, by what rules and who dominates the game depends on the
institutions and arenas of the city’s policy-making process. At a national level, the relevant
institutions for policy-making, including local policy-making, may be the nation’s
constitution, electoral system or legal code. At the level of an urban political subsystem
for wage policy, the relevant institutions include the electoral system, the economic
model and the societal norms of clientelism. Another determinant is the arena of the
political game for wage policy. Metropolitan governments face a challenge here, since
funding sources and legal jurisdictions dictate that as their policy-making processes
8
frequently occur at both the federal and local levels. Another factor to consider is its
degree of formality and the functionality of the official mechanisms of policy-making.
From a citizen’s perspective, formal participation in this process would include expressing
preferences through a political party, through voting, by lobbying around policy matters or
challenging particular policies in the courts.
The Minimum Wage Initiative in Mexico City
1. How did the movement start and what did it accomplish?
On May 1st, 2014 the Mayor10 of the Federal District (the nation’s capital district, the DF,
commonly referred to simply as Mexico City) in Mexico proposed opening a national
debate about the relationship between economic growth and the minimum wage policy in
Mexico since the 1980s. He questioned whether “the Mexican economy could grow
based on a punishingly low minimum wage or if the economy was not growing precisely
because the income levels of workers is extremely low.” (GDF, 2014 p. 5)
This statement was a notable shift after 15 years of passive labor policy in the DF, a city
ruled by a left-leaning party since 1997. Not only had the city government not attempted
to influence federal labor policy, it has also maintained non-interventionist stance – or
even quite conservative stance – in the policy areas that were under the local
government’s jurisdiction (such as labor inspections and the labor justice system), without
taking steps to improve job quality in employment, even for its own employees. Between
May and December 2014, the Mexico City government (Gobierno del Distrito Federal, or
GDF) took steps to place the wage issue on the public agenda, but with meager results.
Therefore the GDF undertook an intense campaign, holding an international Forum in
August 2014, publishing a detailed document supporting the gradual recovery of
minimum wage rates in Mexico and Mexico City, followed by debates in public for a and
among a wide range of national and city political actors. Nonetheless, the GDF’s efforts –
backed by international organisms such as ECLAC and the ILO, and which included a
debate in the national Congress, in trade unions and chambers of commerce as well as
within academic institutions – were unsuccessful in reversing the Federal position o the
matter. They also did not succeed in loosening the tight grip the Federal government kept
over minimum wage policy through the National Commission on Minimum Wages
(Comisión Nacional de los Salarios Mínimos, CNSM) and its allies in the labor and business
communities.
10
The correct title, Jefe de Gobierno, is literally translated as Head of Government, but is translated here as
as Mayor, as the post is roughly equivalent to the role of Mayor in most large North American cities.
9
The argument made by the Mayor during a May Day celebration, was that low wages,
below the poverty line, are affecting the entire national income scale, with negative
effects for the economy and social well-being in the DF, as well as that the level fixed by
the CNSM was far from what was called for in the Mexican Constitution, at MXN$67.86 vs.
MXN$171 pesos/day (USD$$.45 vs. USD$11.15 a day).
He referred to what was
happening in other cities around the world, including in LA, as well as Obama’s support for
an increase in the minimum wage in the US. With this, he instructed the economic
cabinet of the city to develop a proposal to revise the minimum wage and create a group
of experts to identify the best alternatives, which were presented at the previously
mentioned Forum. This document was backed by 8 university experts and ECLAC, was
presented in August and again in later settings, such as the National Governors
Conference, to advance the debate nationally (GDF, 2014, p 5-6).
The mayor’s proposal, designed to push through varied stages of inertia in minimum wage
policies, was based on the theoretical and empirical arguments, taking into account
predicted impacts on prices and employment, and supported raising the minimum wage
gradually, starting with a MXN$15.57/day raise (about USD$1 and 23% of the current
wage) to reach MXN$82.86/day (USD$5.39), close to the cost of a basic food basket.
Though a true living wage (for basic needs beyond food) is MXN$171 (USD$11.15), a raise
of 154%, the proposal included an annual increase of 27.4% plus inflation each year until
2018, making it possible to finish the Mayor’s term in 2018 with a minimum wage level
that fulfilled constitutional obligations of meeting a living wage. Later, more modest,
proposals suggesting raising the wage 15.6% annually, to reach the constitutional
mandate in 2025, with the hope of building a compromise agreement with the federal
government. Other aspects of the proposal were the de-indexation of minimum wage
levels as a reference for other obligations and prices (such as traffic fines), making the
CNSM more autonomous and creating an inter-institutional commission to evaluate the
impact of the increase as well as modifying the calendar for fixing the minimum wage. In
terms of the DF, the city council was asked to begin the process of de-linking the minimum
wage from other prices, to improve salaries for its project staff and to adopt a responsible
contractor policy requiring its contractors to pay employees at least MXN$82.86
(USD$5.39), to exempt small businesses for the first year and to improve labor inspections
in the city (GDF, 2014, pp. 76, 84 and 85).
The arguments of those opposed to the GDF’s minimum wage initiative, led by the
president of the CNSM, business and employer organizations, were varied. While they
and the federal government recognized the need to improve worker incomes, they
opposed any effort to do so that was not tied to productivity levels, arguing that
otherwise it would generate inflation and possible job loss in unskilled jobs. This
10
argument ignored the fact that since 2005 there has been a 5% lag in minimum wages
behind productivity. Also, they argued that few workers actually earn minimum wage
salaries and that a change could not be issued “by decree,” though in fact that had been
precisely the role of the CNSM over the years. Finally, they argued that the minimum
wage could not be increase until this amount was de-linked from other public and private
obligations, such a pension payments and fines. This de-linkage was proposed by the
federal executive and almost accomplished legislatively, but was defeated at the last
moment in the Senate. While there had been almost universal consensus on the matter
of de-linkage, once it did not pass, it became the main pretext for denying a later
minimum wage increase.
At the same time, after the tripartite CNSM initially rejected the GDF’s proposal on August
12th, it later formed a special committee to study the matter for six months and
commissioned studies from the World Bank, ILO, and private sector consultants. While
the report should have been released in April 2015, the deadline has been extended.
As such, the minimum wage policy in Mexico has continued without change. In December
2014 it increased the minimum wage the same rate as inflation (a 4% increase). The only
exception was the decision to unify the minimum wage to one national level, eliminating a
lower rate in Zone B in March 2015 (in two stages, to avoid an inflationary impact from a
1.8 peso-day increase), thereby continuing the unification process begun in December
2012 when Zone C was eliminated.
As such, beyond the fact that the GDF adopted a policy to guarantee a wage floor for its
sub-contracted service providers (who in reality already earned above the current
minimum), the most important accomplishment of the effort to raise the minimum was
wage was the pressure generated to de-link the minimum wage rate from other fiscal
obligations – an effort which translated into legislative change at the local level but not
the federal level. One of the other minor victories was simply that the issue became a
central part of the public debate in the 2nd half of 2015, to the extent that other political
actors, even the PAN, had to express support for it, a reversal of earlier positions when
the PAN was in power. While some PAN Senators collaborated with the PRI to prevent a
quorum in the Senate when the de-indexation was discussed, they also supported holding
a referendum on the minimum, though this never came to pass after being declared
unconstitutional by the Supreme Court.
11
2. What changed and why? What explains the shift to a more public
interest-focused local labor policy?
Three main factors explain the previous absence of an innovative labor policy in Mexico
City: the lack of social actors demanding a progressive policy, the weak institutionalization
of the policy-making process and the lack of an orientation towards the public interest
(O’Connor, 2014). While the first two issue remain, the latter has shifted since the Mayor
began his campaign to raise the minimum wage and, later, to improve job quality in the
city.
While under previous PRD administrations - Cárdenas/Robles, López Obrador y Ebrardthere was a clear pattern of channeling resources and attention towards social policies (up
to 30% of the city budget), and neglecting labor policy (less that 1% of the budget), under
the Mancera administration labor policy experienced a revival. The earlier pattern was
due in part to the PRD´s ideological ambiguity, when faced with a lack of alternative
demands from social actors in the city and the resistance among employers to modify the
labor status quo. The conservative nature of the PRD´s labor policy may be seen not only
in the low budget dedicated towards it, but also in the political actors overseeing it, being,
in general, actors without autonomy or inclined to change or challenge the labor policies
inherited from previous PRI functionaries. On occasion, these actors even supported the
private sectors attempts to restrict collective bargaining.
