HomeMy WebLinkAboutAgenda - 12-01-1997 - 9b ORANGE COUNTY
BOARD OF COMMISSIONERS
Action Agenda
item No. 01—b
ACTION AGENDA ITEM ABSTRACT
Meeting Date: December 1, 1997
SUBJECT: Living Wage Ordinance
DEPARTMENT: PURCHASING AND Public Hearing: Yes: No:
CENTRAL SERVICES Budget Amendment Reqd? Yes No
ATTACHMENT(S): INFORMATION CONTACT:
Pam Jones, ext. 2650
Report; May, 1997 Ted Abernathy, ext. 2325
Memorandum; September, 1997
Telephone Number-
Hillsborough 732-8181
Chapel Hill 967-9251
Mebane 227-2031
Durham 688-7331
PURPOSE: To provide an update and receive direction from the Board regarding
specifics of a living wage ordinance for Orange County.
BACKGROUND: In February, 1997, the Orange County Greens requested that the
Orange County Commissioners develop a living wage ordinance for the County. The
Board of County Commissioners directed the County Manager and the Economic
Development Commission to develop a report on the appropriate nature, scope and
practical implementation of a living wage ordinance.
The report provided a brief history of living wage ordinances in the United States. It
then discussed options for application of the ordinance and posed seven clarifying
questions for the Board to consider. Next, four methods for establishing a specific living
wage level were provided. Finally, management, enforcement, and impact were
examined.
This Fall, the staff received input from Commissioners regarding components each felt
were appropriate to be included in a County ordinance. Based on the information
received the following parameters have been developed as a starting point to discussing
specifics for the ordinance.
1. What should be covered by the ordinance? All County contracts in
excess of $25,000, including legal, accounting and construction contracts should be
included. Units of State and local government should be excluded, including University
contracts. Contracts with non-profits may be phased in, however, the staff should
survey our non-profit grantees to determine the impact of an ordinance first. Purchases
2 t' I
Y
should be excluded, but information should be gathered to determine the current salary
practices of our major vendors.
2. Should any local ordinance apply to companies receiving subsidies?
Yes, specifically those companies participating in the County loan pool and water and
sewer extension fund.
3. Which employees of contractors should be affected? Those working on
Orange County projects should be included. It is recommended that special situations
such as those participating for educational purposes be excluded (interns, co-op
students for example).
On a separate, but related issue, all Orange County employees full, part time and
contract employees, should be covered.
4. What is the appropriate living wage for Orange County? $8/ per hour.
5. What are the next steps? After receiving Commissioner input, the Board
should instruct the County Attorney to draft an ordinance, which would be available for
public comment at the next quarterly public hearing.
Following the public hearing staff will pull together a recommendation regarding the
administration of the ordinance for the Boards review. The administrative
recommendation will include a plan to educate vendors who may be subject to the
provisions contained in the Ordinance. July 1, 1998 is the suggested effective date for
the living wage ordinance.
RECOMMENDATION: The Manager recommends that the Board provide direction
regarding the specifics of the ordinance and direct the County Attorney to draft a living
wage ordinance for Orange County.
A Report Examining a Living Wage Ordinance
for
Orange County, North Carolina
Prepared May 1997
t -
A Report Examining a Living Wage Ordinance for Orange County North Carolina
Background and Report
In February 1997, the Orange County Greens requested that the Orange County Commissioners
develop a living wage ordinance for the County. The Board of County Commissioners directed
the County Manager and the Economic Development Commission to develop a report on the
appropriate nature, scope and practical implementation of a living wage ordinance.
This report provides a brief history of living wage ordinances. It then discusses options for
application of the ordinance and poses seven clarifying questions that the Board of County
Commissioners must address. Next, four methods for establishing a specific living wage level are
provided. Finally, management, enforcement, and impact are examined.
History
In 1906 Catholic priest Father John A Ryan, in his book A Living Wage.first articulated the
concept of a"living wage". The current movement began in the early 1990's with Father San
Lupico of Baltimore, who began noticing increasing numbers of working poor at his soup kitchen.
He and others formed a coalition of church-based organizations called Baltimoreans United in
Leadership Development (BUILD). Together with the American Federation of State, County,
and Municipal Employees and an organization of low-wage workers called the Solidarity
Sponsoring Committee, they began work toward Baltimore's adoption of the nation's first living
wage ordinance in 1994. Appendix 1 is a copy of the Baltimore living wage ordinance.
Religious organizations, labor unions, and community activists have continued to promote the
concept in many other cities and states. In most cases, the local push to enact a living wage
ordinance has been prompted by local government downsizing and, more specifically, the growing
trend toward privatization. As cities attempt to control costs, many have contracted with private
businesses to perform work previously completed by local government employees. Workers in
privatized jobs usually receive lower wages and benefits, are temporary employees, and are not
unionized.
The national trend that has most contributed to the living wage movement is the declining buying
power of the Federal Minimum Wage. In 1970, the federally defined poverty level for a family of
three was $3100, and the minimum wage worker's annual earnings were $3200. As can be seen
in Chart 1, the minimum wage has failed to keep up with inflation. A full-time worker in a family
of three, earning minimum wage, now earns well below the Federal poverty level. The current
minimum wage is$4.75 per hour. Beginning September 1, 1997, the Federal Minimum Wage will
increase an additional 8.4 percent to $5.15 per hour.
Chart 1
EARNINGS AT MINIMUM WAGE vs. POVERTY LEVEL
$14,000
$1Z000
:.:
$io 000 .. :>;:>>>::>:::;;::;::::: >::.:.::...
$8,000 _.......
$6,000 :; . »>:;`..:;';;:::.':::::::`:;;' ;:;:':.,::...
.... ... .. . .........
f
.... . .
$4000
::..
:::>......
.;.:::.:<:.::: ..:..:::::::..:.::::::... ..
$z,000 :....:...:...::.:. ..
_.
.::........:::.:..::.:::..,
$o
t ANNUAL EARMNGSAT MIMMUN WAGE j
i
i FE>WAL POVERTY LEVEL (FAMILY OF 3) j
Since Baltimore first adopted its ordinance in 1994, several local governments have passed similar
measures, including Jersey City,New Jersey; Milwaukee, Wisconsin;New York,New York; and
Portland, Oregon. Other cities such as Boston, Los Angeles, Madison, St. Paul, and New Haven
are considering some action. Each city has passed unique legislation with key provisions which
differ. Some of the campaigns have been local. Others have been attempts to pass state-wide
legislation. Appendix 2 is a complete summary of local legislative efforts.
Application Of Living Wage Ordinance
How a living wage is applied locally varies from city to city. In all cases to date, the living wage
ordinance has applied to companies contracting with or receiving money from the local
government.
• Baltimore's ordinance requires"service and professional service
contractors to pay the prevailing wage as locally established."
• Jersey City adopted a more narrow ordinance that only applies to
businesses contracting with the city to provide"clerical, food service,
janitorial, and unarmed security services."
v w
• New York's code applies to "security, temporary office service, cleaning
and food services."
• Portland's ordinance applies to contractors supplying"janitors, security
guards, parking attendants, and temporary clerical assistance."
In other cities considering a living wage ordinance, the new minimum would apply to businesses
receiving local subsidies or tax abatement. For instance, in Minneapolis, where the proposal has
passed the City Council but is not yet enacted, businesses receiving more than $100,000 in
economic development incentives would be required to pay the locally established minimum wage
to all their workers. Several cities also are considering action which would require businesses
receiving tax abatement above a specified level to comply with a locally adopted living wage.
Another requirement that is usually part of a local effort is to ensure that all of the local
government's permanent and temporary employees earn in excess of whatever minimum living
wage is established. The action is viewed as a declaration of commitment by the local
jurisdictions.
Some questions that should be discussed and agreed upon by Board of County Commissioners
before arriving at any decision on implementation include the following:
1. What is a contract? Does a purchase of goods qualify as a contract, and if so, at what level
should purchases be considered? Orange County processes 3,000 purchase orders annually,
ranging from $100 to millions of dollars each.
2. To what type of contracts should the ordinance be applied?
• Construction: To date, living wage efforts have focused on service
contracts and have not applied to construction contracts.
• Legal and Accounting: Should the ordinance apply to legal or accounting
contracts, two of the largest service contracts which Orange County
currently has?
• Non-Profits: Should contracts with non-profit agencies be included?
Many non-profit agencies traditionally pay lower wages. Others, such as
the Triangle Residential Options for Substance Abusers program, use
unpaid or partially paid client labor. Still other non-profits, such as The
University of North Carolina, have little local control over their wage
structure. Most governments, if not all, have excluded non-profits from
living wage ordinances.
• Employee Benefits: Should an ordinance be applied to employee benefit
contracts such as health or life insurance? To date, no community has
included employee benefit contracts.
3. At what financial level should a contract be covered? Some communities considering living
wage ordinances have proposed considering only those contracts above a certain level such as
$25,000 or$50,000. Orange County executes hundreds of small contracts annually.
Appendix 3 is a list of current Orange County contracts above $5,000.
4. Should any local ordinance apply to com anies receiving local subsidies? Although Orange
County may not supply tax abatements, it has participated in two water and sewer expansions
for specific companies over the past 10 years. Orange County's current policy requires that
the company's average wage be above the local average wage, but does not set minimums.
Appendix 4, the Minneapolis-St. Paul Living Wage Policy, is an example of an ordinance that
addresses requirements for companies receiving local subsidies.
5. Which contract em llg=s should be affected? If a large company has only a few employees
working on an Orange County contract, should all of that company's employees be subject to
the Orange County's local minimum?
6. Should the residence of employees affected be considered? It is likely that many of the
employees affected will not be residents of Orange County.
7. Should any local ordinance apply to Orange Count+permanent and temRg[=mployees?
If the Board of County Commissioners were to adopt an ordinance, its impact on Orange
County employees would depend on the level at which the living wage was established.
Charts 2, 3, and 4 show preliminary estimates of the number of employees affected at specific
wage levels. Some of the temporary employees are high school students employed as library
pages, work-study students, and athletic assistants. Others are mostly clerical staff and
maintenance workers. For many temporary employees, the hours worked are very limited.
Chart 2
Orange County Temporary Employees
Hourly Rate Less Than $7.50
Department Number Of Employees
Aging 2
Board of County Commissioners 1
Budget 1
Cooperative Extension 1
Department of Social Services 1
Economic Development 1
Emergency ement Services 1
Finance 1
Health 1
Library 7
Personnel 1
Public Works 3
Recreation 16
Soil and Water 1
Sheriff's Department 1
TOTAL 39
Chart 3
Temporary Employees
Hourly Rate Greater Than $7.50 But Less Than $8.50
Department Number Of Employees
Aging 6
Department of Social Services 3
Emergency Management Services 4
Health 1
Information Systems 1
Land Records 1
Planning 5
Public Works 4
Register of Deeds 1
Revenue 1
Sheriff's Department 1
TOTAL 28
. I
Chart 4
Orange County Permanent Employees
With Annual Salary Less Than S8.50/Hour All Earn Above 57.50
Department Classification Total
A ' 9 CAT Driver 5
Health Community Health Assistant 2
Public Works Custodian 7
Public Works Solid Waste Center Operator 7
Recreation Recreation Program Assistant 1
Sheriff's Department Custodian 1
Sheriffs Department Jail Cook 1
TOTAL 1 24
At What Level Should A Living Wage Be Established?
Establishment of a specific monetary value for a living wage can be approached in many ways.
Each community which has enacted or tried to enact legislation has established a formula, picked-
a number, or empowered a local commission-and each has arrived at a unique"living wage,"
ranging from$6.10 per hour to $11.25 per hour. Some calculations have included:
• The amount needed to keep a family of 2, 3, or 4 above the federal poverty
level
• The amount needed to keep a family at a certain percentage(such as 10
percent or 20 percent)above the Federal poverty level
• Prevailing wages, similar to the Davis-Bacon requirements
• Historical Federal Minimum Wage inflation-adjusted to reflect today's
dollar value
• Budgeting actual local costs to try to determine the actual salary needed to
live locally, including factors for local housing costs
Orange County could develop a living wage amount using many different methods. Four different
methods are outlined below.
Method 1 - Federal Poverty Level
One method would be based on the federal poverty level. The 1997 Health and Human Services
Poverty Guidelines established the annual earnings needed for a family of specific size to meet the
threshold. Chart 5 provides the hourly rate for various size families using 2080 working hours
annually, assuming there is a single wage earner.
, J
/0
Chart 5
1997 Health And Human Services Poverty Guidelines
Number Of People In Family Minimum Hourly Wage
1 $ 3.79
2 $ 5.10
3 $6.41
4 $ 7.71
5 $ 9.02
Method 2 - Federal Poverty Level Adiusted for Local Cost of Living
A second method would be to index the federal poverty level using the American Chamber of
Commerce Research Association's cost of living index. The index provides an estimate of the
local cost of living compared to the national average. The latest figures available show Chapel
Hill's cost of living at 114.5 percent of the national average, or 14.5 percent more expensive. The
Raleigh-Durham region is indexed at 103.0 percent, or 3 percent more expensive. Chart 6 shows-
federal poverty levels, adjusted for the cost of living.
