With national policy likely to compound the income and wealth gap in the coming years, states and localities are fighting back.
Across the country, local jurisdictions aren’t waiting for federal action or corporate governance reforms to close the wage gap. In December, for example, the city of Portland, Oregon, passed an ordinance to raise the business tax on companies with CEOs who earn more than 100 times the median pay of their workers. Portland officials said the ordinance is the first of its kind in the country. And now, more cities and states are poised to follow suit.
“The huge divide in income and wealth has real-world implications,” Steve Novick wrote last October in Inequality.org. Novick sponsored the ordinance when he was on the Portland City Council. “Too many Americans cannot get a leg up,” he wrote. “Income inequality undermines the American dream.”
Portland city government projects the tax will raise $2.5 million to $3.5 million a year, which city officials have said will likely help pay for the city’s homeless programs.
Inspired by the living wage movement, Portland’s ordinance comes on the heels of decades of grassroots activism around the issue of wage inequality.
Starting in the 1990s, the failure of Congress to adequately raise the federal minimum wage gave rise to a prairie-fire movement of local activists pressing for local and state living wage ordinances. Living wage ordinances typically cover a segment of workers, such as employees of government contractors, while minimum wage laws cover all workers. By 2010, over 120 jurisdictions had passed local living wage laws, and at present, 41 jurisdictions have passed minimum wage laws.
“I expect this pay gap reform movement to spread like wildfire, just as the living wage movement did,” said Sarah Anderson from the Institute for Policy Studies. “I’ve gotten inquiries from over two dozen states and cities about how to establish a pay gap ordinance.”
Anderson lobbied the Portland City Council in support of the policy and testified at a public hearing. She has since compiled resources for communities interested in instituting a CEO-worker pay gap penalty.