An additional issue was the nature of the PRD itself and its system of internal currents,
based on a tradition of clientelism and few, if any, connections with independent unions
in Mexico. Social policy and programs became the tool by which the party generated
voter loyalty and its city-wide political base, especially as social programs expanded at a
time when the labor movements ability to mobilize voters was in decline.
While before 2014 the incentives for political leaders were not aligned to allow for a labor
policy designed for the public interest, the new Mayor did develop such incentives and
pursued his minimum wage initiative. According to administration insiders, the Mayor
admitted to his staff that the advantages of social policies was decreasing for two reasons.
One is that much of the population was already the recipient of existing social programs,
with little impact on poverty levels or economic growth. Also, the political benefits for
such programs was waning. In this context, reviving labor policy was not akin to
abandoning the PRD´s trademark social policy, but it recognized the need to address
poverty at its root causes, not simply address its effects. While the low salaries paid in
Mexico are a generalized problem, the urgency of increasing the incomes of the most
vulnerable segments of workers has become clear not only for moral reasons but also
because it is necessary to address labor informality, productivity and the growth of
12
internal market demand. The ILO, ECLAC and OECD have all written about the
“eccentricity” of the Mexican minimum wage and CONEVAL has noted that between 2005
and 2014 about 20% of the employed population could not obtain the basic food basket
from their income. These all served as evidence to show why it is unsustainable to
maintain a minimum wage that has lost 75% of its acquisitive value over 30 years. INEGI
has also shown that labor formality is decreasing, with 6 of 10 workers in informal
conditions. In all, a space was opened to for the GDF to address the issue of job quality,
with wages being a key indicator.
As such, the GDF drew upon objective reasons to launch its campaign to raise the
minimum wage, despite the fact that wage policy is technically within federal jurisdiction:
the impact of low wages on Mexico City, the need to fulfill a constitutional mandate, the
pursuit of greater equality led to the campaign´s goal – the “lighthouse” effect that
minimum wages have of salaries throughout the wage structure (GDF, 2014, pp. 13 and
67).
In all, the incentives of the GDF to advocate for an increase in the minimum wage did not
lead it to make a radical proposal, but to open space for a negotiation over the matter
with the federal government. The Graphs and charts included in the annex show the
evolution of the minimum wage since the 1980s, its variation in relation to the median
wage, its relationship with productivity, the share of wages in added value and the total
wage burden within GDP, all of which lent support to the recovery of minimum wage
levels.
Context and Agency
Kingdon states that there are “windows” of opportunity which open when political and
policy streams merge, ie, when a proposed solution and a political climate fit together and
make action on a policy matter likely (Kingdon, 1995). In this case, the social and labor
consequences of having a low minimum wage had been apparent for some time and has
been noted in studies by the ILO, ECLAC and within the academic community, but until
recently no one had been able to place this issue on the public agenda. The Mayor of
Mexico City has won office with over 60% of the vote in July 2012, but by 2014 he – much
like many politicians in Mexico – was falling in terms of public opinion, reaching a 60%
disapproval rating due to several unpopular initiatives. His lowest levels of approval was
in November 2014, which only began to improve in 2015,11 reaching a 54% disapproval
rating by April 2015,12 according to a newspaper poll.
11
http://www.eluniversal.com.mx/ciudad-metropoli/2015/encuesta-mejora-mancera-en-la-preferencia-decapitalinos-1073954.html
12
http://www.sinembargo.mx/06-04-2015/1304213
13
Mancera revived the issue of minimum wages both due to its economic and social
importance, but also as a way to distinguish himself from earlier missteps while appealing
to a leftish constituency and win a space on the national stage. It was additionally
important for him to take this position, having kept a low profile during the “Pacto por
México” structural reform negotiations.
Another factor to consider is that the issue was raised on May Day 2014, shortly after
Patricia Mercado has been appointed Labor Secretary for the city. Her background was
with the independent union federation, FAT, and she brought a history of feminist, activist
and political activity. She became part of an economic cabinet in the city which
understood the importance of wages and income as a factor in increasing the internal
market and reducing poverty. She and the Economic Development Secretary, Salomón
Chertoriski, reached out to academics, as well as international organizations such as the
ILO and ECLAC, to move the idea of a change in labor policy.
3. The Limitations of the Campaign: Apparent Consensus, but Few Results
3.1. Institutional Restrictions: Centralism in Wage Policy
The existence of a persistent vicious cycle - at both the federal and local levels – in the
Formulation and implementation of labor policy favors the status quo and reduces the
possibility of effective enforcement. Numerous decisions are made outside formal
settings, without strictly following legal procedures and implementation is often
bottlenecked. As Levitsky and Murillo (2012) state, there is an implicit agreement in this
environment to tolerate lax enforcement and simulation of formal channels, which has led
to decades of stable, though very weak, labor institutions.
Federally, the fragile institutionality of the CNSM is evident, though this is where the
political game on wage policy supposedly occurs, in a tripartite process between the
government employers and unions. Though the Representatives Commission of the
CNSM should set the increase each year, in reality the SHCP decides the increase based on
inflation levels, without taking into account the constitution, the LFT or worker interests.
The institutional rules which establish how the minimum wage is to be set were created to
ensure a tripartite system which allowed the Executive branch to make the decisions and
guarantee labor peace but in reality it has become an antidemocratic mechanism which
respond to only one interest. The poor quality of worker and employer representation
and the orientation of the government over the past 30 years to favor employer demands
by using low wages as an instrument to control inflation and ensure a competitive
advantage in extorts, has led to the total undermining of the social objective the
institution was originally designed to meet.
14
In effect, according to the Constitution and the labor laws, the CNSM today is the only
organism permitted to set minimum wage levels in the country, as part of a process to
centralize decision-making. Until 1962, when this Commission was created,13 minimum
wages were determined at the municipal level via the Local labor Boards in each state.
Until 1986 the CNSM was made up of regional commissions until they were removed to be
replaced by special committees, on an as-needed basis, as in the current case while
considering the proposal of the GDF. The governing body of the CNSM is the Committee
of Representatives, with 9 representatives from each sector and one from the
government who acts as President. In 2014, the representatives from the labor sector
were all from unions traditionally connected to the PRI (CT, CTM, CROC, CROM y CTC)14,
and none from the independent unions. According to labor law, labor and employer
representatives should be elected every 4 years, which happens in a process that is not
only simulated, with little transparency or publicity, but also leaves out the majority of
workers, given that only 13.9% of the workforce in unionized.
The CNSM has a technical committee with experts who should carry out the necessary
studies to give the body the information it needs to fulfill its constitutional mandate and
according to economic conditions, and it has the power to establish additional
consultative committees. However, Garavito Elías (2013, pp. 8-9) reveals the “technical
void” of the CNSM and the inadequacy of its studies, meaning that it does not properly
define what the material, social and cultural needs of a family, as the constitution
requires. In essence, the Commission uses data from INEGI (before 2010, the World Bank)
about the annual increase in prices (Ibid). In reality, as this author and other have decried,
the CNSM has become a “white elephant,” with an inflated budget and onerous salaries
for its upper functionaries, who essentially just carry out a ritual each year, setting a
minimum wage level that is effectively dictated by the SHCP and backed by “unanimous”
agreements, as mentioned by the Labor Secretary himself in November 2013.15
As a response to the GDF and as a stall tactic, in October 2014 the CNSM created a special
committee to evaluate the possibility of an increase, with support from international
organizations, without consulting the materials assembled by the GDF´s group of experts.
After 6 months without reaching a conclusion, its deadline was extended to October
13
This was a reform to Article 123, section VI of the Constitution and created 111 regional commissions
corresponding to economic zones around the country, each with its own minimum wage level. 20 years
later the number of zones was reduced to 89, the number kept reducing until reaching 3 in 1989 (A, B and
C), then 3 in 2012 and now only one as of April 2015.