CHART 6
1997 Health And Human Services Poverty Guidelines
Adjusted For Local Cost Of Living age Per Hour
Number in Family Adjusted For Chapel Hill Adjusted For Raleigh-
Durham Region
1 $4.33 $ 3.90
2 $5.84 $ 5.25
3 $7.33 $6.60
4 $8.83 $ 7.94
5 $10.33 $ 9.29
In the first two methods, the minimum income needed to meet poverty guidelines varies greatly,
depending on family size. In the March 1997 Welfare Reform Update, the Orange County
Department of Social Services provided the information in Chart 7, which shows the size of
families currently needing temporary assistance.
Chart 7
TEMPORARY ASSISTANCE For NEEDY FAMILIES
G
300 ...- :
..::.......
O 250 ;> :`;: »`:::.>:>
W
N
200 ' '
O
ISO -
..........
O
100
Q:
W
m
so
z
0 ,
1 2 3 4 5 8
NUMBER OF PEOPLE IN BUDGET
Method 3 - Federal Minimum Wage Adjusted•
A third method would be to apply the minimum wage. The historical minimum wage, adjusted to
today's dollars, totals $6.56. Adjusted to the cost of living for Chapel K, it equals $7.51.
Adjusted for the region, it equals$6.76.
Method 4 - Local Wages
A fourth method would be to examine local median family incomes or percentages of income.
Chart 8 provides that information. These measures are sometimes used by local governments to
qualify families for subsidized housing.
CHARTS
1997 Income Limits for Raleigh- urham MSA fWage Per Hour
Family Size 1 2 3 4 5
50%Median $ 8.80 $ 10.05 $ 11.32 $ 12.57 $ 13.58
60%Median $ 10.56 $ 12.06 $ 13.59 $ 15.09 $ 16.30
80%Median $ 14.09 $ 16.08 $ 18.10 $ 20.12 $21.73
Median $ 17.60 $ 20.10 $ 22.64 $25.14 $ 27.16
Regardless of the method used, a consideration is that some ordinances also require fringe
benefits or an addition to hourly wages in lieu of benefits. Jersey City requires vacation and
health benefits for full-time workers. Los Angeles adds $1.25 per hour to the minimum if health
benefits are not included.
Many other methods could be examined. To establish a local living wage, the Board of County
Commissioners would need to determine its objectives, decide on a specific living wage amount,
and plan for how that amount might be adjusted annually.
Management And Enforcement
The ordinances that have been adopted detail the management, enforcement, and penalties for
each community. If Orange County decides to adopt living wage rules,the County Attorney
would craft a local ordinance that specifically addresses the processes and ramifications for failure
to comply. Each local government that has adopted a policy has placed the responsibility for
management and enforcement on departments or staff that do not correspond to Orange County's
current administrative structure.
In Orange County,the management of contracts and internal audit functions is contained in the
Purchasing and Finance Departments. Various other county staff are involved, including the
County Attorney, and the departments where contracts originate.
Managing a living wage ordinance includes the following components:
• Establishing and adjusting the specific wage
• Informing potential contractors of the new rules
• Gathering information about compliance
• Auditing information to ensure compliance
Following-up on contractors deemed non-compliant
How Orange County would organize and staff these functions would, in part,be dependent on the
scope and nature of the ordinance adopted. A narrow interpretation of which contracts would be
affected might allow the function to be absorbed by existing departments, with some additional
resources or a re-prioritization of goals. A more broad interpretation applied to many contracts
would necessitate examination of a new function area as well as additional staff and resources.
Impact On Orange County
The impact on local government is impossible to assess completely until the scope of a potential
ordinance is determined. The Preamble Center for Public Policy, an independent research and
public education organization based in Washington, D.C., has completed an analysis of the fiscal
and economic costs of Baltimore's ordinance in the first year. Baltimore's Bureau of
Management and Budget Research determined the total value of contracts affected by the
l3
ordinance to be$26.8 million of Baltimore's $2 billion budget. The Preamble Center analyzed 23
contracts totaling $19.3 million dollars that had been bid before and after the living wage
ordinance took effect. There was no significant rise in the costs of the contracts. The largest
single contract was for Public Pupil Bus Transportation in the amount of$14.5 million. With the
living wage ordinance, it rose 2.6 percent. Baltimore provided $121,000 for enforcement in the
first year. Appendix 5 is "An Analysis of the Fiscal and Economic Costs of Baltimore City
Ordinance 442", prepared by the Preamble Center for Public Policy.
Due to the preliminary nature, narrow scope, and the type of contracts considered in Baltimore,
little can be gained by using this model to predict how such an ordinance would affect contracts in
Orange County. In addition to the difference in the type of contracts which we have locally, our
economic situation is very different. Less unionization, low unemployment and a very strong
local economy could result in different responses than have been seen in Northeastern urban areas.
In Charts 9 and 10, the Personnel Department estimates the potential monetary impact if a local
ordinance were applied to Orange County temporary and/or permanent employees. For the
purposes of this example, living wage requirements are assumed at $7.50 or$8.50.
Chart 9
Living Wage Cost Estimate
Orange Coun Temporary Em to ees
At$7.50 At$8.50
Estimated Coun Cost to Lm lemem S 22,500 $45,000
Employees Affected 39 67
Departments Affected 15 20
Chart 10
Orange Coun Permanent Employees
At $ 7.50 At$8.50
Estimated County Cost to Implement -0- $20,000*
-Employees Affected -0- 24
Departments Affected -0- 5
*Sala;adjustment to employers earning below$8.55 only. Does not take into account other salary adjustments
which may be necessary to respond to salary compression arising from realigning the pay plan.
The overall budget impact will depend on how narrowly or broadly the ordinance is applied. In
any case, some staff resources and attorney will need to be budgeted. A more complete analysis
of costs can be developed when the scope and level of a living wage are agreed upon.
Summary
If the Board of County Commissioners decides to continue exploration of a living wage
ordinance, the following decisions need to be made.
• What kinds of activities should be covered by an ordinance?
• Should activities covered by an ordinance have a minimum monetary
value?
• Should an ordinance apply to companies receiving subsidies?
• Should an ordinance apply to County temporary and permanent staff.
• What is the appropriate amount of a living wage for Orange County?
Once these answers are agreed upon, the County Manager can develop a structure to administer
the ordinance and provide the Commissioners with an estimate of the budgetary and personnel
impacts.
APPENDIX I. I�
C:TY CF BAL_:MGR:
cr=NMCB NO.
(Council Bill No. 716)
AN OR7-NANCE concerning
PP`1AZ:1=NG WAGE _
FOR the purpose of requiring contracts for services,
including professional services, to ee n°oa-ft `e LLB
te hei—we and get,
_n=____ti_._ _c:t_-=_ rrovide for the ravment of a
rrevailinc wage.
B'_' repe_linc and reordaiZ_nc wit without amendments
r.=icle _ - Mayor, City Ccuncil, and Xun4cipal Agencies
S:b ti tle - Ccnt_acrs - Hours and Waves to be under the ne*:
headinc "Constrsction Contracts" -
Sect ion _S (F i_'-st pa.r ag:-apn) ._. ..
B`?timcre City Code (1963 Replacement Volume, as a=ended)
Article 1 - Mayor, Citv Council , and Municipal Acencies.
Su!:title - Ccntracts - Fours and Wages to be under the -new
he=ading "Service Contracts"
Section 26A
Ba l`:mere Ci tv Code f_98^3 Replacement t%olun. e . as amence_1
c=
ji ic.e
Section (4)
Baltimore C:tVr C_ta-rte: (196: Revision, as aaende=)
W-'Z?.ZAS, It is the vurrose of this Ordinance to erovide for
a rre_vailina minimum hourly wage rate for workers emmloved by
vendcrs who are awarded service contracts for certain services -
and
WFT7 t.S . It is the intent of this Ordinance to require
vendors who are awarded professional contracts to ray their ner.-
rrc`_essional em=lovees the mrevailina minimum hcurly wage rate_
rrovided fcr under t~is Ordinance ! and
�1AT10Ms GARTAL'QA�G►SS AGOEa SO flG'T41G LAW.
(1LAA=M U61ms rt ra`r 6�eu%4 w.
• !i_s cra _^ante wi 1' a i ....
so .,v, de for er fcr .ene..�
? r^ucn _tne`wacn Comm_gsion and the Board 0" Estimates in t'ie
same manner t'iat _the oreva_1__nc waee_for const':vct. on contracts
are enforced ; now, there Fore
SECTION 1. BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF
BAZ.=MORF, That Section (s) of the Baltimore City Code (1983 "
Replacement Volume, as amended) be added, repealed, or amended,
to read as follows:
A-R-11CLE 1 - Mayor, City Council, and Municipal Agencies
0 - Contracts - Hours and Wages
< CONSTROCT OK CONTRACTS
3 19 . Requirements for certain contracts with the City.
3 Each and every contract in excess of five thousand dollars
($5, 000. 00) (hereinafter referred to (the] AS "the contract")
made by the Mayor and City Council of Baltimore (hereinafter
referred to as "the City") , or on its behalf, with any person,
f i--= or corporation for: (1) the construction, reconstruction,
erection, conversion, installation, alteration, repair,
maintenance, renovation, razing, demolition, moving, removing,
grading, paving, . repaving, curbing, filling, excavation or any
*other operation or work to be done *or performed in, on, upon or
in connection with any building, bridge, viaduct, tux-mel, tower,
stack or other structure, airport, land, highway, pier, wharf,
sewer, . drain, main, conduit, machinery -or mechanical,- electrical
or other equipment r_
for said municipality; ':
. ,... _
contain the following provisions:
S='RVICE CONT-R.ACTS
26A. SERVICE CONTRACTS WITq THE CITY.
rA) AS USED IN THIS READING THE FOLLOWING TERMS RAPE THE
MEANINGS INDICATED UNLESS THE CONTEXT CLEARLY REOVIRES A
DI-Fr'RENT MEANING:
(1) "INDEX" ?BEANS TFE MOST RECENT AVAILABLE FIGURE
S7!ATEO IN THE PUBLICATION "POVERTY IN THE UNITED STATES" .
PUE LISRSO BY THE BUREAU OF THE CENSUS AND UPDATED ON AN ANNUAL
BA.SiS , WFICH DEFINES THE NATIONAL POVERTY LEVEL FOR A FAMILY OF
4 .
(2) "PERSON" MEANS ANY INDIVIDUAL BUSINESS ENTITY_
CORDORATION, PARTNERSHIP. JOINT VENTURE.
(3) "PREVAILING MINIMUM HOURLY WAGE RATE" MEANS THE
PATE ESTABLISHED BY THE BOARD OF ESTTMATES AS THE MINIMUM HOURLY
WAGE PATE THAT SHALL BE PAID A WORKER EMPLOYED BY A SERVICE
CONTRAC-rOR AND PROFESSIONAL SERVICES CONTRACTOR PURSUANT TO THE
FOFLw!ULA SET FORTH IN SUBSECTION (H) OF THIS SECTION.
N z 7 - APPENDIX 1.
a 1
( 4 � "S77- VICE CONTRACT" MEANT T. CO 477, ,C^ pr. e-r-vaTcO nv
""'� °� O1 '^ STG
Tars ?CARD OF ES . I"!ATE d .VIE RZZOM1d 'NpATI
TON OF Ttrr C.TY. .. ..
P'-RC''A.S 14G AGZNT AS A SERVICE CONTRACT TTTAT IS AWAROEO To A
sZRVICE CONTRACTOR.
(5) "SERVICE CONTRACTOR" MEANS T1?S' prRSON AWARDED A
CITY SERVICE CONTRACT AND INCLUDES ALL SUBCONTRACTORS OF SERVICr
CONTRACTORS.
(6) "S'cRVICE WORKER" MEANS ANY NON-PROFESSIONAL,
IMILOYS E OF A SERVICE CONTRACTOR AS DEFINED BY THE BOARS
ESTIMATES.
(B) 8 HOURS SHALL CONSTITUTE A REG.OA.P WORE DAY FOR ry
INDIVIDUAL WORKING DIRECTLY FOR ANY SERVICE CONTRACTOR OR
S:UICONTR.A.CTOR ENGAGED IN THE PERFORMANCE OF A SERVICE CON'T'E,AC^
(Cl EKPLOY ES OF SERVICE CONTRACTORS ST-TALL BE C7.ASS::77-M AS
SrRVTCE WORKERS OR NON-SERVICE WOR.Kc- A.S S?-CI=ICALLY FOP'*'t
IN TFE CONTRACT PP.SUA.NT TO THE CLASST"C3TTON SCtaDU:,F
ESTABLISHED BY THE BOARD OF ESTIMATES.
