Innovation in policy-making in
city governments: Openings to
change minimum wage policy in
Mexico City and Los Angeles
RDW July 2015, Geneva
Graciela Bensusán (UAM-X)
Elizabeth O’Connor (Special Advisor to the Mexico
City Labor Secretary, PhD Candidate at CIDE)
Table of Contents
I. Introductory section
1. Research Question(s)
2. Theoretical framework
II. The minimum wage initiative in Mexico City
1. How did the movement start and what did it accomplish?
2. What changed and why?
3. The limitation of the campaign: apparent consensus; few results
4. The Political Game: Mexico City
III. The minimum wage campaign in Los Angeles
1. How did the movement start and what did it accomplish?
2. Chronology and arguments
3. What made this initiative emerge now and why was it
successful?
4. The Political Game: Los Angeles
IV. Conclusions: comparative perspective
Research questions
1. Given the lack of action by Federal governments on
developing proactive wage policies, due to inertia or
opposition, can cities compensate by developing their own
minimum wage initiatives?
If so, which factors limit or facilitate the ability of local
governments to take such action?
2. How does the political game, including its formal and
informal rules, as well as the incentives and preferences of
the actors in the game, impact the success of local
initiatives?
Conclusions
1. State vs Federal
2. Government incentives
2. Interplay between grassroots/worker
organizing and policy campaigns.
3. Campaign duration.
4. Presence of grassroots and social actors.
• 5.1. Investment by grassroots and social
actors.
• 5.2. Political weight of grassroots and social
actors
6. The incentives of grassroots/social/labor
organizations
Research strategy
• Comparison of two cases, Mexico City and Los Angeles,
using the analytical framework of the political game in
each city (framework developed by IDB and others).
• This framework is rarely used at the local level where the
political game may be just as complex, due to
 interplay between national and local governments
 complex local politics in today’s global cities.
In each city we will look at the main:
• federal and local institutions which shape the game,
• leading actors – government/social actors who play the
game,
all while examining a key aspect of labor policy: the
minimum wage policy.
Similarities between DF y LA
• Size, an economy rooted in the service industry, large
groups of vulnerable, low wage workers and both have leftleaning city governments operating in a more conservative
federal environment.
• 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).
• Both countries have a decreasing rate of union and
collective bargaining coverage, with trade union density at
around 10% (though in Los Angeles it is slightly higher at
14.8%), making the minimum wage an even more
important tool in addressing problems of poverty and
inequality.
Differences between DF and LA
• In the United States today, 29 states plus WDC have set their
minimum wage above federal levels, plus 21 cities and counties,
and President Obama has supported a minimum wage increase
(though it was blocked by a Republican 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.
• While in the United States, particularly in Los Angeles and
other cities, there have been dynamic campaigns for decent wage
levels for decades, in Mexico the effort to address the minimum
wage is a recent phenomenon promoted by the local government
of Mexico City since May 2014.
• We are interested in observing the political game and
the arenas, processes and actors involved in
setting wage policy, by examining their incentives and
the interactions between different level of state
intervention.
• We also hope that the lessons provided by the case of
a North American city (LA), with a long history of
successful campaigning on labor issues, gives us tools
to improve upon the more modest results achieved in
Mexico.
Theoretical Framework
• The description of the political game framework draws heavily
from IDB authors (Scartascini, Spiller, Stein, & Tommasi, 2011).
• A simplified set of elements within the policy-making process are
considered here, including the policy-making arena and its degree
of formality, adaptability or rigidity,
especially relevant when considering local vs federal jurisdictions
• 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.
The policy-making game in cities
Actors in the labor policy sub-system:
• The Executive/Local Government, typically the Mayor and Cabinet.
 Political incentives: If directly elected, eligible for reelection, a Mayor will have a different
relationship with constituents (private sector, unions or CSOs) than if installed via political
party negotiations.
 Economic incentives: Metropolitan areas compete within the global economy to attract
foreign investment. Its pursuit may restrict policy options locally, particularly around wages
(Sassen, 2001).