14
CT, Labour Congres; CTM, Confederation of Mexican Workers ; CROC, Revolutionary Confederation of
Peasants and Workers; CROM, Regional Confederation of Mexican Workers; CTC, Confederation of Workers
and Peasants.
15
Notimex, noviembre de 2013, op. cit.
15
2015.16 The fact that all responsibility was delegated to a commission that essentially
mirrored the Committee of representatives, and the lack of results in an organism granted
significant staff and resources with the single objective of setting the minimum wage, is an
open violation of the constitution and labor law, and reveals the institutional fragility of
the policy-making process for wage policy.
Given the above, the institution has not worked towards the social objective, or public
interest, that it should, rather it has served to stubbornly protect the status quo, which
favors the interests of a small group despite being dysfunctional for society as a whole.
The lack of effective representation in this process for hundreds of thousands of wage
workers, those who earn the minimum wage or close to it, explains how the CNSM
unanimously decided to keep the minimum wage increase at 4%, at the level of inflation
and no more, with no attempt at allowing it to recover its original value or reflect
increases in productivity.
3.2. Actors: Incentives, Preferences and Resources
3.2.1. Federal Government and Political Parties
The reasons for the Federal Executive to maintain traditional wage policy was evident.
When the Mexican economy went through new difficulties due to slow economic growth,
below projections, and lowered expectations related to the recent set of structural
reforms due to the fall in oil prices, the promises made during the 2012 presidential
campaign to improve incomes, create an unemployment insurance and pensions fell by
the wayside. However, to recover the trust of the business sector after the 2013 fiscal
reform, maintaining the status quo on wages seemed inevitable. In addition, the most
successful sector of the economy, manufacturing exports, is based on low wages as a
method to attract investment and be competitive, meaning that the federal government
had a strong incentive to avoid endangering this state of affairs by allowing higher wages
to potentially impact contractual salaries. Later, as the peso fell against the dollar there
were additional incentives in the same direction as they sought to avoid inflationary
pressure.
Another negative factor, political this time, was that despite good relations between the
Federal and local governments, it was difficult for them to allow its Mayor, Miguel Angel
Mancera, to overturn a long-standing policy in place since the 1980s, when inflation was
one of the causes of the economic instability seen through the mid-1990s. As such, Luis
Videgaray, Secretary of the Treasury and Public Credit, stated he was willing to debate the
16
According the the STPS Informative Bulletin, March 23, 2015, they are carrying out studies on the
minimum wage and productivity with the Bank of Mexico, with support from SHCP, as well as the wages and
inflation with the ILO and wages and poverty with Coneval.
16
matter of the minimum wage but questioned aloud whether the issue was being used for
electoral reasons without a “serious” discussion about its effect on inflation or
employment.17 Other political leaders also played a negative role. For example, the head
of the Bank of Mexico warned that changing wage policy would provoke job loss due to
inflation.18
With decision-making in the hands of the CNSM and having prevented the Senate from
allowing the de-linkage of the minimum wage from other fiscal obligations, only an
intense and sustained social movement – such as that seen in the case of the 43 missing
students in Ayotzinapa – could have changed the position of the Federal government.
Political parties has a different set of incentives when faced with the Mayor´s proposal,
although the power of the labor vote has declined for the PRI without shifting to the PRD
(Bensusán and Middlebrook, 2013). Other clientelist practices and mechanisms have
become more important in mobilizing the vote among vulnerable populations, precisely
those which include minimum wage and, more broadly, low wage workers.
With the PRD facing a growing image problem after the events of Ayotzinapa, despite its
innovative social policies, its stance on raising the minimum wage and support for the
Mexico City mayor would be a positive way of setting itself apart from the other political
parties. It was not an opportunistic move since, while it was never a priority issue on its
agenda,19 in past years (1997, 2002, 2012) the PRD had expressed support for increasing
the minimum wage and moving the power to set the wage from the CNSM to the
Chamber of Deputies with a greater plurality of voices. To this end, they proposed
creating INSPRU (National Institute of Wages, Productivity and Profit-Sharing) as an
autonomous advisory body to the Legislature (Garavito, 2013).
Even though the PRI publically expressed support for a minimum wage increase, party
discipline with the Federal executive branch was strong in the months following the 2012
electoral victory. The PAN, as mentioned, proposed holding a popular referendum on the
issue in 215. However, the behavior of both parties showed that there were not sufficient
incentives to pursue real change. The PAN, by coordinating with the PRI in December 2014
and avoid quorum in the Senate, reaffirmed its conservative position on wage policy and
its support for the business sector that it showed while in office (2000-2012). So it
repeated the pattern seen around the labor law reform debate in 2012, when a segment
17
http://eleconomista.com.mx/industrias/2014/08/21/videgaray-dice-aumento-salario-minimo
(http://www.elfinanciero.com.mx/economia/alza-al-salario-provocaria-resultados-indeseablesbanxico.html).
19
As seen by the fact that Minimum wages were not discussed in the Pacto por México agreement signed by
the three major parties - PRI, PRD y PAN- on December 3rd, 2012.
18
17
of it legislators allied with Coparmex (Employers´ Confederation of the Mexican Republic)
and opposed measures for greater union democracy. Paradoxically, the PAN later
returned to the issue of raising the minimum wage in the 2015 elections, something the
PRD inexplicably did not do.
In short, those who had the institutional and political capacity to renovate minimum wage
policy and support the Mexico City government´s proposal, lacked sufficient incentives to
break away from a policy sustained since the 1980s.
3.2.2. Social Actors
While all sectors publically recognized the need for a minimum wage increase,
unsurprisingly the strongest resistance came from the business sector and its allies, such
as the CESP (Socioeconomic Evaluation Center Project) (GDF, 2014). In the context of low
growth and higher taxes, the preferences of this sector supported the status quo, with
little interest in reviving a depressed internal market. They asserted that wage increases
should be linked with productivity in order to avoid generating inflation and job loss, and
explained that workers would take jobs below the minimum wage given that there were
more workers than jobs. Some referred back to the 1970s and 1980s when wage
increases by “decree” led to high inflation and the loss of minimum wage purchasing
power. They also were concerned that other parts of the wage scale would go up.
The CCE (Business Council Coordinator) shared this view, stated that though few workers
earned the minimum wage, this wage policy helped keep other wages in check, including
among large firms who had seen strong improvements in productivity, such as the
automotive sector. This was the true motivation of the large companies, though they
often stated it as a concern for small businesses.
Coparmex in Mexico City recognized, at least publically, that the GDF’s proposal was “wellintentioned” and “complete” and was backed by some industrial groups, though they
asked that the payroll tax be eliminated, arguing that non-wage labor costs were behind
the high rates of informal employment. They noted that 93% of minimum wage workers
were informal while over half the formal sector workers earned more that two minimum
wages.20 CONCAMIN, meanwhile, advocated for an open debate on the issue.
In the end, essentially all the business sector organizations lined up with the Federal
government to support postponing a minimum wage increase until the presumed benefits
of the 2013-2014 structural reforms were seen. They did, however, promise to use this
time to maintain and increase their investments, create jobs, increase productivity and in
general, “work seriously and professionally towards improving wage incomes.”
20
Morales, Lorena, Reforma, 29/08/2014
18
While these positions were to be expected, what was surprising was the moment when all
of the union leaders, including the “new unionism” represented by the UNT, backed the
position of the Federal government and the business sector. This was the position of the
CTM, the Telephone Workers Union, the UNAM university union, the CROM, the CTC as
well as the Pilots union. Along with employers, they agreed that “this discussion should
be held within the legal and institutional framework established in the Carta Magna and
be based on sharing the benefits of increased productivity.” They stated that they should
first “formalize employment and de-link the minimum wage from other non-labor
measures, to avoid falling into past errors that caused painful lessons for the country,
businesses and workers.”21
This position for the trade unions linked to the PRI, such as the CTM, is not hard to
understand, given that their survival is based on an historical alignment with the federal
government. Their model depends on access to institutional power, such as participation
in the CNSM, rather than their ability to mobilize opposition on wage or other policies.