(D) (1) E 17, Y SERVICE WORKER S LALL BE ?AID NOT LESS OFTE*l .
7 A.N BI-WLEXLY AND WITHOUT SUSSEOUEN'T' DEDUCTION OR REBATE ON ANy
.A.CCOUNT (EXCEPT SUCH PAYROLL DEDUCTIONS AS APE DIRECTED OR
PERMITTED BY LAW, BY A COLLECTIVE BARGAINING AGRE"%MNI T OR BY
SPECIFIC WRlrr-EN AUTHORIZATION FROM AN EXPLOYEEI TRc FULL A.MOU-N-T
DUE AT THE TIME OF PAYMENT COKPUTED AT WAGE RATES NOT LESS TRM
TvE P.°.AILING MINIMUM HOURLY WAGE RATE ES'T'ABLISFED BY TF E BOARD
G= ES'^:'KATES AND SET FORTE IN THE SERVICE CONTRACT
(I) A SERVICE WORKER SHALL NOT BE PAID LESS TF%A.N
THE A-MOUNT ESTABLISHED BY THE BOARD OF ES'T'A=TES FOR THE
PREVAILING MINIMUM HOURLY WAGE RATE FOR A SERVICE CONTRACT
(I11 A COPY OF THE PREVAILING MINIMUM HOURLY WAGE
RATE FOR THE SERVICE CONTRACT $HA.LL BE KEPT POSTED BY THE SERVICE
CONTRACTOR AT THE SITE OF THE WORD IN A PROMINENT PLACE WHERE IT
CAN SE LASILY SEEN AND READ BY THE SERVICE WORKERS AND IT SHALL
BE SUPPLIED TO THE SERVICE WORKER AT TFE REQUEST OF TFS SERVICE
WOPiC'cR
-,;!THIN A REASONABLE PERIOD OF TIME AFTER THE REQUEST.
(2) THE SERVICE CONTRACTOR SHALL PAY THE SERVICE WORKn,
COMUNSA.T I ON AT THE OVERTIME RATES ESTABLISHED BY THE BOARD OF
ESTIMATES , WKICi SHALL NOT BE LESS THAN ONE AND ONE-HALF TIME
THE RE=AR HOURLY RATE OF PAY—FOR FOR ALL FOURS WORKED IN EXCESS OF
EIGHT HOURS IN ANY WORK DAY OR FORTY HOURS IN ANY WORK WEEK
(I) OVERTIME FOURS, HOWEVER. SHALL NOT SE
COKPENSATSO FOR MORE THAN ONCE AND OVERTIM!: SFA_LL BE PAID ONLY ON
THE REGULAR HOURLY RATE OF PAY AND NOT ON THE FRINGE BENEFITS .
OTHER PERSONNEL COSTS . OR THEIR CASH EQUIVALENTS.
(3) IN THE EVENT THAT ANY SERVICE WORKER IS PAID LESS
THAN ME COMPENSATION TO HUTCH THE SERVTCC WORKER IS E"tT=TLED TO
APPENDIX 1. _ lg •
` ' 1j J^ 7 7 S S7=70N . TNEr SZ7 jC.: collf j'PAC'.'r/�(
2
70 '^11Z S'±R'77CF' WOf2f!r.T2 FOR~^'!1T:�AMOUN'!'_ f)i;f' 1.ND SJ ', KF�'SRr^TT
3 PAY `TO ^.'1fr• CITY A PENALTY ,� r c S�ii�.
IN THE Ar Oc11. , O,• p PER DA.Y rOR E, Ac�
F.In OYEZ SO U111)F.RPA.TD PROVIDED (ioLEV??R , THAT 1.14r- PENALTY SisAT7
NOT BE ASSF.SSEQ FOR WAGr VIO.,ATiON° 'T'0 l+NY Ili IVTDUAL WHICH
�',MQU147' TO A TO'T'AL OF LESS THAN S1 TN AMY PAYROLL PERTOp EACH
7 DAY ' S VIOLATION SHA TAI. CONSTITUTE A S CPARA—, E OFFENSE
8 (4 ) ON RECOMMENDATION OF THE WAGE COMMTSST N WHEN A
9 StiRVICE CONTRACTOR HAS PAID FINES ON MORE THAN 3 SERVTCV —
10 CONTRACTS IN A 2 YEAR PERI00 THE BOARD OF ESTIMATES MAY PROHIBIT
:1 A SERVICE CONTRACT VENDOR FROM PARTICIPATING IN THE BID PROCSSS
12 FOR UP TO 3 YEARS.
13 (51 ANY SERVICE WORKER MAY WITHIN 1 Y -AP FROM THE DATE
:4 OF THE INCIDENT FILE A PROTEST IN WRITING WITH THE WAGE
:S COTr!MISSION OBJECTING TO THE AMOUNT OF WAGES PAID 00R S'cRVTC="S
.S PERFORMED BY THE SERVICE WORKER ON A SERVICE CON?'P.ACT A.S BEING
_7 LESS THAN THE PREVAILING MINIMUM FOU'RLY WAG-2—RATS FOR SUCH
_3 SERVICES .
9 (I) A SERVICE CONTRACTOR SHALL NO DISCHARGE
7 RE_DUCE THE COMPENSATION OR OTHERWISE DISCRIMINATE AG&:NST ANY
SUCH SERVICE WORKr'R FOR MAKING A COMPLAINT TO THE WAGE
? COM34ISSION , PA.RTICIPATING IN ANY OF ITS PROZEDINGS OR USING OF
3 ANY CIVIL_ REMEDIES. IN SUCH A CASE THE WAG9 COMTSSION MAY
PURSJA.NT TO SIMILAR PROCEDURES AS PROVIDED IN ARTICLE 19 SECTION
70 OF THE BALTIMORE CITY CODE (1933 R 4T VOLUME AS
AMENDED) ORDER APPROPRIATE RESTITUTION AND THE REINSTATEMM—M OF
SUCH E PLOYEE WITH BACK PAY TO THE DATE OF VIO TION
r?1 (?11 TFE SERVICE CONTRACTOR S y LL MATUTAIN PnVROT_,LS AND
RECORDS RELATING TF SRETO DURING TFE COUPSE OF TIT^ WORK ADD
SHALL--PRESERVE THEM FOR A PEPI00 OF TFt'REE YF 4 TFiEPEAr"T'ER FOR
,Ul SERVICE WORKERS WORKING DIRECTLY UPON TYE SERVICE CON'TIRACT
THS RECORDS SHALL CONTAIN TH=' NA�*E AND ADDRESS OF EACH SERVICE
WORKER, THE SERVICE WORKER"S CLASSIFICATION IN ACCORDANCE WITH
TFS CLASSIFICATIONS FIXED IN TAE CONTRACT THE NUMBER OF HOURS
WORKED EACH DAY, THE PREVAILING MINIMUM HOURLY WAGE RATE THE
GROSS WAGES . DEDUCTIONS MADE. ACTUAL WAGES PAID A COPY OF THE
SOCIAL SECURITY RETURNS AND EVIDENCE OF PAYMENT THEREOF A RECOPD
OF FRINGE BENEFIT PAYMENTS INCLUDING CONTRIBUTIONS TO APPROVED
PL.3_NS FUNDS OR PROGRAMS A.ND/0R ADDITIONAL CASH PAYMENTS AND
SUCH C-.---ER DATA AS MAY BE REOUTRED BY 'THE BOARD OF ESTIMA'T'ES FROM
T:YS TO TIME.—
12} THE SERVICE CONTRACTOR SHALL SUBM T 2 COMPLETE
COPIES OF THE PROJECT PAYROLLS AND TFE PROJECT PAYROLLS Or EACH
SUBCONTRACTOR CONSECUTIVELY NUMBERED NOT LATER THAN 14 DAMS
FROM THE END OF THEIR RESPE(=:VE PAYROLL PERIODS ONE COPY TO BE
SE14T TO THE CONTRACTING AGENCY THE OTHER TO THE WAGE COMMISSION
WHERE THE SAFE WILL BE AVAILABLE FOR PUBLIC INSPECTION DURING
RMMAR BUSINESS HOURS . THE PROJECT PAYROLLS—S-HALL CONTAIN THE
NAME OF THE PRIME SERVICE CONTRACTOR AND ANY SUCONTRACTOR IF
ANY A DFSIGNATTON OF THE PROJECT AND LOCATION THE NAME SOCIAL
SECJRII'Y NUMBER ANO OCCUPATION OF EACri E:Mpr OYEE Tf{F
D{S ISI bA AO M r
APPENDIX I. Iq
7(c Or �iculls W 0 P,K r"1 0
_LY F�y 7!l,� SF7
;%7 �777A GHT T:M7 ?,tM A7 Cv-, ) 7-,M.T: Ail-
7,11!:. j!CUpT.,y
WOPK71 PER PAY
7ir GROSS WAGES PA10 To 7'! SERVTZ.
T)T71, 7Cr) , NNO SUCH OTHTM DATA AS MAY PF MQUIRZO nY THI: BOARD OF
EST YATES-; FROM TIME TO TIMS. Tl i S PRIME SERVICE CON'"j'Lxlt*.CTCR SUL-4
BE 7ESPONSIBLE FOR THE SUBMISSION OF ALL SUBC014T?-A.C#rORSf PAYROLLS
COV'E7Z:NG WORK PERFORIJEO . EACH COPY OF THE PAYROLL SHALL BE
ACCOMPAN:EQ BY A STA.TEMENT- -SlGl'lEQ BY THE CONTRACTOR OR THE
SUBCONTIR.:kCTOR . AS THE CASE MAY BE , INDICATT-14G THAT THE PAV.RCL-,, _U
CORRECT, THAT THE WAGE RATES CONTAINED THERE:9 ARE NOT LESS TF-Zx
'THOSE ESTABLl SHED BY THE BOARD OF ESTMATES AS SET FOPT-n- IN THE
CONTRACT . TKAT THE CLASSIFICATION SET FOR':": FOR Er.CF SERVICE
WCP-vE'-' CONFORMS WITH THE WORK THAT TFE SERVICE WOPTER PERFORMED .
3 AND THAT THE SZRVTC!: CONTR.A=CR FAS COMPLIED WITF TFE PROVISIONS
OF TF:S- FEARING.
(3 ) 1? TFE S-ERVTCE-CONTRACTOP. 1S QELINOL'rNT IN
SUBM77TING ANY PAYROLLS , ?4CCESSZNG OF PA-RTIAL PAY-f-fENT EST:iwATtS
MAY BE FS:Q IN ABEYANCE PENO:NG REC77PT OF TFS PAY?CLLS - IN
A:C:T:ON , iF TFE CONTRACTOR IS iN SUBM:=:- v. c- ?Ay.:ZOT-I:ls .
TL:- cT?V7CZ CONTRACTOR AMO PAY TO TFS C:TY 't. -
PENALTY IN THE A14OUNT OF SIO -FOP 'EA.C:-' CALENDAR QA.Y -TR!.T THE
PAYROLL 1S LATE. - A PAYROLL SF.A.LL MEM THE COlf-g-�N=Q PkYROLLS 07
TF--- CQNTR.!.C'70R A.MO ALL SUBCONT?,ACTORS IN ANY ONE PAY PER700 .
() TFS CITY t.AY WM OLD OR CAUSE TO BE W:- TFFE'.rD t,.Ro?x M-Wt-
SZ-RVTCZ CONTRACTOR SO MUCH OF THE ACCRUED PAYUTNTSAS ?A.AY 'BE
CONSIDE'REC NECESSARY rl) TO ?A.Y THE S--VICE' WORM-?S M47LOYED BY
THZ SEPVT CE CONTRACTOR TFE 77LL AMOUNT 0-7 WAGES PZC�U:R p By TFE
RSV:S:ONS OF THIS HEADING ! A-NO (21 TO S;kT7S7'f AYY L:AB:::.ITY Cr
A-11TY CSNITRi.CTSR FOR ANY PENALTZES AS ?Rovlozo HEREIN. TF.E- C-LTY
Y.A.Y- ALSO W-;T�rollp 'PAYmENTS F'ROM ANY SIRVTCr CONTRACTOR EHO F2-S
EAT ,=Q To POSIR AM K==- POSTSO A COPY OF THE PREVAILING M:,xl:M VF
FOURLY WAGE RATE AS REQUIRED FZ7ZZ:N . UNTIL SUCH DEFAULT
HAVE B=EN CORRECTED.
f C.1 (1) IT SRALL BE THE RESPONSIBILITY OF TFE CON-MIC-aG
AGENCY To ?ROM?',"LY EXAIATNE ALL WEEXLY PROJECT PA.Y.RQ'.r.,LS SLT'-AM:TTE:)
Y CONTRACTORS WOPUKING ON A S-EPVTCE C N AC FOR
WITH THE PROVISIONS OF THIS F=-Ar):, NC A-NO TAE
?T- '="A.770NS PROMM-,QAT 0 IN PURSUANCE TFEREOF P...NTD TO RE-PORT LEI
TO THE WAGE COMMISSION.