• The Federal Government
 Has policy preferences about its major cities, which are important national economic
motors.
 If is has a different political orientation than of the local government, may be obstructionist
• Non-State actors
 Employers and businesses are represented in the political game either directly or
through interlocutors such as chambers of commerce, industry associations and others.
 Workers may be represented by organized labor unions. Those who are informal or not
unionized 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.
Institutions and Arenas of the policy-making process: How
these players interact, by what rules and who dominates
the game
Institutions
• National level: relevant institutions may include the nation’s
constitution, electoral system or legal code.
• Local level: relevant institutions may include the electoral system,
the economic model and the societal norms of clientelism.
Arenas
• Special challenge for metropolitan governments: funding sources
and legal jurisdictions may mean that their policy-making process
occurs at both the federal and local levels.
•
Degree of formality and functionality of official policy-making
mechanisms. Do they work? Do citizens express preferences
through voting, lobbying around policy matters or in the courts? Or
through street protest and extra-offcial means?
Our Hypothesis:
• The rules of the game and the preferences and
incentives of the actors playing the game explain
the differences in the results, to positive effect in
Los Angeles, and to negative effect in Mexico.
Minimum Wage Initiative in Mexico City:
• Was a shift in local labor policy, promoted by the city Executive to improve
his public image and earn national presence, without a previous campaign
by unions or civil society actors
• Local social policy – the city government’s area of innovation and identity as
a progressive government - had reached levels where increased spending
was no longer feasible and provided diminishing political results
• In this context, Executive (Mayor) had incentives to change wage policy in
the city, advocating a minimum wage increase.
▫ Including, sufficient incentives to assume the cost of likely failure on substance,
given legal restrictions on Mexico City government in setting minimum wage
policy (in both formal and informal rules of the game).
• Absence of (organized) social actors invested in improving wages.
Moreover, presence of unions interested in maintaining the status quo,
supportive of federal government’s restrictive wage policy (corporatist
legacy).
Minimum Wage Initiative in Los Angeles:
• Minimum wage ordinance was product of a sustained, organized and broad
grassroots campaign.
 The Mayor’s 2014 proposal came on the heels of a campaign victory by hotel
workers who won a minimum wage increase for their sector after a long
campaign and industry negotiations. Organizations responded with a more
ambitious proposal, and won.
• Trade unions, community and immigrant rights organizations and others had
been organizing and lobbying to improve wages and job quality in LA for over
30 years, investing resources and developing political relationships.
▫ They gradually reshaped the city’s political map and institutions, building power
within the policy-making process.
• Therefore, Executive and other political actors had incentives to respond to
grassroots demands, resulting in substantial piece of legislation rather than a
rhetorical position.
Results:
Mexico City:
Minimum Wage initiative was successful in sparking an
important national debate.
Today, nearly universal consensus that wages in Mexico have
not kept pace with productivity and that they are
contributing to the nation’s high poverty and slow growth
rates.
However, no change for low wage-workers. The political
game at the Federal level prevented a change in wage policy.
Los Angeles:
Campaign was groundbreaking success. 800,000 minimum
wage workers will see better incomes, as wages rise from
US$9.25 to US$15 by 2020.
Also, long term structural change achieved by tying the
minimum wage to inflation in the future, and with a new
agency created for enforcement, including a role for unions
and other social actors in the process.
In comparing case studies of Los Angeles and Mexico
City, we make the following observations:
1.
State vs Federal Dynamics. Differences between the US and
Mexico in terms of centralism and federalism, especially related to
wage policies. In the US, while the Federal government has been
opposed to raising the minimum wage, state and some local
governments could develop their own policies. Not so in Mexico.
Also, it was growing local pressure that moved the US Federal
government to cautiously address the minimum wage now for the
first time since 2007.
2.
Government incentives. Both structural and contextual factors
were important, as was the role of agency in the design of labor
policy in the Mexico City. Government incentives explain why this
campaign was more than a slogan (unlike many in Mexico) and was
grounded in technical knowledge and designed to appeal to a broad
segment of society. However, despite a moderate and gradual
proposal, it was unable to overcome the status quo preferences of
the Federal government.