Due to this, however, it becomes inevitable that they join the unanimous consensus in the
CNSM and disregard the needs of the many minimum wage workers, even though it will
impact the entire wage structure.
What is harder to understand are the incentives of the UNT in publically contradicting
some of its own past proposals, in a statement signed with the CNSM, of which it is not
even a member. In 2002 and 2012 it had worked with the PRD to propose the elimination
of the CNSM and move its duties to the Legislature. One possibility is that the relative
weakness of its main affiliate, the telephone workers union, facing a breakdown of its
membership base in the restructuring of the telecomm sector, led to curry favor with the
Federal government. Another possibility is that the structure of the labor movement in
Mexico is largely at the company or plant level, and it has faced great difficulties in
expanding to other sectors of the economy. So, even though a low minimum wage exerts
downward pressure on wages and job quality in general, for both the UNT and CTM
unions, the short-term interest of the labor movement could be construed as simply
protecting the membership it does have, even at the expense of other workers.
The initial public statement of the UNT was quickly repealed, appearing to be unilateral
and little-considered statement based on a quick assessment of the benefit of maintaining
an alliance with the government and business sector. A short time later the UNT came out
with a new statement asking for the CNSM to be disbanded and replaced by a Legislative
consultative body, in line with earlier positions. The UNT’s next Congress later ratified this
21
http://www.proceso.com.mx/?p=379442
19
second position in November 2014. However, though the UNT had the capacity to
mobilize support for the Mexico City government’s wage increase, it did not take actions
to do so beyond public rhetoric.
Without a labor movement or workers movement mobilizing to support a minimum wage
increase, the GDF’s proposal was left essentially without the support of social
organizations. However, in March 2015, a movement of agricultural day-laborers in the
San Quintin Valley emerged, striking during harvest and blocking highways, demanding
improved working conditions and a much higher daily minimum wage. This served to
revive the GDF’s wage campaign. In April 2015, UNT leaders met with the 80,000
member, independent day-laborers group, the Alliance of State, National and Municipal
Organizations for Social Justice, and simultaneously the Mayor of Mexico City publically
announced support for the day-laborers, linking it to its own initiative and lending
mediation support (Excelsior, April 16, 2015). After gaining substantial support from
Mexican and North American unions, the day-laborers successfully negotiated an
agreement after 2 months of mobilizations. In June 2015 the signed an agreement with
wages increases according to the size of the company, with a daily wage of 180 pesos in
the largest companies, 160/day in the middle range and 150.day for small companies. As
well, all workers will be incorporated into the Mexican Health and Social Security system,
IMSS, and worker representatives will be incorporated into the labor inspections process
for agricultural centers in the San Quintin Valley.
The results of this later battle in the agricultural sector show that, despite a difficult
political, institutional and organizational context, it is possible to overcome resistance to a
change in wage policy in Mexico. Redistributive conflicts may be won when the
“argument of power” is employed, in the form of organized and strategic mobilization on
behalf of workers and social organizations.
The Minimum Wage Campaign in Los Angeles:
In the United States, a Federal minimum wage was established first established in 1938 by
the Fair Labor Standards Act (FSLA) and currently stands at US$7.25 a day. However,
unlike in Mexico, states have the ability to set a differing statewide minimum wage, and
have often done so. For example, when the federal minimum wage was last raised in
2007, thirty-seven states had already set their minimum wages higher than the federal
level. Today, 29 states plus the District of Columbia have local wage minimums higher
than the federal level of US$7.25.
20
Within this setting, Los Angeles, the second largest city in the United States and with a
large number of low wage service sector workers, has recently passed a minimum wage
ordinance of historically large significance. It is estimated by minimum wage campaigners
that over 800,000 workers will see a wage increase, larger than the combined number of
workers impacted by all the other minimum wage laws passed in 2014 combined.22
The scope of the impact of this minimum wage increase has to do in large part with the
large number of workers in the local labor market earning very low salaries in the city.
Due to an increased cost of living and stagnant wages, workers in Los Angeles today make
less money for the same work than they have in past decades, with wage erosion being
most pronounced for workers in the bottom range of the wage scale. From 1979 to 2011,
annual pay dropped twenty-six percent for workers in the 25th income percentile,
meaning the working poor, who were largely found in service sector industries (UCLA and
Economic Roundtable, 2015). See Figure 8 in Annex 1.
The median hourly wage for all workers residing in the City of Los Angeles in 2013 was
estimated to be US$27.85, however, forty-six percent of LA’s wage and salary workers are
paid less than US$15 an hour. This encompasses 41 percent of the full-time employees
and 54 percent of the part-time employees who live in the City of Los Angeles. Fifty-eight
percent of all single parents and 64 percent of Latino workers are in the low-wage labor
force, earning less than US$15 an hour (UCLA and Economic Roundtable, 2015). See
Figure 9 in Annex 1.
1. How did the movement start and what did it accomplish?
The push for an increase in the minimum wage in the United States has had both local and
national components. Recent federal administrations, Presidents Regan, Bush and even
Clinton, have passed numerous anti-worker and anti-union laws, and the recent Obama
administration has been sharply curtailed in its ability to reverse these tendencies by a
Republican Congress. There has been a sharp decline in union density, leading trade
unions to experiment with new organizing strategies and innovative campaign efforts. At
the same time, the 1980s and 1990s also saw a rise in identity politics and a new era of
community organizing, often in communities of color, and immigrant organizing. As well,
and importantly, these decades also saw unions and social organizations learning to form
functional and strategic coalitions, as earlier animosities from the Cold War years waned
and the need to join forces became increasingly evident.
22
Castellanos, Patricia. Interview by Elizabeth O´Connor. Personal Interview, May 22, 2015.
21
Nationally, over the past 15 years, there have been ten state-level efforts to raise the
minimum wage, all of which were successful and these efforts have since intensified. In
2014 alone, there have been 22 minimum wage bills presented in 14 states. Many cities,
as well, have taken action to address the minimum wage. These include Seattle, where
the mayor has proposed an increase. San Francisco, which was one of the first cities to
legislate a higher minimum wage in response to an assertive grassroots campaign has a
minimum wage today of $10.70 with a healthcare requirement, or $13 an hour if health
insurance is not provided. Recently, the city’s mayor has proposed raising the minimum
wage to $15. In Washington DC, the minimum wage was raised to $11.50, though its
impact was low as the number of minimum wage workers inside the small federal district
was quite low.
Chicago currently has a referendum open on raising the minimum wage to $15 for large
employers. Santa Fe, Albuquerque, San Jose, Oakland, Louisville and San Diego have
minimum wage initiatives. New Your City is prohibited by state law for a city-wide wage
ordinance, but the State’s Governor has asked the state labor board to investigate raising
the minimum wage for fast food workers to $15. Finally, in Los Angeles, sector-wide
campaigns have resulted in a minimum wage of $15 in the airport, as well as the hotel
industry in downtown LA and in Long Beach, before now extending an ordinance to cover
all workers in the city.
Responding to building local pressure, President Obama this year proposed raising the
Federal minimum wage to $10.10/hour, an amount considered too little by most
minimum wage activists but important initiative nonetheless as it continued the national
debate on the issue of wages during the economic recovery. The bill was strongly
opposed and defeated by Congressional Republicans, many of whom were from districts
with high numbers of minimum wage workers whose employers´ bitterly opposed the
idea of raising wages.
Locally, the movement to raise the minimum wage in Los Angeles has been built on over
thirty years of organizing and activism. The city has a long history of ethnic diversity and
activism, though it has also been a place of inequality, racial injustice and wealthy elites.