( 21 TFE WAGE COMMISSION SHALL CAUSE INVESTIGATIONS TO
BE *,t CE AS MAY BE NECESSARY TO OETERMINE -WHETHER THERE FA..s '!E'EN
CQK?'r.lA.NCE WITH THE PROVISIONS OF THIS HEADING A-NO THE
REGULATIONS PROKULGATED THEREUNDER, AND CONTAINED IN THE
CONTRACT . THE SERVTCE CONTR.NCTOR SHALT, PERMIT RE?RESZNTA77-vr-S-OF
TFE CITY TS OCSFRVE WORK BEING flc7rnR,u,O UPON TFE WORK SITE To
:NTZ';vjZW SERVICE WORKERS AND TO FXMINE THE BOOKS AND RECORDS
TO TI!E PAYROLLS ON T!ir- PRCJFr--T BEING- INVESTICAME-162-70
Cor%rECTNFSS OF Cl.,%%SSTFTCAT.rSNS-AND ANY PAYMFN'7 OF
ANO OvErTimr., AS RF'IU7RFO . COMPI.AiNils CF
7rompT!,y A.N0
APPENDIX 1.
7 77 ,P C P Y A:�E RY C 7' W G T)Y 7� S�,A C- '77:. .
.1T7'7'
V
or 17!i7
OF 7HIS WAG - COMMISSION MAY Iss"ll
C31177L THE A'7TZN )A?4CZ AND OF wITNF
,SSES AND
Tli-- PRODUCTION OF BOOKS , PAPERS , RECORDS . AND QOCQ4E?4TS RI:LA.Tll,;G
7 'rO ?4YROLL RECORDS NECESSARY FOR HEARINGS , INVESTIGATIONS , AND
-
P'ZOCEE:)INGS - - ANY SUCH SUBPOE14A SHALL BE SERVED By THL SHERIFF or
BAL"I":MORE C:TY. IN CASE OF OTSOBEDIZNCS To SnPOINA , THE WAGE
COM14ISSION MAY APPLY TO A COURT OF APPROPR:A T JI-RISDICTION FOR
AN ORDER REWIRING THE AT-11-LMANCE- ANO TESTIMONY OF WITNESSES
IZ THE PRODUCT:ON OF BOOKS . PAPERS, RECORDS AND DOCUMEITM-IS . SAID
COUT :N CASE OF CONTUMACY OR REFTJSA.L- TO OBEY ANY SUCH SZ7mpoE%,TA..
AFTER NOTICE TO THE Pr-RSQN SUBPOENAED , AND UPON FINDING
--T%-A.T V
15 ATTENDANCE OR TESTIMONY OF SUCF WITNESS ES--CF THE PRODUCTION OF
:5 SUCF BOOKS , PAPERS, RECORD AND QOCtNENTS . AS THE CAS:-: -M.Ay BE ' :s
7 RELIVA-W7 OR NECESSA�Y FOR SUCH HEARINGS - tx—fV7ST:GAT:CNS OR
1-3 WAGE cotm-4:sSioN , MAY issuz AN ORI)EP REPU:R:*qG
THI A-TTINOA-INCS OR TSSTIMONY OF SUCF W:TN=-SS= OR THE PRODUCTION
OF SUCH ORDER OF COP�T KAY BZ ?rTN:S-ri.A.SL:- BY THS COU-.,-,.T AS
(i ) IN THE EVENT TFE BOA-go OF UT:M_=.Tgs SFALL
D Z-r'=-"ZY7VT , UPON REC0KY---V0AT:0N FROM TFS WAGE -C . . SS
OW: -:ON
NOTICE AND FZARZNG , THAT A.N'V. SERVICE CONTRACTOR F-AS FAZLEQ TO PAY
TI HE M7NZ?,rJK WAGE RATE OR XAS OTFERWISEV-1- Or-ATED TFI PROVISIONS OF
THIS HEADING AM TIAT SUCH ll-=RZ WAS iNTENTIONA.L. NO CONTRACT
SHALL BE AWA ' CONTBACTOR , OR TO AYY PERSON ---V.
-RDED TO SUCH SIRVICI
WHICH SUCH SERVICE CONTRACTOR HAS AN INTEREST UNTlL 1 YEAR FLAS
FROM. TFE DATE OF SUCH DETERMINATION . AND PROVIDED .
F1771TH17 , TT;LkT A-NY SUCH INTENTIONAL VTOLATI-ON OF TFS PROVZS70NE CF
THIS E.;.O:VG SF-2tLL BE A -PUNTSFEABLE U?ON COWV:C'-":, ON'
BY A F_NZ OF NOT MORE TtLllf 5300 . PROCEE07NGS BE 0R=' THE WAGE
CC?-Cv:S5"-70N SK;kL,, NOT BE CONSIDER_: A. PR:--C-QNo:TION TO CRIMINAL
P?0SZ:!:7:0V UNDER THIS FZ;kC:NC-.
(1) EFFECTIVE JULY 1, 1995 , TF%" IN:2:AL PRE-7 AILING
2 :T;7Y7u:i; FOUP,' Y WAGE RATE SHALL BE ESTABLISHED BY
RESOLUTION OF THE BOA-RD OF ESTIMATES.
(2) By DECMER 15 , 1995--MD EACH YMA-R Tt M'RS AFTER EY
CATS , THE WAGE CO"ISSION SHALL REC0M-v"ZVD TO TY BOARD 0=
ZST7XA7ES A RVISED PREVAILING M:NIYUM HOURLY -WAGE RATE FOR THE
NEXT F:SCAL YEAR. THIS RATE SHALL BE -BASED U?0N ViZ :NDEX -AY0
C27-ILL SUCH FACTORS AS TFE CCK-v:-SS':ON :S ALr7YCR:ZZ0 TO c--0NS:QE'R-
r3 ) THE ONGOING COAL IS TO A!;F!T-V- 7. '.RATE ;;'r:-:CH EXCEZ:DS
LEVEL AS DEFINED !N ;:-,HE INOEX. FOR THE FIRST FOUR
"SAPS OF TF=- r-- E
.u. FECTI:V DATE OF THIS ORDINANCE. TFE C:TYIS GOAL 71-7
TO P'LA-SE 7V AN FiOUP-rY -WAGE RATE: OF S-, 0 BY -- :SCAL YEAR 1900
US:NG -TFS FOLLOWING TIMETABLE,
F:SCAL YEAR WAGE F
.A77
1996
1997
APPENDIX I. c2l
iooa i . 10
loco X7 . 70
(1) AS A MATTER OF POLICY IT IS A CONTINUING GOAL TO SJBM-rm
BIDS BASED ON A 40 HOUR WORT{ WEEK FOR SERVICE WORYERS
(J) THE BOARD OF ESTIMATES AND THE WAGE COMMISSION SHALL
ADMINISTER AND ENFORCE THE PROVISIONS OF THIS HEADING IN R'A'E SA--Mr
M-A.NNER THAT THE BOAM OF EST114ATES AND THE WAGE COMMISSION
ADMINISTER AND ENFORCE THE PROVISIONS OF THE CONSTRUCTION
CONTRACTS HEADING OF THIS SUBTITLE.
(7) TFE PROVISIONS OF TRIS HEADING SgA.LL Ay LY
rXC'Lt S=LY TO SERVICE CONTRACTS AND Si•iALL NOT BE CONSTRU"D TO
CONFLICT WITH THE HEADING ON CONSTRUCTION CONTRACTS OR ANY
PROVISIONS ON CONSTRUCTION CONTRACTS AS PROVIDED IN TF:.S
SUBTT_TLE.
SEC. 2. AND BE IT FURT:F ORDA__YZO, That this ordinance
shall take e! ect on the 30th day after the date c- its
enact=ent.
Ce:-tified as duly passed this day
Oi (1rn
President alti=cre City Council`"—'
Certified as duly delivered to His Honor, the Mayor,
this DEC fl g 1994 day of 19�
C ��if Clerk
Approved this / �� day of
Mayn't-1 baltimcre City
Miff+CiC�^Cj.
�j
APPENDIX 1.
RESOLUTION OF TEX BOARD OF EST7.LATES
OF THE CITY OF BALTIMORE
16MRELS, The Mayor and City Council of Baltimore, acting by and through the
Board of Estimates, pursuant to Article VI, Section 2(a) and Section 4 of the
Charter of Baltimore City, 1964 Revision, as amended, has authcr:ty for fo:�ulat�zg,
dete:=in;ng and executing the fiscal policy of the City and over the avardiag awd
supervision of contracts; and
WHs.-4ZAS, the Baltimore City Council has passed City Council Bill No. 716,
requiring that City contracts for services provide for the pay�eat of a preva=:=ng
wage; and
WN:REAS, C=ty Council BL'I No. 716 provides that the 'Board of Estates shall,
by Resolution, establish a min:. = wage prograa with the goal of an hourly
wage rate of $7.70 to be phased in over a four—year period begi....ing in Fiscal °ear
1996; and
SAS, She Board of Estimates intends to provide for the enforeement of City
Council Bill No. 716 through the Wige Co==:ssion in the same manner as vith the
prevailiZg wage provisions for eonscruction contracts;
NOW, THEUTCUE. Be it resolved by the Board of Estimates of the City of Balti=c:
that. beginning with Fiscal Year 19960 the prevailing minimum hourly wage rate of
$6.10 shall apply to all professional and service contracts let by the Board.
DEC 14
APPENDIX 1. �3
RESvLW=ON OF BCARM CF ES:C:'.n:S�
OF ':aE CC:Y OP BALT:X1:RE
Brun—m►5, the Mayor and City Council of Ealtimcre, acting by
and t---ugh the Board cf Estimates pursuant to Article VI, section
4 of the Charter of Baltimore City, 1994 R vision, as amended, is
responsible for awarding contracts and supervising all pure as nS
' by the City; and
J
w.,_ .��}
E_k.d'�s, the Board of Estimates wishes to insur* that all
City ccrt_acta_s, subcoat=ac=c_s and their agents &r.d em:_cyees
ccnduct themselves in acccr .ance with established federal, state
and local laws .
NOW, T==-FORE, BE :l' R-:SOLV:.0 BY —. Boxi j m 0? z0of ='S OF
$A-TIMOR C_::', that the fc_?ow?n g policy, which has always been
i
a,plica!::e to City ccr.t_acts, be fo_,-ma:.ly adopted by this Bcar;j. to
a:p Iy to all City cont_acte:s, s•,t!:ccr_tracters and their agents and
e rloyees :
1. Contractors, subcontractors, and their agents and
employees may not engage in unfair labor practices as de:ined
under The National Labor Relations Act and applicable federal
redlations and state laws ,
2 . Contractors, s•,:bcentr actors, and their agents may not
threaten, harass, intimidate or.in any way-impede persons esrplo:ed
by them who on their own time exercise their rights to associate,
speak, organize, cr petiticn governmental of::eia'_e with the==
grievances .
APPENDIX 1. a�
s:::ccr.t�ac:or, c: e:: agents have violate: t:ie policy set
in this Resolution said contractor, or subcontractor w_11 be
' li:ied from biddin on City contra if
d_scua 5 y cis , and __ they are
currently completing contracts , they will be found in default ad
their contracts.
4 . A copy of th!s Resolution must be included in all City
contracts .
S . This Resolution Apr-lies to all City cont=acts entered
to a=ter the date cf its adoption and to each and every City
CoCntract, o_ subcont-act in effect c= the date o= its adopti o:.
and each depa_-tmert and agency ci the C:.tv, is charged with tae
respo:si'ZOi1 itv of to not-, !Ying a1z ;resent cC:traCtC:s, t
•v
i
3 _
s Rescluti ca takes ef!ect
Clerk Date
A;.p,oved JLs To Fc= JL:d .
LeS al 9-.:f!
ssey �1 s
Les_=e. 6. w=me= .
Principal Counsel
APPENDLX 2.
LIVING WAGE UPDATE
PREPARED BY WORKER OPTIONS RESOURCE CENTER
MARCH 1997
LIVING WAGE LEGISLATIVE CAMPAIGNS
State of Maryland Living Wage Pilot Contract for cleaning state- Announced 7/25/96.
Program owned World Trade Center Possible future expansion
requires payment of living to other state contracts,
wage of$6.60/hr. to depending on results of
employees providing pilot.
contracted service; rate
rises to $7.10 in 1997 and
$7.70 in 1998.
Baltimore, MD City Living Wage Requires service& prof. Enacted December 1994.
Ordinance(enacted) service contractors to pay $6.10 rate took effect July
min. rates of 1995, $6.60, July 1996.
$6.10, FY 1996 Dike to $6.10 approved by
$6.60, FY 1997 Board of Estimates, 12/96,
S7.10, FY 1998 to take effect July 1997.
$7.70, FY 1999, subject to
Bd. of Estimates approval.
Includes record keeping,
reporting, enforcement, &
remedial provisions.