3. Interplay between grassroots/worker organizing
and policy campaigns.
•
In LA, the progression of smaller campaigns shows that organizing activity and
policy reforms are mutually reinforcing goals.
•
Sometimes organizing the unorganized and the increasing the power of union
actors helps open path
for policy reforms. Conversely, at other times
policy reforms can change the rules of the game, alter the balance of power and opening
space for additional organizing.
•
In Mexico City, the minimum wage initiative could be a step towards success if
used by political and social actors as a first step towards building a larger movement,
taking advantage of the space created by the initiative and national debate.
•
Are there groups of workers ready to use this to their advantage?
•
In LA, unions and social actors were skilled in using smaller but strategic
organizing successes as stepping stones to larger policy and structural reforms, and to
use modest policy advances to launch additional organizing efforts.
•
In Mexico, recognizing this interplay and broader applicability for individual
successes will be necessary to gradually change the political game over time.
4. Campaign duration.
• The minimum wage campaign success in LA unfolded
over a long timeline, unlike in Mexico.
• Grassroots organizing started in the 1980s with demands
and goals that matched the (limited) the power of union
and social actors at that time.
Campaigns with modest policy goals lasted an average 2-4
years, some worker organizing campaigns lasted over a
decade.
• Single industry or community campaigns were built
upon by LA organizations to develop long-term plans for
institutional change. Defeats and compromises were
absorbed as adjustments to that long-term plan, but not
to its abandonment.
5. Presence of grassroots and social actors.
• The minimum wage effort in Mexico City was a political
initiative led by political actors, with little engagement from
grassroots or union actors.
• The incentives of political actors change frequently, and
political actors themselves often change, making them unable
to sustain the sort of long-term effort that will lead to lasting
policy change.
• In contrast, the Los Angeles campaign stemmed from
existence of
grassroots and social actors who were
independent from the political process, meaning 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.
5.1. Investment by grassroots and social
actors.
• The actors supporting the minimum wage proposal were
willing to invest time and resources to the campaign.
• Many Raise the Wage coalition activities were funded by
trade union allies. Though their members did not
directly benefit, creating changes in the prevailing wage
standards of the local labor market would improve the
climate for collective bargaining.
• These organizations had developed significant strategic
skills and mobilizing capacity, for a more effective
campaign.
5.2. Political weight of grassroots and social actors.
• The relative political weight established over time of the LA
unions and community organizations meant that many
political actors in the legislative and executive branches, and
even segments of the business community, found their
incentives and preferences aligning with minimum wage
increase supporters.
• This was assisted by the institution of an electoral system
which allows reelection, leading elected political figures to
consider the preferences of key organized constituencies.
• In contrast, the electoral system in Mexico has not allowed
reelection (though it will be a new factor in the next election
in 2018).
6. The incentives of grassroots/social/labor organizations
• A campaign for change needs the presence of actors demanding that change.
• In the US and LA, 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, and
deriving financial resources from political or employer relationships is
illegal. So changing the status quo is often a positive change for them.
• 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.
• Though some changes in the status quo could increase their membership or
improve working conditions for members, a more immediate source of
support is usually from political actors or employers. This explains why
nearly all unions opposed a minimum wage increase in Mexico and even the
independent unions committed few resources or energy to the effort.
• It is notable that this matter of the incentives and motivations
of unions is 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 (with exceptions on both sides), union
democracy has historically often supported the status quo in
the United States.
• However, today many union leaders, seeing that their ability
to maintain power over the long term resides in membership
growth (organizing) are challenging status quo views.
• It has been process of internal change, spurred by sources of
funding and power that, while difficult, has led to innovation.
Such a process has not occurred in Mexico.
Conclusions
1. State vs Federal
2. Government incentives
2. Interplay between grassroots/worker
organizing and policy campaigns.
3. Campaign duration.
4. Presence of grassroots and social actors.
• 5.1. Investment by grassroots and social
actors.
• 5.2. Political weight of grassroots and social
actors
6. The incentives of grassroots/social/labor
organizations