Critics say that higher wages draw more qualified, educated workers and leave people with no and very low skills unemployed. Other experts say the job-loss factor is minimal, in the 1 percent to 2 percent range. It's unlikely, he says, but employers may fill new jobs with higher-skilled employees. Companies that hold contracts for labor-intensive services, such as janitorial work, may feel more impact, she says. Opponents say the cost of higher wages gets passed on to taxpayers in the form of higher bids on government contracts.
Advocates say the cost is more often shared between the public and private sectors.
An airport may be able to pass the cost of a living wage onto passengers because of the demand for air travel, but a nonprofit organization with a tight budget may force government to bear its cost. A key element, according to studies, is competitive bidding, economists say. If public contracts are competitively bid, then higher wages are more likely to be absorbed by competing companies. If contracts are single-sourced, there's no pressure to keep costs low. As for the impact on the larger community, living-wage laws are too narrow to cause much of a ripple effect, experts say.