Boston, MA Living Wage Requires city service Ordinance not yet
Ordinance(proposed) contractors& subsidized introduced; has majority
businesses to pay living council support&tentative
wage of$7.49/hr. mayoral support. Awaiting
results of impact study,
rumored to be favorable.
Rally scheduled for 2/8/97,
with likely introduction
short!y there after.
Chicago, IL Chicago Jobs&Living Requires covered service Introduced before City
Wage Ordinance contractors& publicly Council in May 1996.
(introduced) subsidized businesses to Mayor's opposition cost
pay workers min. of some support on Council.
$7.60/hr. Includes Ongoing organizing has
community hiring, record increase community&
keeping, reporting& political support.
enforcement provisions.
a�
APPENDIX-2.
Jersey City, NJ City Ordinance No. Requires businesses Enacted June 1996
96-063 (enacted contracting with City for
clerical, food service,
janitorial, &unarmed
security to pay workers
min. rate of$7.50/hr; and
vacation&health benefits
for full-time workers
performing contract
services.
City of Los Angeles, Los Angeles Living Requires certain Introduced to City Council
CA Wage Proposal concessionaires& service in July 1997. Passed
(introduced) contractors(?$25K)& Council(12-0, 2 members
recipients of certain not voting)on 3/18/97.
subsidies(?$100K)to pay Mayor has said he will
$7.25/hr. & health bens., or veto;veto required by end
$8.50 without. Provides of March.
for paid holidays, annual&
sick leave. Employers
required to promote ETTC
among low wage workers.
Includes enforcement&
remedial provisions
Los Angeles County, Living Wage Study& County to study policy Motion passed by County
CA Policy Options options for raising wages& Council, Fall 1996
(passed) benefits of employees of
county contractors
Madison, WI Living Wage Require city contractors to Campaign initiated
Campaign(developing pay workers 110%of
proposal) federal poverty level for
family of four& provide
health insurance.
'_Milwaukee, WI(City) Living Wage Requires certain city Enacted Nov. 1995. Initial
Ordinance(enacted) service contractors(>_$5K) rate set at $6.05/hr. Rate
to pay workers performing indexed on March 1 of each
contract services hourly year, now set at $6.25.
wages based on poverty
level for family of 3.
Includes reporting,
enforcement&remedial
provisions.
Milwaukee, WI Living Wage Current proposal requires Council action deferred
(County) Resolution indexed $6.25/hr. wage until April. Several
(introduced) floor for employees of competing proposals likely
certain county contractors before final action.
C)_7
APPENDIX 2.
Milwaukee, WI Livable Wage Requires that all MPS Enacted Jan. 1996
(school board) Resolution employees and employees
of MPS contractors be paid
min. of$7.70/hr.
Minneapolis, MN Recommendations of Recommendations of task Proposal passed City
the Joint Minneapolis- force include: Council 12-0 (1 member
St. Paul Living Wage 1) businesses receiving> not voting)March 7, 1997.
Jobs Task Force $I OOK in city econ. dev. Also provides for coverage
(enacted, St. Paul; assistance must pay wages of city service contractors,
pending, Minneapolis) set at 110% of fed. pov. to the extent possible,
level for family of four, within four years.
with annual indexing; 2) Authorizes study of
601/6 of jobs created to be whether pay rate should be
held by city residents; 3) 100%of poverty level if
cities to accord preference employer provides health
in assistance to business insurance. Sets goal of
engaging in enumerated 60%of new jobs set-aside
responsible labor relations; for city residents. Requires
& 4) cities barred from development of -
contracting out existing administrative guidelines to
public sector work unless implement Living Wage
contractors paid living Policy.
wage or current city e.
St. Paul, MN Same as Minneapolis Same as Minneapolis Modified set of
recommendations passed
unanimously in St. Paul of
1/2/97; requires 110%rate
where no health insurance
provided, & 100%rate for
businesses providing health
insurance; deleted
restriction on contracting
out and enumeration of
responsible labor practices.
Mandates 6016 hiring
preference for city
residents.
New Haven, CT Ordinance Establishing Would require city Initial City Council hearing
A living Wage for contractors(food on 3/5/97. Measure
Service Workers preparation, clerical, referred to committee,
(proposed) custodial, & security)to committee slated to take up
pay employees"living again on 3/24/97. Subsidy
wage", consisting of amendment also proposed
"contract wage" (120%of but its fate is uncertain.
poverty level for family of Mayor is opposed to
a8
APPENDIX 2.'
1 4) plus medical benefits overall proposal in current
i (group health insurance form, but open to
coverage or payment negotiation.
equaling 125% of annual
premium cost); requires
contractors to agree to
remain neutral in event of
union organizing campaign.
New York, NY City Code Amendment Requires businesses with NYC Council passed
Establishing Prevailing certain City contracts for ordinance 7/11/96; Mayor
Wage requirement for security, temporary office Guiliani vetoed 8/7/96;
Certain Service service, cleaning and food Council overrode veto
Contracts(enacted) services to pay workers 9/11/96. Comptroller
under the contracts developing prevailing wage
prevailing wages for list for affected
affected occupations, with occupations.
occupational rates
determined annually by city
comptroller& estimated to
range from$7.25 to
$11.25/hr. Covers
reporting, record keeping,
enforcement& sanctions.
Portland, OR 1996-98 Fair Wage Requires city contractors Enacted May 1996.
Policy for Formal supplying janitors, security Implementation for existing
Service Contracts guards, parking attendants, contracts commenced on
(enacted) and temporary clerical 7/1/96,with any required
workers to pay employees: contract amendments
$6.75, FY 96-97; $7.00, completed no later than
FY 97/98. Directs city 8/1/96. Implementation for
agencies to consider new contracts immediate
additional wage& benefit upon enactment.
criteria, e.g., leave&
retirement, benefits, child
care, in future RFPs. City
Office of Finance&Admin.
to recommend Community
Benefit Factors Package,
include. health ins. & other
bens., for possible inclusion
in future contracts.
Santa Clara County, Manufacturing Measure provides for tax Passed by County Council
CA Personal Property Tax rebate of property tax levy September 19, 1996.
Rebate; Santa Clara on manufacturing
County Growth&Job equipment for businesses
a9
APPEYDLY 2.
Creation Policy locating or expanding
(enacted) i within county if certain
conditions are met, include.
company pays wages at or
above competitive industry
wages (at least $10/hr.),
provides health care to all
permanent employees, has
history of fair labor
practices& other corporate
good citizen practices.
San Jose, CA Prevailing Wage Amendment to city's little Enacted 1991
Ordinance(enacted) Davis-Bacon prevailing
wage ordinance requires
service contractors with
contracts of$1000 or more
to pay prevailing wages for
work under the contract
Many other living wage&minimum wage campaigns have emerged in communities around the nation.
Living Wage proposals have been introduced in Burbank and West Hollywood, CA, and are in the works
in numerous other communities including Buffalo, Cincinnati, Dallas,Detroit, Nfiissoula, Oakland,
Pittsburgh, San Jose, St. Louis and the states of Pennsylvania, Rhode Island, Vermont, and Wisconsin.
APPENDIX 3
Values of Contracts Executed by County During FY 1996
Contractor Name $5,000-59,999 $10,000 -24,999 $25,000-49,999 over$50,000_
UNC: Health contracts
School of Dentistry X
Family Medicine X
Pediatrics X
OB-Gyn X
Central Services:
David M. Griffin Indirect Cost X
Deloitte Touche; audit X
Coleman Gledhill Hargrave; legal services X
DSS:
Raymond Spangler III; X
DOA
Vendor agreements for in-home care X
Tarheel Taxi X
Sarah E Carter(Taxi) X
Jail:
Orange Family Medicine; Jail med X
Public Works:
Cleggs Pest Control X
ASK Elevator Service(maint contracts) X
Criminal Justice Partnership Act
TROSA(drug rehab) X
OPC Mental Health X
Altemative Sentencing X
Hearth Foundation (Smart Start) X
Kellogg Grant:
JOCCA X
Piedmont Health Services X
Planning:
Jaeger Company; Preservation study X
Land Records/GIS:
Kimball; mapping
Personnel Benefits:
EAP X
Health Insurance:
NCACC/BCBS X
HealthSource X
Dental X
Life Insurance
Tucker Administrators X
APPENDIX 4. 31
Comm of the Whole - Your Committee rises and reporis that ;t has had under
consideration the recommendations of the Joint Minneapolis Saint Paul Living Wage
Jobs Task Force; and that the Community Development Committee has held a public
hearing thereon; and the Committee of the Whole now recommends passage of the
accompanying resolution adopting a Living Wage Policy. (Pe-.n No 2c25_4)
"i nn rc%,ed to s s t i tL;ta fcr Z cccc-_�y� - reso' :ti cn the :-c•i nt
;':i nrea':i 1$-S-6 rain 16 i% i nc i:ace C=s 1-ask F cr:_ . _I i cy as
SE. T.rtri i ri Fat❑ . . :rye C'i i .C2 �`1c City Clerk . SeCCnced.
_:st. ,,•eas, -; Nays, 6 as
SC:t.; Scnuista nair01iie. nn.
G)S -rcr:, 7 huI-tier, CaM;III I , B I C! r.a -i aril., ,'.cJcc .al
C rr- ►c-�s. _
RECORD OF COUNCIL VOTE (X INDICA,ES VOTE1
m C J U L U ( I(DN APPENDIX 4.
of the
CITY OF
MINNEAPOLIS
ay Niland_ Biemat. Campbell, Cherryhomes. Herron. McDonald, Mead and Thurber
Adopting a Living Wage Policy.
Resolved that The City Council of The City of Minneapolis adopt the following
Living Wage Policy:
Preamble: The following recommendations are made in order to assure that
whenever Minneapolis invests public funds in economic development projects, those
projects create the greatest number of living wage jobs possible for Minneapolis
residents. In addition to these specific recommendations, City policy makers must keep
the critical need for living wage jobs before them whenever they consider investing
public dollars in development projects.
1. City economic development assistance should require the creation or
retention of full time jobs with a living wage -
A) Except when any of the following conditions are met:
i) the cumulative assistance package totals less than
$100,000 in any one fiscal year, or
ii) the business receiving the assistance is a small business as
defined by Minnesota Statute 645.445; or
iii) the recipient is an intermediary, such as a community
development corporation or community bank, which serves
as a pass-through agency for the granting of assistance.
B) Assistance in excess of $100,000 in any one fiscal year will trigger
this provision. For the purpose of this provision, assistance should
be broadly defined as:
il land sales at less than a fair market price when the amount
of the reduction in the sale price below the fair market price
exceeds the assistance trigger,
cx-3=P'«.i f a
APPENDIX 4. 33
loans (staff will return with administrative guidelines on Iiow
loans will be treated under this policy);
bonds excluding conduit bonds (which are subject to existing
job linkage requirements);
iv) grants; and
v) City tax incentives.
City economic development assistance relating to projects in which the primary
objective is job creation/retention will be more clearly defined in administrative
guidelines.
2. Projects whose only public assistance is site remediation, investigation,
and assembly will be reviewed according to Principle Number 6 of this resolution and
will be exempt from monitoring and sanctions requirements.
3. Assistance packages above 5100,000 to non-exempted businesses will
have to create or retain a fixed ratio of jobs per S 100.000. Administrative guidelines will
provide suggested ratios by specific job creation or retention program.
4. A living wage will be defined and indexed as 110% of the federal poverty
level for a family of four. Staff are directed to return to the Council/Minneapolis
Community Development Agency Board of Commissioners with recommendations on
whether the living wage should be defined as 100% of the federal poverty level for a
family of four for businesses that provide employer-paid basic health insurance
coverage that meets administrative guidelines.
5. The Minneapolis Community Development Agency (MCDA) and the
Minneapolis Employment and Training Program (METP) shall work with assisted
businesses to establish a goal that 60% of new jobs created will be held by City
residents. These jobs should be advertised to the entire community including low-
income people through community sponsored organizations and/or job linkage
programs.
6. The City of Minneapolis will focus its job creation and retention assistance
at businesses which demonstrate a clear and ongoing commitment to the community by
providing living wage jobs to their employees and to residents where applicable by
giving priority to these businesses over businesses which have not traditionally paid
living wages.
7. All other things being equal and to the extent legally possible, the City of
Minneapolis will give preferential status for job creation and retention assistance to
businesses that engage in responsible labor relations. Responsible labor relations are
APPEMrx 4.
defined as neutrality on union organizing, providing a complete and accurate iist of
names and addresses of employees, reasonable access to employees and facilities
during non-working periods, voluntary recognition based on a card check demonstrating
that a union represents a majority of employees in a bargaining unit, and binding
arbitration on the first contract.
8. The City of Minneapolis, working through the MCDA, will impose
sanctions for non-compliance with these requirements.
9. The MCDA and the METP will report on compliance with these
requirements, as a part of the annual job linkage report to the City Council.
10. Work presently being performed by City employees may not be contracted
out unless the contractors pay employees performing that work a living wage or the
current City wage and benefits, whichever is higher.