Opposition to labor rights and improved wages has been particularly fierce in the city’s
dominant industries, such as the entertainment, tourism, technology and shipping
industries. Social and economic justice activists have spent years building worker and
community power, and developing new and innovative strategies to impact public policies
and working conditions for the city’s most vulnerable workers. Key to their success was
the interplay between grassroots and worker-led organizing and policy campaigns. At
22
times organizing advances and the increasing power of union and social actors helped
open the path for policy reforms, while at other times policy reform fights succeeded in
changing the rules of the game, altering the balance of power and opening space for
additional organizing gains. This interplay evolved, marked by several distinct and
groundbreaking stages, which built upon each other over time.23
In the 1980s, social activists in groups such as Jobs with Peace began to look at local
development issues, seeking to divert money from military investment to local
investment. At the same time, the national decline in union density began to be felt more
acutely by HERE, SEIU and other service sector unions, who began seeking out new
organizing opportunities to rebuild lost membership. The well-known Justice for Janitors
campaign developed during this time in Pittsburg, PA and would be imported to the much
larger city of Los Angeles to be implemented on a massive scale. As well, immigrant
communities in the city, always numerous but now increasingly well-established and
vocal, began demanding a voice in city politics. As these and other groups sought ways to
have an impact on the economic well-being of Angelenos, relationships formed among the
multiple actors seeking to improve the wages, benefits and working conditions of low
wage workers in service sector industries. Given a very conservative and anti-worker
climate at the Federal government level in the 1980s, local social and labor organizations
sought to impact policy-making in an arena where they could have an impact, at the city
level. It was during this time that the first Living Wage campaign began, seeking to set a
higher minimum wage level for those contractors and service providers bidding on city
contracts relying upon public funds.
In the 1990s, progressive community organizations and unions began forming coalitions to
work together on the social and economic issues in low wage and vulnerable communities
in Los Angeles. In this decade, as large American cities like LA courted developers and
large employers for their investment dollars, unions and communities pushed to ensure
that these projects would create an inclusive model of development. This decade also
saw the emergence of new, progressive organizations, many focused on supporting
communities of color. The immigrants´ rights movement was in full swing, and many
communities in African-American South LA mobilized after the Rodney King riots in 1993.
While many of these organizations sought racial equality and justice, the economic
marginalization of inner-city neighborhoods was recognized as a root cause as well.
23
The following section is based largely upon documents from the LAANE website:
http://www.laane.org/what-we-do/projects/, as well as the Castellanos, Patricia Interview by Elizabeth
O´Connor on May 22, 2015.
23
As such, the matter of access to quality employment in marginalized communities became
a unifying issue, and newly formed coalitions of labor and communities began to focus on
winning structural change as well a change in public policy, leading to the Community
Benefits Agreement (CBA) strategy. Community benefits agreements are negotiated
agreements which place conditions on development projects receiving public subsidies,
preferential tax incentives or other incentives to ensure these investments are managed
in a way that fosters quality employment for the communities they impact. CBAs may put
labor conditions on development projects, mandate card check recognition for unions, set
hiring quotas for local workers and stop hiring set-asides for suburban white workers, set
environmental regulations, establish low-income housing quotas or other requirements
that respond to local community concerns. (UCLA and Economic Roundtable, 2015)
While the CBA strategy was successful in many cases, in a city the size of Los Angeles its
overall impact was limited, given the vast number of development, construction and
investment projects occurring at any one time. However, by forcing a public discussion
about what investment and development should mean for local communities and local
workers, the CBA process changed the terms of the debate about the responsibilities that
the city government, developers and employers have towards communities. As well, the
local political game gradually changed, as communities and unions engaged with policymakers around these projects, developed relationships and built political power. While in
numerical terms the number of workers benefiting from CBAs may have been modest, in
institutional terms the decision-making apparatus was significantly altered as the
executive and legislative branches of the Los Angeles government had to start taking
community and employment issues into account in their public commitments.
By the 2000s, progressive organizations were seeking to address the issue of employment
quality by sector or industry, exploring strategies to transform the labor markets of entire
industries. At same time, a revitalizing labor movement was considering how to shape
the public policies that regulate key industries, in an effort to facilitate unionization and
allow worker representation to emerge. Most of the successful campaigns incorporated
both policy and advocacy strategies with workers organizing strategies, and many
unfolded over a long time period, spanning more than one city administration. One
example of an industry-wide strategy was the “Clean and Safe Ports Project,” an eight year
campaign led by the Los Angeles Alliance for a New Economy (LAANE), in coordination
with the International Brotherhood of Teamsters and community organizations.
The trucking industry in the United States was largely deregulated in the 1980 under the
Carter and Reagan Administrations, resulting in the emergence of the independent
24
contractor model of employment, where truck drivers became the owner operators of
their own “business,” or truck. Trucking companies could then hire workers per job, while
trucker assumed all the associated risks and expenses, such as insurance and the loan to
purchase the vehicle. This evolved into an extremely precarious employment situation,
and as owner-operators, workers were also now nonunion. Simultaneously, organizations
representing communities near the ports of Los Angeles and Long Beach had identified
trucking through their communities as a major source of air pollution. Most of the
trucking industry, as it crosses state lines, is regulated by federal entities, however
trucking routes between the LA-Long Beach Ports to the inland warehouses is one
segment that fell under local jurisdiction. As such, both local communities and the
Teamsters found this a strategic opportunity to affect both environmental and labor
standards of the trucking industry labor market, at one of the largest ports in the world.
The coalition of organizations proposed an ordinance for the port which would require it
to adopt environmental standards for trucks entering the ports, while also requiring that
trucking companies using the port hire their drivers directly. The policy battle was initially
won, then suffered a setback when the issue of hiring truck drivers in a traditional
employer-employee relationship was lost in a Court of Appeals. however, the policy
campaign meant that truck drivers now had a deeper awareness of their rights as workers
and the problems of being an owner-operator, as well as a giving them a way to express
their voice. Moreover, both the LA and Long Beach Port management and the trucking
companies have a new awareness of the ability of grassroots organizations and union to
mobilize and influence policy-making. As a sector-wide campaign, the ports ordinance left
an altered set of rules for the political game and a new balance of power.24
This campaign is a good example of successful industry-wide campaigns in Los Angeles and
beyond, which intentionally involve both reforms in public policies aimed at improving
worker standards and organizing activity to increase the power of workers. These two,
mutually-reinforcing strategies mean that policy reforms can create space for later
organizing and organizing activity can help change the institutional balance of power to
allow policy reforms. In the ports campaign, both occurred over the course of eight years,
and continue.
24
In the next stage of the Clean and Safe Ports Project, the Teamsters commenced union organizing in the
largest trucking companies operating at the port. An organization of workers from multiple trucking
companies, with the support of the International Longshoremen Workers Union, have developed creative,
militant techniques leading to short port shutdowns on several occasions. Today, two of the trucking
companies are unionized, two others have agreed to neutrality during an organizing campaign and
organizing activities continue. This represents about 5% of the approximately 10,000 workers in the ports
trucking industry. In other industries a “tipping point” is usually reached at about 30% of a workforce,
where enough union presence exists in a labor market to affect wage and benefits levels industry-wide.
25
During these same years, similar industry-wide campaigns have occurred in the recycling
and waste industries, among drywall hangers, in the cleaning and private security
industries, the hotel and tourism industries, the airport, and others. In 2014, shortly after
a lengthy, industry-wide campaign reached an agreement for a city-wide minimum wage
increase to $15.37 for all workers in the hotel industry in Los Angeles, after winning similar
gains in first the LAX airport corridor, then in Long Beach, is when the city´s mayor
announced his initiative for a city-wide minimum wage increase.
2. Chronology and arguments
After the long history described above, the minimum wage campaign in Los Angeles was
relatively short, reaching victory in just nine months, unlike previous campaigns which
often extended for several years.25 On Labor Day in September 2014 after the LA-wide
hotel minimum wage was passed by the city council in July 2014, Mayor Eric Garcetti
announced an initiative to raise the city’s minimum wage to $13.25 by 2017. Community
and labor organizations responded that this increase was not enough, and pushed an
alternative proposal to reach $15.00 by 2020.
The increase was fought by most segments of the business community, including the Los
Angeles Chamber of Commerce. Especially virulent opponents were the city´s Restaurant
Association, the Central City Business Association and the Valley Industry and Commerce
Association,26 who, similar to business sectors in Mexico City, argued that the increase
would cause job loss for the city, create more off-the-books employment and expand the
underground economy. They also drew upon the fear of the unknown, noting that the
city was moving into “an experiment,” that could lead local businesses to relocate to
surrounding areas.