11. To the extent legally possible, City contracts awarded for service will,
within four years, beginning in 1997, be awarded to contractors who pay at a minimum
a living wage for employees performing that contract service.
12. The Minneapolis City Council shall direct their purchasing staff to develop
by August 1997 policies and practices for contracting and purchasing of goods and
services to encourage the creation of living wage jobs.
13. The City of Minneapolis acknowledges the need for job readiness services
for some City residents who face serious social and economic barriers to employability.
Many of these residents need to establish a stable work history before they are able to
move on to living wage jobs. The City of Minneapolis exempts organizations whose
primary mission is to provide job readiness and training services, and whose primary
purpose of requesting funding is to provide those services.
14. The City of Minneapolis will work with the Metropolitan Council and other
appropriate state and regional agencies and the legislature to promote common
standards consistent along these guidelines for job creation and retention assistance by
public development agencies throughout the region.
15. Although our primary focus is on the creation of living wage jobs where
public assistance is received, Minneapolis cannot achieve its economic development
goals without a trained and work-ready workforce and adequate day care. Minneapolis
will commit to assist area businesses to obtain trained and work-ready employees and
to facilitate access to child care.
16. Administrative guidelines should be developed by the MCDA staff and
brought before the MCDA Board of Commissioners for review and adoption. These
guidelines should explain in detail how each of the policy recommendations will be
implemented. ?
APPENOIX 4. �5
17. Because job readiness is a primary challenge to the success of any wage
initiative, and because it is of importance to the residents of Minneapolis as well as to
businesses that develop here, the Minneapolis City Council directs the METP to report
annually on current job readiness, training and apprenticeship activities.
RECORD OF COUNCIL VOTE INDICATES VO
` COUNCIL NOT VOTE TO VOTE TO COUNCIL NOT VOTE TO SUST IN
I
MEMBER I AYE I NAY yOTIE� PI}�A1 SUSTAIN MEMOE?1 � AYE MAY VOTING I ASSENT �RRI � SUSTAIN
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cx-3m Ilw.tzlf3
APPENOLA �.
Baltimorc s
L* 0
iwng Wadoc
Law
An Analysis of the Fiscal and Economic Costs "
of Baltimore City Ordinance 442
Mark aeishrot
Michelle Sforza-Roderich
The Preamble Center
for Public Policy
- APPENDIX 5. 37
THE
PREAMBLE CENTER The Preamble Center for Public Policy is a new,
FOR PUBLIC POLICY independent research and public education organization
based in Washington, D.C. Preamble worker in partnership
BOARO OF D/RCC7CR5 with a broad networl of academics, policy professional and
PATRICIA BAUMAN, CHAIR community leaders who share our concerns about the
SAu~ FouNQAnoN Pig social, economic and political challenges facing the
United States.
JOHN BROWN CHILDS The Preamble Centers mission is to expand the
UNIVERSITY OF CALIFORNIA prospects for progressive, sustainable solutions to the serious
a
AT SANTA CRux economic and social problems cnfsonting America's
working families. Through research, analysis and policy
DAVID COaIEN
ADVOCACY 1NST7rLlTE �devel ment work we seek to challenge outdated and
unproductive ideas and assumptions and develop new
SU3AN COWELL analytical and policy approaches for the long term.
UN17F! Our uniqueness as an organization lies in our
commitment to bringing citizen organizations, community
NANCY M. DORSINVtLLE leaders and elected officials together with researchers to
THE Haw YORK
WOMEN'S FOUNaAnON hammer h out practical solutions to our collective dilemmas.
The Preamble Center's work is geared toward putting tools
JUAN A. FIeUEROA m the hands of citizen leaders and policymakers — tools they
PUERM RICAN LEGAL DEFENSE can use to challenge old policy orthodoxies, carve out new
AND EDUCAnoN FUND approaches, and communicate their ideas to a public
COLIN GREER increasingly eager for serious, workable alternatives to
NEW WORLD FOUNaAnON present social and economic policies.
PAULA RAYMAN
RADeuIrE PUNIC Mare Weisbrot is Research Director at the
PoucY/NST?nnr Preamble Center for Public Policy. He received his A.D. in
DIANE TAKVORIAN economics from the University of Michigan, with
ENV/RONMENTAL specialization in political economy and international
HEALTH CoANnoN economics. He bas written on these topics for both academic
and non-academic publications. He has taught at Eastern
°"" Illinois University and The American University.
STAFr Michelle Sforza-Roderick is Research Associate
at the Preamble Center for Public Policy. She received an
Scow NOVA MA from The George Washington University.
KALLz MAKALOU
MIGMELLE SFORzA-ROOERICK
MARK WEI3BROT
STEPHANIE GRAY
NAOMI WALKER
APPENDIX 5. . 38
Acknowledgments
The authors would like to thank Kalle Makalou.Dean Baker, Michael Ettlinger and John Schmitt
for their helpful comments. Scott Nova, as always,provided invaluable guidance and editorial
input.
APPENDIX 5. 3q
Baltimore's Living Wage Law
An Analysis of the Fiscal and Economic Costs of
Baltimore City Ordinance 442
Mark Weisbrot
Michelle Sforza-Roderick
Research:
Nicole Woo
Stephanie Gray
Naomi Walker
Prepared for
The Preamble Center for Public Policy
October 1996
APPENDIX 5. TD
Executive Summary
"Living wage" laws are under consideration in states and cities across the country. These
proposals are designed to raise the wages of very low-income workers by requiring state or municipal
contractors, recipients of public subsidies or tax breaks, or, in some cases, all businesses, to pay
employees wages significantly above the Federal minimum.
Wherever they have been proposed, living wage laws have been met with vigorous opposition,
primarily from business interests and some local political leaders. Opponents claim that a living wage
law will cause large increases in the costs of public contracts, lead to increased unemployment, cause
companies to drop out of bidding for public contracts, impose significant administrative costs, and
cause businesses in general to shun the locale in response to the law's ostensibly unfavorable impact
on the local business climate.
The Preamble Center for Public Policy conducted the present study of Baltimore's living
wage law in order to determine, based on the actual experience of one of the first cities to pass such
a law, whether the stated concerns of critics are or are not well-founded.
Baltimore City Ordinance 442 was passed in December of 1994. This ordinance mandated a
minimum hourly wage of$6.10 for anyone working on a city service contract, effective July 1, 1995;
this minimum increased to 56.60 per hour for contracts signed after July 1, 1996. The study involved
a review of the costs o4 and bidding for, city service contracts, interviews with city contractors,and
analysis of tax data relating to levels of business investment in Baltimore.
Among this study's main findings:
• The real cost of city contracts has actually decreased since the ordinance went into effect. For
the average contract (weighted by its share in the sample), this decline was statistically
significant.
• Of companies interviewed that held contracts before and after enactment of the law, none
reported reducing staffing levels in response to the higher wage requirements.
a The cost to taxpayers of compliance has been minimal,with the City allocating about 17 cents
per person annually for this purpose.
• The average number of bids per contract declined from 1994 to 1995, but this decline was
not statistically significant, nor did it affect the competitiveness of the bidding process as
manifested in actual contract costs.
• There is no evidence that businesses have responded negatively to the passage of the
ordinance. In fact, the value of business investment in the City of Baltimore actually increased
substantially in the year after passage of the law.
Based on these findings, it is clear that opponents' claims of large-scale negative economic
and fiscal impacts from living wage legislation have not held true for the case of Baltimore.
APPENDIX 5.
Introduction
Observers from across the political spectrum now acknowledge that real wages have declined
for the majority of American workers over the last two decades. Wages for the bottom three-fifths
of wage-earners have been falling since 1979, and for four-fifths of wage-earners since 1989.
The lowest wage workers have been the hardest hit. A worker at the 10th percentile (i.e.
earning less than 9016 of wage earners and more than 4 0 1/6) lost 17% of his or her real.income from
1979-95, an hourly wage drop from 56.10 to 55.06 in 1995 dollars. Women in this category fared
even worse, with wages falling from 55.82 to $4.84 per hour.'
The minimum wage itself fell behind inflation from 1979-1989, losing 31% of its real
purchasing power during that period. This in itself was a significant cause of declining incomes for
the poorest workers.
What to do about the problem of declining wages, or indeed whether to do anything at all,
is a matter of heated debate. Business interests and conservative political leaders generally oppose
any direct government action to raise workers' wages. The argument is that government's role
should be limited to measures designed to increase business investment. This, it is claimed, will
ultimately lead to gains for workers.
From the political center to the left, there is support for some form of government action to
address the problem. One obvious mechanism is the minimum wage. On August 2, 1996, Congress
passed legislation raising the federal minimum wage to 55.15 by September of 1997. However, the
real value of the minimum wage after it is fully in effect will be about 54.89 in 1995 dollars. This is
still 240/6 below its value in 1968. The income of someone working 40 hours a week, 52 weeks a year
at this wage will still remain app:oxnnately 19%below the official poverty level for a family of three.
Furthermore, the political forces necessary to bring the minimum wage closer to its past real
value are not in evidence. Congressional Republicans fought hard against the recent increase,
filibustering in the Senate and attempting to gut the bill with amendments that, for example, excluded
millions of small businesses. Only five Senate Republicans broke ranks to vote against the latter
amendment that would have doomed the bill.
On the Democratic side, neither President Clinton nor the Democratic Congressional
leadership made any serious effort to increase the minimum wage when they had control of both
Congress and the White House in 1993 and 1994. Further action to raise the minimum wage during
the next Congress seems un&ely, regardless of who controls the House and Senate.
The Living Wage
The decline in wages for low-income workers and the failure of the federal government to
take stronger steps to address the problem have led to efforts to raise wages through legislation at
the state and local level. These efforts, commonly referred to as"living wage campaigns," have been
launched by grass-roots coalitions of community organizations, religious groups and labor unions —
led in many cases by the AFL-CIO's state labor federations and local central labor councils and the
'Mishel,L.awrmm,Banvz=Jared,and Schmitt,John.The Stott of Worlang Amenca. 1996-97. Washington,
D.C.:Economic Policy Instinne, 1996.
APPENDIX 5,
Association of Community Organizations for Reform Now (ACORN).' Living wage campaigns are
underway in more than a dozen states and municipalities.
In contrast to recent federal legislation, many state and local living wage campaigns make an
explicit effort to raise wages to the level necessary to keep the family of a full-time worker above the
poverty line. Some of the proposals would raise the minimum wage in a state or municipality to its
peak historical value under federal law (56.47 per hour in 1995 dollars, achieved in 1968) and
thereafter index it to inflation. Others would mandate insurance benefits for low-wage workers. And
others would set wages according to local cost of living levels. The California Liveable Wage
Coalition, for example, took California's high cost of living into account when setting its minimum
wage goal above the federal level.
Many living wage campaigns do not seek to increase the minimum wage across the board in
a particular location. Instead they target only those employers who receive public money or public
contracts, requiring that these employers pay a certain wage as a condition of receiving these funds
or contracts. State and local programs that provide subsidies, tax abatements and other benefits to
private employers for the purpose of job creation and retention rarely distinguish between high and
low-wage employment. Nor do most cities and states that contract with private corporations for the
provision of public services impose any pay and benefits standards on contract recipients. As a result,
many companies receiving public subsidies and/or public contracts pay wages well below the poverty
level. The argument behind living wage laws is that governments should not be using tax dollars to
create or subsidize poverty-wage jobs, but rather should set a positive example by requiring
employers who receive public funds to pay a living wage.
Baltimore's living wage law is one of the first to compel contractors to pay employees enough
to keep a family of four above the poverty line. Other cities with such laws include San Jose, where
city contractors must pay employees union-scale wages. A Milwaukee ordinance requires city
contractors to pay employees$6.05 per hour, and increases yearly until the wage can raise a family
of three above the poverty line. Jersey City,New Jersey, requires a minimum wage of$7.50 per hour
be paid to employees of certain city contractors. And New York City recently established union-scale
wages and benefits requirements for some city service contractors.
Campaigns to ensure that beneficiaries of public funds pay employees a living wage are
underway in Los Angeles, Chicago, Boston and other locales. The Los Angeles Living Wage
Coalition drafted an ordinance that would require companies"that benefit from city taxpayer dollars"
(any business in receipt of a city contract, lease agreement, tax abatement or subsidy valued above
$25,000) to pay employees $7.50 per hour and provide them with health insurance benefits. The
estimated number of affected workers is over 14,000. A city council vote is expected this fall.
Chicago's Jobs and Living.Wage Proposal, which would require a 57.60 per hour wage for
employees of city contractors or companies receiving city financial assistance, would affect 10,000
workers. The ordinance,introduced in the city carnal in May 19%, is now in the finance committee.
Community and labor groups in Boston plan to introduce a similar ordinance by the end of
the year. The Corporate Accountability and City Contracting proposal would tie financial assistance
and city contracts to business to community hiring requirements and a living wage of$7.49 per hour.
Table 1 lists living wage proposals under consideration around the country.
2 ACORN is a national grass-roots community organization of low and moderate-income families.
_ APPENDIX 5. �3
Table 1: Examples of Proposed Living wage Legislation
City or State Route to Description of Measure Status
Enactment
Albuquerque Ballot Initiative Raise minimum wage to Gathered required signatures;waiting to
S6.50Asour qualify for December special elecuon
Boston Legislative Require city contractors and Possible introduction of city council
subsidized businesses to pay ordinance by the end of the year.
S7.49Axw and him from the
commtmiry
Chicago Legislative Require city tractors and Ordinance introduced to city council in M&N
subsidized businesses to pay 1996
S7.60Ax=and hire from the
community
Denver Ballot Initiative Raise minimum wage to Supporters gathered requited signatures to
S6.50/hour in 1997;S6.85ftw in qualify for the November 19%ballot.
1998;S7.15/hour in 1999;indexed
to cent of living tbaesfta
Houston Ballot Initiative Raise minimums wage to Will begin gathering signatures m Fall for
56.50/hour city wide January 1997 ballot.
Los Angeles Legislative Require city contractors and Possible council vote Fall 1996
subsidized businesses to pay
S7.50/ma plus Emily health
benefits or S9.50/hour without
benefits
Minneapolis/ Legislative Joint Twin Cities Task Force is Possible introduction of proposed ordinance
St.Paul drafting living wage policies for by the end of the year, public hearing
city contractors and subsidized expected in the fall.
businesses
New Orleans Ballot Initiative Set city-wide nmi mumm wage at Supporters have gathered 14,000
S1.00lhoua above the federal level signatutes; 1997 timeline to be determined
California Ballot Initiative Raise the start miaamtmm wage to Supporters gathered required signatures to
55.00Awur in 1997 and_.. __ qualify for the November 19%ballot.
S5.75Axw in 1998
Minnesota Legislative Require state and city eontracters Passed MN.House and Senate;vetoed by
and subsidized businesses to pay Governor
S7.28Asota and hire from the
community
Montana Ballot Initiative Raise the state miaitaumm wage to Supporters gathered required signatures to
S4.75Asoua in 1997;SSMIhour in qualify for the November 19%ballot.
1998;S5.75Axw in 1999;
S6.25/sour in 2000.
Missouri Ballot Initiative Raise the stns minimum wage to Supporters gathered required signatures to
S6.25Asoua in 1997;S6.501sour in qualify for the November 1996 ballot.
1998;S6.75/hour in 1999;and
unease S.15 each year thaeafka
Oregon Ballot Initiative Raise the state minimum wage Supporters gathered required signatures to
from 54.75 to S6.50/hour over qualify for the November 19%ballot.
three years.
APPENDIX 5. l 4
Proposals to require municipal contractors to pay a living wage have met with strong
opposition from business interests and some political leaders. Their most prominent arguments
include the following:
Higher Costs for Contracts. Critics argue that requiring city contractors to pay employees
wages substantially higher than the federal legal minimum will drive up the costs of city contracts,
imposing substantial new burdens on local taxpayers. The office of Los Angeles Mayor Richard
Riordan claims that the proposed Los Angeles living wage ordinance"will have a major impact on
the city's budget and may make it impossible to restructure the way the city delivers services."' The
Chicago Chamber of Commerce has advanced the same argument during the debate on the Chicago
living wage ordinance. A spokeswoman claimed that"[t]he new ordinance will. . . hurt the city by
creating artificially high wage rates. . . and increasing city procurement costs!" In Baltimore, Mayor
Kurt Schmoke, contemplating a veto of the living wage ordinance passed by the City Council,
expressed fears that the contract cost increases would be so high the city would not have the funds
to pay for them.`
Fewer Workers Employed. Opponents also claim that because living wage laws will raise
labor costs, many contractors will seek to do the same work with fewer employees, thus costing
some low-wage workers their jobs. Economist Stephen J.K. Walters' arguments during the Baltimore
living wage campaign were faddy typical: "the big losers are all the states that have done the most to
make unionisation easy and labor costly. . . . [The living wage would]price many of the workers right
out of their jobs."' According to the chief economist for the University of New Mexico Bureau of
Business and Economic Research,"the ones who are fortunate enough to keep their jobs will benefit
[from Albuquerque's proposed law],but we would see quite a few people at the minimum wage who
would lose their jobs.'
High Enforcement Costs. Critics claim that taxpayers will be further burdened by substantial
new costs to monitor and enforce employer compliance with the law. During the debate on the St.
Paul living wage proposal, a board member of the Chamber of Commerce stated, "The initiative
mandates that the city follow up on all projects after two years and impose fines and penalties for
noncompliance. Who do-you think would and up paying to administer this ordinance? We would -
the taxpayers. . . . This new burden would be added at a time when taxpayers are demanding that we
reduce the price of government."'
Loss of Bidders. Opponents also claim that competition for city contracts will be reduced,
as fewer companies believe that they can place a competitive bid under the requirement of higher
'The"Living wage"lame-Fan Sheet,Office of Mayor Richard Riordan
3Foti,Ross.-Ciro p Want City Ca wiwtocs to Pay 57.60 `Living Wage,'"Tile Press,June 19, 1996.
"Wage Bill Depends an Schtaake,"Baltimore Sine,December 4, 1994
'Walters,Stephen JX-Is BUILD Trying to Tar Down?"The Baltimore Sun,June 22, 1994,p. 11 A.
61)omrzalski,Detmis.and Vukelich,Dan.-6.50 City Minimum Wage Advocated,"Albuquerque Tribune,
August 15, 1996,p. 1.
Given,William."Should City Jobs Initiative Pass?"Saint Paul Pioneer Press,October 10, 1995,p. 7A.
APPENDIX 5.
wages. Less competition will lead to further cost increases. A Chicago Sun-Times editorial asserted
that although"proponents argue that [Chicago's proposed living wage] ordinance would make the
bidding process more equitable for companies already paying a living wage, it is likely that the higher
cost of doing business would instead reduce the number of companies bidding."' And the Boston
Herald claims that"for a business in a competitive industry (and most are), increasing the cost base
with [a living wage] requirement could simply lead it to drop the city as a customer."9
Creation of a Hostile Business Climate. One of the most prominent arguments of critics is
that businesses in general, not just those bidding on city contracts, will interpret the passage of a
living wage law as a"bad signal" in terns of the city's overall business climate, leading to capital
flight from the city. At a time of bitter competition for job-creating investment, the argument goes,
a municipality would be placing itself at a grave disadvantage by passing a law that implies a lack of
commitment to keeping costs for businesses under control. According to a Boston Herald editorial,
"the [Boston ] proposal couldn't be better calculated to drive business out of the city."10 The Los
Angeles Business Journal opined, "Simply put, the living wage threatens to derail the economic
revival that the City of L.A. has been enjoying," referring to the proposal as, "[a]nother bad,job-
killing idea."" The Minnesota Retail Merchants Association claims that"mandating wages like this
will have a chilling effect on business development."" Concerning Denver's ballot initiative to raise
the city's minimum wage, a City Councilman called it"retail suicide. . . . What we're going to do is
watch a lot of our economic base walk out of the city to the suburbs.""
These arguments, and their variants, have been raised wherever living wage legislation is
under consideration. If they are correct, the case for this legislation would be severely weakened.
The purpose of this study is to determine, based on the experience of one of the first cities to
pass a living wage requnmwit for municipal contractors,whether the stated concerts of critics about
negative economic and fiscal consequences are or are not well-founded. We assessed the impact of
Baltimore City Ordinance 442, which went into effect on July 1 of 1995, in the following areas: the
cost of city contracts, the numbers of bidders seeking city contracts, the number of workers employed
by city contractors, administrative costs, and the overall business climate of the city of Baltimore.
It is our hope that the results of this analysis will be of use not only to the citizens of Baltimore, but
to elected officials and members of the public in other locales as they evaluate present and future
proposals for living wage requirements.
'June 23, 19%.
9Septembw 5, 19%.
101bid.
" "Another bad,job killing idea,"Los Angeks Business Journal,September 30, 1996
12Judv Cook Main Retail Mash=n Assoc==quoted in"Can Government Entire a"Living Wage, .,
Investor's Business Daily.April 3, 1996, in reference to proposed state-wide Minnesota living wage law
13Bartels,Lynn."Voters Will Decide on Wages,"Rocky Mountain News,August 6, 1996,p. 1.
APPENDIX 5.
The Baltimore Living Wage Ordinance
In December 1994 the Solidarity Sponsoring Committee (SSC), a group of low-wage
service workers, successfully campaigned for a mandatory living wage for employees of city
service contractors. The committee was organized by BUILD (Baltimoreans United in Leadership
Development), a largely church-based community organization affiliated with the Industrial Areas
Foundation, and AFSCME(the American Federation of State, County and Municipal Employees).
The Baltimore Living Wage ordinance, which went into effect in July 1995 (fiscal year 1996),
established a minimum wage of$6.10 per hour for anyone working on a city service contract. In
July 1996, the wage was increased by Baltimore's Board of Estimates to $6.60. The living wage
ordinance stipulates that the wage be increased annually, upon approval by the Board of Estimates,
until it equals the amount required to raise a family of four above the poverty line. In subsequent
years, the wage is to be indexed to inflation in order to keep it above the poverty line. The
ordinance aims for a living wage of 57.70 (the projected poverty level income for a family of
four) for 1999 (see Figure 1).
The living wage ordinance establishes an enforcement mechanism and imposes significant
penalties on conaactors who violate the wage requirement or fail to submit proof of compliance.
Contractors are required to submit payrolls on a biweekly basis to the Wage Commission for
enforcement purposes. They can be fined $10.00 per day for each day their payrolls are late. If
a service contractor is found to be noncompliant with the wage requirement, it must remit back
pay to the employees and pay fines to the city. Any violator of the ordinance can be made
ineligible for city contracts for a year. If a contractor is noncompliant on more than three contracts
in a two-year period, it can be barred from bidding on contracts for three years.
There is, however, an exception in the ordinance that exempts those companies awarded
contract arennonrs from the living wage requirement. Extension options typically range from one
to four years and "grandfather" the wage requirement in force at the time the contract was
awarded.
The adoption of the living wage ordinance was a respar>se to the deepening impoverishment
of low-wage earners in the city of Baltimore. Church leaden saw a sharp increase in the number
of working people relying on social service ministries for food and housing. An increasing number
of these poor families were headed by low-wage earners, rather than the unemployed or welfare
recipients. In Baltimore, BUILD argues, the proliferation of poverty-wage jobs was spawned by
the subsidized refurbishing of the downtown sector as well as the privatization of work by the city
government. The job growth brought by subsidized businesses was concentrated in low-wage,
temporary occupations like janitors and lawn asters. And government privatization often relegated
workers to contingent employment paying low wages and offering few, if any, benefits. In order
to reverse this trend, the SSC campaigned for a mandatory living wage for employees of city
contractors, arguing that taxpayers' money should not be used to promote the creation of poverty-
wage jobs. Workers benefitting from the living wage ordinance include janitors, food service
employees, laborers, machine cleaners and repairmen, stenographers, carpet cleaners and
repairmen, and bus drivers and aides hired by the city.
APPENDIX 5.
Figure 1: Living Wage Earnings and the Poverty Level: How the Wages Compare
20,000
18,000
16,000 Federal Poverty Line for
14,000 a Family of Four
E 12,000
10,000
8,000
6,000
4,000
2,000
$4.75 $5.15 $6.10 $6.60 $7.10 $7.70
Hourly Wages
Figure 1: This figure compares the current ($4.75) and future ($5.15) federal minimum wages and
Baltimore's living wage itaremeats m the current poverty threshold for a family of four. The Baltimore Living
Wage ordinance projects the earnings of the lowest paid city service contract employees to increase to $7.70
per hour in 1998. This amount would raise a family of four above the current federal poverty line of
$15,569.00, but will lose some value due to bdiation. A city contactor working 40 hrs per week. 52 weeks
a year at Baltimore's current living wage of$6.60 per hour, earns a yearly salary of$13,728.00 or 22% Iess
than the federal poverty level for a family of four. The current hourly wage of poverty-line earners is $7.49
per hour(Source:Burem of the Census.)
The Costs.of the Living Wage Ordinance to the City
This study focuses on contracts whose labor costs have increased or are expected to
increase as a result of the living wage ordinance. The City's Bureau of Management and Budget
Research cow a list of the types of contracts that are or will be affected by the ordinance, as
well as the dollar amount of all the contracts. The Bureau determined that the total value of
conaacts falling under the wage requirement was $26,811,544 in December 1995. We obtained
full or partial information on 46 contracts involving 75 companies; others have yet to be rebid
under the living wage requirements. Those contracts for which information on pre- and post-
ordinance (rebid under the living wage law) costs were available are presented in Table 2. The
value of these conuacts is$19,326,066.39, or 72% of the value of those connacts affected by the
ordinance.