In contrast, the proposal was strongly supported by the Los Angeles Central Labor Council,
along with a very wide coalition of community organizations, grouped under the name
Raise the Wage. While the Labor Council provided significant resources and played a
leadership role in lobbying for the wage increase, Raise the Wage produced a sign-on
letter supporting the increase, signed by over 250 membership-based organizations, and
coordinated walks and other mobilizations.27 Union and community groups were joined
25
Castellanos, Patricia. Interview by Elizabeth O´Connor. Personal Interview, May 22, 2015.
L.A. Times, Los Angeles' minimum wage on track to go up to $15 by 2020, May 19, 2015.
http://www.latimes.com/local/lanow/la-me-ln-minimum-wage-hike-20150518-story.html#page=1
27
http://www.laraisethewage.org/coalition
26
26
by one segment of the business community, the LA Business council, who came out in
support of Mayor Garcetti’s proposal, albeit with conditions.28 While major media outlets
did not necessarily endorse the increase, the LA Times published an editorial the day after
the ordinance passed, calling for the creation of more employment sources for jobs with
wages over the new $15/hour minimum.
Supporters noted that even a $15-hour minimum wage does not constitute a living wage
in the high-cost area of Los Angeles, leaving minimum wage earner still unable to access
affordable housing in the region. However, they argued that it was an important step in
addressing persistent poverty and inequality in the city. The Fair Labor Standards Act of
1938 states that a minimum wage should be sufficient to support the “minimum standard
of living necessary for health, efficiency, and general well-being.” A full-time worker
earning $15-hour for a 35-hour work week, 50 weeks a year would earn $26,250 a year.
That amount is roughly twice the federal poverty-level threshold, depending on family
size, which activists stated could be considered a minimal standard for “well-being” in a
high-cost urban area like Los Angeles (UCLA and Economic Roundtable, 2015)
Supporters also argued that impact on the local LA economy would be overwhelmingly
positive. As in Mexico City, Los Angeles civil society actors sought academic support to
bolster their position. A study commissioned by the Central Labor Council and carried out
by UCLA and other researchers found that 78% of low wage workers in LA are in the
service and retail industries, and thereby working in segments of the economy that are
not for export. As such, 4 out of 5 workers are engaged in activities within the local
economy, without receiving enough pay to contribute to local economy as consumers.
Meanwhile the wage increase would benefit an estimated 811,000 workers, of which
454,000 work full-time and 357,000 part-time. Given that low wage workers - those
earning between $30,000 and $40,000 a year - spend an average 106% of their income on
consumption, a wage increase for the lowest-earning sectors of the economy has a bigger
impact on internal markets and local aggregate demand, than a wage increase for higher
income brackets. Assuming that virtually all of a minimum wage increase will go to local
consumption by 811,000 workers currently earning the $9.50 minimum wage, the study
concluded that an estimated US$7.6 billion of additional purchasing power will enter the
local LA economy from a minimum wage increase to $15-hour (UCLA and Economic
Roundtable, 2015).
28
http://www.latimes.com/local/lanow/la-me-ln-labc-minimum-wage-20150211-story.html
27
2.1. What was won?
In the end, the Los Angeles City Council approved the Raise the Wage coalition´s minimum
wage increase proposal of $15 by 2020. On May 19th, 2015, the Council voted 14-1 to
instruct the City Attorney to draft an ordinance, which will then return to the City Council
for a final vote and approval by the Mayor´s office. The agreed upon timeline takes into
account that the State´s minimum wage is already slated to increase to $10 in January
2016. The City ordinance will then raise it to $10.50 by July 2016, with $1 each successive
year until it reached $15 in 2020. See Figure 10.
More importantly, from the point of view of employment quality activists seeking
structural change, are the reforms on how the minimum wage will be set in the future and
its enforcement. After 2020, the minimum wage in LA will be tied to inflation (currently
averaging 2.3%) and a new agency, as yet unnamed, has been created to enforce its
application, with the participation of community and labor organizations given a legallyrecognized role in monitoring and enforcement.
Organizations in favor of the minimum wage increase ceded certain key elements of their
proposal in order to reach agreement within the City Council. The most significant was
the requirement to include a number of paid sick days guaranteed for low-wage workers.
In the interest of compromise, activists agreed to have that legislation considered in a
separate, future vote.
Another point of conflict which emerged was the matter of tips-only employees. In many
parts of the United States, tips employees such as waiters are exempt from minimum
wage laws. The Restaurant Association and the Center City Business Association sought at
both the city-level and the State-level to pass bills which would exempt tip employees
from minimum wage ordinances, though initiatives in legislatures at both levels failed to
pass.
3.
What make this initiative emerge now and why was it successful?
In contrast to Mexico City, in Los Angeles, the move to raise the minimum wage was not
sudden change in policy, rather it was the continuation of a process to improve
employment opportunities in the city. Nonetheless, the shift away from industry-specific
organizing and policy campaigns to a focus on broader labor institutions such as the
minimum wage does represent a new stage in worker advocacy, and may be attributed to
a variety of developments.
One basic across the United States is growing levels of issue salience. Given the
downward pressure on the middle class income nationally, 40% of Americans today
28
identify themselves as part of the lower class or lower middle class, the highest rates of
self-identification with income levels in decades. As such, 76% support raising the
minimum wage (Kelly, 2015).
Another development is growing city-level leadership in finding policy solutions to
economic and social ills. Public pressure to raise the minimum was unable to seek an
outlet at the federal level, given the current paralysis in Washington DC which has made it
nearly impossible to address wages, immigration, or many other issues over the past
decade in the United States. Obama may support a minimum wage increase, but his
Executive office has been hamstrung by a highly dysfunctional Congress – recent sessions
of Congress have been the least productive in history. Therefore, cities are increasing
finding ways to impact matters of national importance at a local level where possible, and
taking the lead in developing policy solutions.
Unfortunately, the centralist structure of the Mexican regime impeded a similar scenario
in Mexico. While the Mexico City government did show at least rhetorical leadership in
fomenting a national debate on wages, and city-level predecessors have show leadership
and innovation on other issues such as emissions control and social policy, in the matter of
wage policy controlling political bloc of the PRI and PAN at the Federal level, along with an
obsolete tripartite system, was able to legally suppress the local initiative.
The key overarching explanation for the relatively quick victory of the minimum wage
campaign in Los Angeles was that, unlike the situation in Mexico, it was preceded by 30
years of building grassroots power, through previous strategic city, community and
industry campaigns, as well as earlier localized minimum wage campaigns. Particular
reform demands in public policies and grassroots organizing efforts were chosen to have
mutually complementary effects, as well as to gradually change the balance of power in
the local political game.
4.
The Political Game: Los Angeles
4.1 Institutions and the rules of the game
The City of Los Angeles is a Mayor-Council-Commission form of government, as originally
adopted by voters of the City of Los Angeles in 1925 and reaffirmed by a new Charter in
the year 2000. A Mayor, City Controller, and City Attorney are elected by City residents
every four years. Fifteen City Council members representing fifteen districts are elected by
the people for four-year terms, for a maximum of two terms. General Managers of the
various City departments are appointed by the Mayor, subject to confirmation by the City
Council. The basic law of the government of the City is found in the City Charter. In 1999,
the voters approved a new City Charter, which provides for a mayor-council type of
29
municipal system, the Mayor being the executive branch and the Council the legislative.
It also created a Citywide System of Neighborhood Councils. The goal of the Neighborhood
Councils is to promote public participation in City governance and the decision-making
process. 29
Within the city electorate, numerous studies have examined the demographic and
political shifts in LA, particularly the rise of the Latino voting bloc (cite: Barreto, etc).
While the degree to which this bloc consistently unites interests with African American,
Asian and other ethnic bloc votes is debated, what is unquestioned is that progressive and
Democratic organizations have been more effective in Los Angeles than in other regions of
the country (the American South, for example) in registering new, qualifying immigrants
as voters and channeling them into their voter turnout system. Overall, minority voters in
LA may be marginalized economically, but still represent an important voting constituency
for city elected leaders.
4.2. Actors and incentives
4.2.1. Government
At a local level, Democratic Mayor Garcetti is the key figure in LA city politics. He shares
some characteristics with his counterpart in Mexico City, Miguel Angel Mancera, as they
are both relatively young (in their 40´s) with significant academic achievements. Garcetti
received a PhD from the London School of Economics. Garcetti’s family is from Mexico,
his grandfather immigrated to the United States after his own father, an Italian immigrant
to Mexico, was hanged in the Mexican Revolution. Garcetti ran for Mayor and was
elected in 2013, after a decade on the LA City council. His campaign was endorsed by the
American Federation of Teachers and other key segments of the city´s labor movement, as
well as other progressive organizations, and keeping that electoral base is a important
incentive in his relatively consistent support for minimum wage and other employment
quality policies.
The 15-person LA City Council is predominantly Democratic and voted to support the
minimum wage increase 14-1. Debate over the issue was reported as being some of the
most intense the Council has seen in years (LAT, 2015), and supporting the wage
ordinance likely cost some business community support for some council members.
However, highly mobilized constituencies across the city created the incentive for council
members to be responsive to their positions, given a history of successful campaigns
around related issues in communities and industries across the city.
29
http://www.lacity.org/city-government/about-city-government
30
At a Federal level, President Obama has been generally supportive of most, though not all,
initiatives that would increase minimum wages in particular industries, labor markets or
nationally. For example, he responded to years of campaign pressure from the Service
Employees International Union and other unions, with an executive order raising the
prevailing wage among federal contractors, though he declined to back the same union{s
campaign to reclassify large groups of homecare workers to make them eligible for certain
wage and labor protections. In general, the Obama administration has responded to
mixed incentives, on one hand requiring financial backing for Democratic electoral
campaigns, including his own, but also needing the backing of trade unions for their ability
to mobilize key voting blocs, especially among low wage voters and voters of color. While
many (not all) Democratic members of Congress support increasing the minimum wage
nationally, the Republicans who control Congress have prevented the issue from reaching
a vote this year.
The main dynamic for the Executive branch, therefore, has been to follow and support the
policy innovations and wage initiatives of city and state policy-makers, rather than lead
them. This Federal-following-Local policy reform dynamic has been strong in progressive
policy-making, but is increasingly working in a conservative direction as well. A new
movement is developing to encourage cities to pass right-to-work and other laws which
limit union power even in closed shop states,30 as well as bans or repeals to prevent cities
from passing additional minimum wage or any other ordinances. In Oklahoma, the state
just passed a law eliminating all city and municipal level ordinances, after the town of
Denton, TX passed an ordinance to ban the controversial practice of fracking.31
4.2.2. Social actors
Again we start at the local level, recognizing that Los Angeles has been one of the nation’s
most active and diverse areas for working class organizing and innovation. A wide range
of Latino and Asian immigrant organizations, African American organizations,
neighborhood and community organizations, environmental groups and worker centers
for non-union workers. In addition, a revitalized labor movement has been active and
relatively successful in organizing new groups of workers in the service sector and
segments of non-traditional employment, such as home care and childcare. Finally, the
movement, while diverse, has a history of coalition building, successfully linking
environmental, community development, social and racial justice and labor issues to join
30
http://www.heritage.org/research/reports/2014/08/local-governments-can-increase-job-growth-andchoices-by-passing-right-to-work-laws , http://www.thenation.com/article/191857/are-cities-next-frontrights-war-labor
31
http://www.npr.org/2015/05/26/409671989/oklahoma-lawmakers-pass-measure-preventing-localfracking-bans
31
forces around strategic policy reforms. Organizations such as LAANE, Green Jobs for All,
the Partnership for Working Families and others choose issues campaign that both
advance organizing goals as well as structural change, and address several issues at once.
The incentives for unions and social organizations in supporting a minimum wage increase
were not the traditional ones for trade unions, in the sense that they would not gain
members or additional dues income from the wage ordinance. Rather, unions found the
campaign to be a strategic investment in coalitions that have or will support their other
campaigns as well as an investment in structural change that would facilitate future
organizing and collective bargaining. Moreover, most union members thought an increase
in the minimum wage was a just goal, and had family members who were low wage
workers that would benefit.
At a Federal level, most Los Angeles based organizations are linked to a national network
of minimum wage coalitions. Many of the national organizations drew from previous
experience in Los Angeles, using the LA city procurement ordinance from the 1980s and a
model in developing similar initiatives in other cities and municipalities. Therefore, while
the Los Angeles organizations were instrumental in leading a national movement, the
presence of a national movement also reinforced and supported the advocacy efforts in
LA.
Other national service industry campaigns, such as Fast Food Forward led by SEIU,
to raise wages in the massive fast food industry held demonstrations, strikes and civil
disobedience actions in 100 cities helped a create a national debate on wages. This
national movement had every incentive to see a successful example of a city-wage
minimum wage ordinance emerge in LA.
The business community in Los Angeles was strongly opposed to a minimum wage
increase, particularly among industries and employers who relied upon low wages, such as
those in the service sector and the hospitality, hotels and restaurant businesses. While
other large LA industries such as entertainment and the high-tech industry benefit from
low wages in general, they were also sensitive to their public image and pressure. In all,
the majority of the business community had a self-interest in preserving low wage levels,
but it was tempered by the fact that key sectors of the local economy already paid higher
wages due to previous campaigns and other key LA industries were unlikely to relocate or
compete with companies from other surrounding areas, softening the impact of a
universal wage ordinance for any given employer.
32
Conclusions
As we have seen, in Mexico City, the initiative to raise the minimum wage was successful
in sparking an important national debate and in many ways the battle of ideas was won, in
the sense that there is now nearly universal consensus that wages in Mexico have not
kept pace with increases in productivity and that they are contributing to the nation’s high
poverty and slow growth rates. However, this is of little concrete benefit to minimum and
low wage- workers in the country, as the political game at the Federal level effectively
prevented a change in wage policy.
Meanwhile, in Los Angeles the campaign was a groundbreaking success, where close to
one million minimum wage workers will see a real change in their incomes, as wages rise
from USD$9.25 to USD$15 between now and 2020. In addition, structural change was
achieved in changing how the minimum wage is to be set and enforced in the future, with
a permanent and legally established role for unions and other social actors in the process.
At the outset of this paper, we set out to answer the following research questions: Given
the lack of action by Federal governments on developing proactive wage policies, due to
either inertia or opposition to the idea, can cities compensate by developing their own
minimum wage initiatives? Particularly, which factors limit or facilitate the ability of local
governments to develop new policy approaches to increase minimum wages for the most
vulnerable workers? How does the political game, including the formal and informal rules
of the game and the incentives and preferences of both State and non-State actors,
impact the success of local initiatives?
In analyzing the case studies of Los Angeles and Mexico City, we can make the following
observations that help us begin to answer these questions.
1.
State vs Federal Dynamics.
There are significant differences between the United States and Mexico in terms of
centralism and federalism, especially related to wage policies. In the United States, while
the Federal government has been consistently opposed to raising the minimum wage –
under Regan, Clinton, Bush, even during the first Obama administration, state and local
governments had a degree of flexibility in developing their own policies. Moreover, it was
mounting local pressure that has moved the Federal government to cautiously address the
minimum wage now for the first time since 2007.
Meanwhile in Mexico, labor and wage policy is still very centralized, though some recent
developments open the question as to whether small steps towards local autonomy are
33
possible. The San Quintin success in raising the wage for workers in a given locality and a
given industry could create space to develop a national campaign, if used strategically.
While the UNT and other organizations, national and international, have declared support
for the new union and the agreement they have won, to build upon these gains it will be
necessary for workers to be freed from the restrictive presence of government affiliated
trade union centrals. In addition, it remains to be seen whether civil society organizations
in Mexico seize upon the opportunity to invest time and resources in a national
movement to raise the minimum wage.
In this sense, one lesson from the events of 2014 in Mexico is that it will be necessary to
change the rules of the game. Brazil and Chile in Latin America, the U.S or Germany, allow
the minimum wage to be set by the Legislative Branch, or other elected and plural bodies.
In Mexico there are varied proposals for institutional reforms that should shift the power
to set wage policy from the CNSM to the Legislature, proposal that will need to be
considered in the near future (PRD-UNT, 2002, 2012).
2.
Government Incentives
While the new Mexico City government had sufficient incentives to renovate the
conservative labor policies it has followed since 1997 despite identifying as a progressive
government, and that it drew upon relationships with international policy and academic
experts to present a well-founded, gradual and flexible proposal in order to negotiate
successfully with the Federal government, at this national level a different set of
incentives were in play. Not only was the CNSM the only body authorized to establish
minimum wage levels, the Federal government, with the help of their allies, also held a
majority in the Senate and could interrupt initial steps such as de-indexing wages, allowing
a restrictive wage policy to continue.
This analysis shows the importance of both structural as well as contextual factors, and
the role of agency in the design of labor policy in the Mancera Administration. It also
largely explains why this campaign, unlike others from the Mexican left, was not merely a
matter of slogans, nor radical, but was well-supported technically in an effort to attract
support from a broad segment of society. However, despite the flexibility and gradual
nature of the proposal, aimed at generating negotiations on the issue, it was unable to
awake interest from the national government.
3.
Interplay between grassroots/worker organizing and policy
campaigns.
As seen in the progression of smaller campaigns in Los Angeles, organizing activity and
policy reforms are mutually reinforcing goals. Sometimes organizing among unorganized
34
workers and the increasing the power of union actors helps open path for policy reforms,
while at other times policy reform campaigns can change the rules of the game, altering
the balance of power and opening space for additional organizing.
In Mexico City, the minimum wage initiative could be seen as successful, if it is the viewed
by political and social actors as a first step towards building a movement. It is now up to
social actors to take the space the initiative has created and push further. In other words,
Mancera’s minimum wage proposal has succeeded in changing and across Mexico there is
now widespread agreement that the minimum wage is too low and has not kept pace with
increases in productivity. The question today is, what groups of workers can use this to
their advantage? For example, could organizations of domestic workers, or the
Gasolineros use this to advance their rank-and-file worker organizing?
Or, could
Telephone Workers Union, one of the stronger independent unions, negotiate with
employers for a national call center minimum wage, or living wage? Similarly,
organizations in Mexico City could reach out to the San Quintin workers to build
coalitions, or support them in expanding their demands for higher wages in other regions
or industries of the country. As we have seen, the issue impacts beyond those who
receive the minimum wage toady, as an artificially low minimum wage affects the entire
wage structure across the economy. The minimum wage level acts as a brake on
contractual negotiations, and today we see that nearly half of salaried employees earn
less than three minimum wages and with this barely meet the poverty line.
In Los Angeles, unions and social actors were skilled in using small or localized organizing
successes to open larger policy and structural reforms, and to use limited policy advances
to launch additional organizing efforts. In Mexico, recognizing this interplay and broader
applicability for individual successes will be necessary to open the way to gradually change
the political game in the long run.
4.
Campaign duration.
While the minimum wage campaign in LA was relatively short, the campaigns that
preceded it were long, something without an equivalent in Mexico. Luce posits that
successful minimum wage campaign in the United States are those that have endured
over a long period of time, in order to build a sufficiently strong movement to reach their
goal (cite: LUCE). The successful minimum wage campaign in Los Angeles built upon a
very long timeline. Grassroots organizing started in the 1980s with demands and goals
that reflected the power of union and social actors at that time. Campaigns with modest
policy goals lasted an average of 2-4 years, and some worker organizing campaigns lasted
much longer. Organizations in Los Angeles developed long-term plans for institutional
changes, while also seeing each smaller campaign - with its own plan and invested
35
resources - as a step in that direction. Defeats and compromises were absorbed
adjustments to long-term plans, without meaning a plan was abandoned.
For example, if the first initiative for a minimum wage increase in Mexico City had the
immediate goal of changing public perception about the issue and opening a dialogue
about jurisdictional limitations in addressing wage policy, then Mancera’s initiative may be
seen as a success. However, success in the form of a minimum wage increase for workers
will require a long-term commitment and the mobilization of social actors who will
continue to press for wage reform.
5.
Presence of grassroots and social actors.
The push for an increase in the minimum wage in Mexico City was essentially a political
initiative led by political actors, with little engagement from grassroots or union actors. As
the incentives of political actors change frequently, and political actors themselves often
change, this makes it difficult for the sort of long-term, sustained effort that will lead to
lasting policy change. In contrast, the Los Angeles campaign stemmed from presence of
grassroots and social actors who were independent from the political process, making it
more likely that demands for structural change lasted beyond a particular administration
or campaign cycle.
Moreover, civil society participation and the presence of mobilized organizations are
necessary to ensure that policy reforms are enforced. For example, part of the Los
Angeles victory was not only an increase in the minimum wage but also the establishment
of a new government agency tasked with enforcing wage laws, with the participation of
unions and community organizations.
5.1. Investment by grassroots and social actors
The actors supporting the minimum wage proposal were moreover willing to invest time
and resources to the campaign. Many Raise the Wage coalition activities were funded by
allied trade unions, who’s members would not directly benefit from the wage increase but
who saw a potential over the very long-term in improving the climate for collective
bargaining by creating changes in the local labor market and prevailing wage standards.
These organizations had also to develop significant strategic, campaign and mobilizing
capacity with which to manage an effective campaign. While in the United States, an
autonomous and organized civil society helped compensate for the relative weakness of
the labor movement, this has not occurred in Mexico. This is reflected in the fact that
there has been no real campaign around wages either inside or outside the labor
movement, despite the extraordinarily low wages in the country.
36
5.2. Political weight of grassroots and social actors
The relative political weight of the previously mentioned organizations meant that many
political actors in the legislative and executive branches, and even segments of the
business community, also found their incentives and preferences aligning with minimum
wage increase supporters. This is particularly true in an electoral system which allows reelection, leading elected political figures to consider the preferences of key constituencies
as well the positions of their political parties or other influences. This is a particularly
strong contrast with the electoral system in Mexico, where reelection will be a new factor
in the next election in 2018, but until then has not been allowed.
At the same time, political opposition to the minimum wage increase from the business
sector was strong, but not overwhelmingly so. Previous campaign activity had neutralized
key segments of the business community, for example within the hotel industry, the real
estate services industry and others, because existing negotiated agreements meant they
were already paying wage levels of $15 or more. Moreover, business interests were not
favored in as overt a manner as in Mexico, were they were institutionalized in the CNSM
through employer and allied union representatives.
6.
The incentives of grassroots/social/labor organizations:
Key to any campaign for change is the presence of actors actively seeking that change. In
the case of Los Angeles, unions and community organizations are dues-based
organizations with elected leaderships, whose power derives from increasing their
membership size and delivering benefits to their members (goals which occasionally
conflict). While political relationships exist, they are not a major source of power for
grassroots organizations, and deriving financial resources from political or employer
relationships is prohibited. As union density declined in the United States, unions found
themselves at a distinct disadvantage within the status quo, and had every incentive to
challenge it - pursuing aggressive organizing campaigns to rebuild membership, seeking
structural political change, and changes in wage and employment policies.
In Mexico and Mexico City, the model of union and social organizations relies heavily on
political relationships to secure negotiated agreements and, to an extent, financial
support. The leaders of labor and social organizations are more likely to be the result of
the status quo. While changes in the status quo could increase their membership or
improve working conditions for their membership, their more immediate source of
support is usually from political actors or employers and they have few incentives to
challenge the political status quo. As such, many unions opposed a minimum wage
increase in Mexico and even the independent unions who eventually declared support for
the initiative did little in the way of committing resources or energy to the effort.
37
This matter of incentives and motivations of unions is somewhat different than the
argument that is often presented about a lack of union democracy in Mexico. While it is
true that unions in the United States are generally more representative and democratic
than many Mexican counterparts (allowing for exceptions on both sides), union
democracy has often supported the status quo in the United States, with members
preferring that union resources be used to defend current CBAs, rather than go towards
strategies like minimum wage campaigns and organizing in new sectors. However, many
union leaders, viewing that their power over the long term will reside in membership
growth, have challenged these views. It has been process of internal change, spurred by
the sources of funding and power that, while difficult, has led to innovation, while such a
process has not occurred in Mexico.
38
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