APPENDIX 5. To
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APPENDIX 5. q
As can be seen from the totals, the nominal cost of the contracts covered by the ordinance
increased by only $42,242, or less than one-quarter of one percent. In real terms, adjusting for
inflation, there was an absolute decrease in costs. The fifth column of Table 2 shows the price of
the most recent contracts adjusted for inflation." In real terms, the total cost of these contracts
declined from $19,326,066 to $18,860,329, or 2.4%.
The average contract price, weighted by its share in the total cost of the sample, declined
by 1.92%. (This is shown in the last column of Table 2). This decline is statistically significant
at the .001 level."
This is a surprising result, given that at least some of the contractors in this sample faced
an increase in their labor costs as a result of the living wage. The most likely explanation is that
other factors overwhelmed the impact of these cost increases. From interviews with contractors
it appears that it is a common practice to try to underbid the previous year's contract, and it may
be that the competitive pressures of the bidding process were enough that contractors were forced
to absorb the increased costs of the living wage. This is most likely true for the food and bus
contractors, who reported that they did not adjust their bids for the increased labor costs. Most
janitorial companies reported that they did in fact take the increased labor costs into account when
formulating their bids, but these increases did not show up in the overall costs of the new
contracts.
We cannot, of course, conclude that the living wage ordinance actually contributed to
lowering the cost of the average contract. However it is worth noting that there are efficiency
gains at the higher wages, and these could have lowered total costs. In telephone interviews with
the contractors, many stressed the relationship between a higher wage and a lower rate of
turnover. One of the larger janitorial contractors who said he always paid more than the Federal
minimum states that at wages below $5.00 an hour, the problems of turnover and absenteeism
were too large. If turnover is actually lower under the new wage, and contractors insist that it is,
productivity increases could offset all or part of the increased labor costs. And since high rates of
turnover can make it more difficult for a contractor to fulfill the contract, the higher wage can
protect the city from having to award increases to contractors who cannot fulfill their obligations
in the agreed upon time and dollar amount.
The number of workers impacted is fairly small, so even if contract costs had increased
by the full amount of the potential increase in labor costs, the impact on Baltimore's $2 billion
budget would have been very slight. However, even these very small increases in the cost of city
contracts did not materialize. Furthermore, the results of this study indicate that even if the
contracts covered had comprised a much larger share of the City's budget, the predictions of
significant cost increases would not have been borne out.
In addition, the argument that the cost of monitoring and enforcing compliance with living
wage laws would impose significant new casts on taxpayers is not supported by the evidence from
Baltimore. According to Baltimore's Bureau of Management and Budget Research, the wage
14The paces were adjusted by the Consumer Price Index for the time that elapsed between each pair of
contracts.
is t,= =3.978.
APPENDIX 5. J� ,
commission was awarded only 511,000 to enforce the living wage in 1996. This would amount to
an increased per capita tax burden of 17 cents a year. This figure does not include any money received
from fines levied on employers who fail to comply with the law, which would lower the net cost of
enforcement to the City.
Impact on Contractor Employment Levels
Have contractors responded to increased labor costs by laying off workers or by failing to
hire as many as they otherwise would have? The evidence here is not yet complete: (1) the
majority of connectors bound by the living wage ordinance have yet to turn in payroll information
to the Wage Commission and (2) pre-ordinance contractors were not required to submit payroll
information. To determine whether the increased labor costs resulted in reduced employment, we
interviewed those contractors who held a contract both before and after the ordinance went into
effect and whose labor costs increased as a result of the ordinance. This sample consisted of 31
companies, including providers of transportation, janitorial, food and administrative services.
None of the companies interviewed reported any reduction in staff levels to compensate
for the increased cost of labor resulting from the living wage requirement.
The school tars corta-act- actually a multiple contract with 26 companies that accounts for
$14,500,000 of the total-provides the clearest example of how it is often less common in practice
than in theory for employers to reduce staff in response to increased labor costs. Because the labor
force for bus contracts consists of bus drivers and aides (the latter are required on special needs
buses for senior citizens and the disabled), reducing staff levels would be difficult if not
impossible.
According to the Baltimore Bureau of Management and Budget Research's estimates, the
City's janitorial contracts have the highest percentage of costs attributable to labor. Of the two
janitorial companies holding pre- and post-ordinance contracts, neither reported reducing staff
levels to compensate for the increased costs. In addition, the large janitorial (school) contracts
have mandatory staff levels set by the city. Staff levels for these contracts, then, could not be
altered by contractors in response to the living wage requirements.
Impact on Bidding Practices
To deumnine whether the ordinance discouraged companies from bidding on contracts, we
examined those contracts where the labor costs would be immediately increased by the
ordinance.16 Of these, 43% either had more or the same amount of bidders as the previous year
and 57% had less. Although the average number of bids for these contracts declined from 6.64
to 5.42 (see Table 3), this difference was not statistically significant.
161nformation on the number of bids made before and after the ordinance was available for 54% of the
contracts.
APPENDIX 5. 151
According to Ken Dahms, janitorial contract buyer for the City of Baltimore, there has not
been any decrease in bids outside of normal fluctuations in companies' bidding practices. It is
perhaps worth noting that the two contracts whose labor costs for its lowest-wage workers had the
highest rate of increase (55% - from $4.25 to $6.60 per hour) had an increase in the number of
bidders, and the contract with the largest decline in bidders already pays workers more than the
living wage.
Surprisingly, contractors interviewed about the living wage gave generally positive
responses. From bus companies to temporary agencies to janitorial services, the prevailing opinion
offered was that the living wage "levels the playing field" and relieves pressure on employers to
squeeze labor costs in order to win low-bid contracts.
"We feel more able to compete against businesses who were drastically reducing wages
in order to put in a low bid," said a manager of a bus company- In such cases, if more firms think
they have a chance to win city service contracts, the number of bidden could actually increase
over time as a result of the living wage hike.
Others notice a marked change in worker morale and productivity brought about by the
higher wage. "You get a better quality worker, which builds a better reputation for our company,
said a human resources representative of a temporary agency. And according to another manager
at a bus company, "workers seem happy [and] they come to work on time because they know-that
at $6.10 per hour, somebody else wants the job if they don't."
Baltimore's Business Climate
The argument that businesses will leave a city as a result of the living wage ordinance is
based primarily on a somewhat intangible mechanism - the idea that such ordinances create the
perception that a locality is unfriendly to business, thus discouraging new or continued investment.
The direct effects of such ordinances on wages, since they affect such a small proportion of the
workforce, could not discourage investment by raising costs broadly in the local labor market.
However, claims of indirect effects are asserted with great frequency, find receptive audiences in
a time of intense state and local competition for mvesmxmL and therefore cannot be ignored.
In the case of Baltimore, there is no evidence that local businesses or potential investors
have responded negatively to the ordinance. As noted above, even the city contractors interviewed
for this study, who are dim*affected, had no complaints about the ordinance. As for businesses
in general, Table 3 shows the assemble base of personal property for businesses and corporations
in the city of Baltimore, for the years 1990-95. This measures the value of local businesses' assets,
other than real estate, for tax purposes.
As shown in the Table, the value of business property declined in real terms in the four
years preceding the passage of Baltimore City Ordinance 442. It then increased sharply from 1994
to 1995, after the passage of the ordinance."The experience of a single year since passage of the
'-'The declims for 1991 and 1992 can be attributed to the national recession(though it is worth noting that
real declines continued until the 4.6% real jump in 1995).
APPENDIX 5:
ordinance provides a limited basis from which to assess the ordinance's impact. But it is clear that
claims that a living wage law will drive investment from a city have found no basis of support in
the actual experience of Baltimore.
Table 3: Total Assessable Personal Property Tax Base for Businesses in Baltimore City
From 1990-1995
Year Current $ Constant $
1990 $695,303,010 $695,303,010
1991 $705,676,100 $684,457,905
1992 $701,417,280 $661,153,059
1993 $697,686,606 5640,373,204
1994 $712,617,470 5636,834,200
1995 5764,257,220 $666,344,552
The Economic Debate Over Mnimum Wages
The results here are consistent with a growing body of economic research that has
challenged some long held notions of how labor markets function, and has influenced, most
recently, the debate over raising the federal minimum wage.
According to ttaditianai economic theory,wages are determined by an equilibrium of supply
and demand in the labor market. The demand for labor is derived from the productivity of workers
"at the margin," — that is, how much an additional unit of labor would contribute to the firm's
revenue. In this view, an attempt to raise wages beyond the market equilibrium rate will cause
increased unemployment.This results from both employers aming back on hiring at the higher wage,
and from the increased mmlbcr of people who enter the labor force to seek work at the higher wage
(but cannot find it).
.This analysis of the effect of the minimum wage has been a mainstay of undergraduate
economics textbooks for decades. However, in recent years a number of empirical studies have cast
considerable doubt on the conclusion that raising the minimum wage will necessarily increase
unemployment.
Most prominent among these is the study by Princeton economists David Card and Alan
• APPENDIX 5. 5'j
Krueger," which examined changes in employment at 410 fast-food restaurants in New Jersey and
Pennsylvania,before and after New Jersey raised its minimum wage in 1992. The New Jersey increase
was substantial — from 54.25 to 55.05 an hour, or 18.8%, and restaurants in neighboring eastern
Pennsylvania faced no such increase. Their study found no significant differences in employment
changes at these businesses across the border of the two states. Card and Krueger followed this study
with a more comprehensive book,Myth and Measurement, which drove a final nail into the coffin
of the textbook relationship between minimum wages and unemployment."An attempt to refute Card
and Krueger's results,ahhough seized upon by opponents of increasing minimum wages,20 was found
lacking within the profession."
The other part of the traditional economic theory of labor markets that has been part of the
public policy debate is more explicitly ideological. The "marginal productivity theory," described
above, says that workers are indeed paid according to their productivity. This has a normative
implication that is difficult to avoid — that is, the market rewards people according to what they
deserve, or contribute to the economy. This belief is not just the province of economists, but has been
part of the popular ideological scenery since the Industrial Revolution. Proponents of a higher
minimum wage have had to contend with this precept as well, but they seem to have made some
headway during the most recent debate over the federal minimum wage. This is partly due to their
success in challenging the conventional stereotype of minimum wage workers as teenagers from
middle class families earning some extra spending money in their spare time. The most recent increase
in the Federal minimum wage directly affects more than 11.8 million workers, some three-quarters
of whom are adults. About 400/6 of those affected are the sole breadwinners for their families.'And
these figures do not include the-millions of workers earning more than$5.15 per hour whose wages
are part of the"minimum wage contour,"—that is, they tend to be pushed up when the minimum
wage rises.
There is of course some level of the minimum wage that would actually cause employers to
eliminate jobs; whether any of the living wage ordinances could reach this level remains to be seen.
One major difference between some of these ordinances and minimum wage laws is that to the extent
~Card and Krueger,-wini s mm Wades and Employmmt:A Can Study of the Fast-Food Industry in New
Jersey and Pennsylvania,"Ammemt F.cow nic Bewww.Vol 84,No.4,pp.772-93,1994.Other studies of different
regions m recent years reached simda eonchisioos.e4 Katz and Krueger(1992),for fast-food rests mts in Texas;
Spriggs and Klein(1994),for food-service businesses in Jackaw Mississippi and Greensboro,North Carolina.
i9Card and I'ruW,Alydt and Meammment:Tfu Mews Fxonom=of dw Mim mum Wage.Princeton.N.J.:
Princeton Univasity Press,(1995).
20A major study prepared m opposition to the Chicago living wage wdmaace relied on the Neumark and
Wascher study (cited below)to own that"the consensus among eeoaamtsrs is that employment declines when the
annimum wage is raised"(Tolley,Bernstein.and Lesage,p.41)See also,e.g.,Richard Berman's op-ed against the
federal minimum wage increase(Wall Street Journal,March 29, 1996).
21 See Schmitt(1996)for a thorough review of Neumark and Wascher's(1995)failed attempt to refute Card
and Krueger's research.
22See Mishel,L.ava=ce.Jared Bernstsm,and Edith Rasell."Who Wins With a Higher Minimum Wage?"
Bneftng Paper.Washington,D.C.:Economic Policy Institute. 1995.
+APPENDIX 5.
that increased labor costs can be passed on to the city government, there would be no need for
contractors to reduce employment. Of course, this could mean additional taxes for city residents. The
other possibility—where there are more competitive markets and bidding practices—also cuts both
ways. That is, if contractors are forced by the higher labor costs to increase productivity and therefore
reduce employment, the taxpayers gain from the increased productivity.
In the case of Baltimore, there have been no additional costs nor measurable effects on
employment. The results, however unexpected, are consistent with the most recent research in labor
economics, in which competitive pressures, efficiency gains, or other responses can produce a labor
market outcome with neither price nor employment changes following a minimum wage increase.
Conclusion
The predicted negative effects of raising wages for workers employed on city contracts
have not materialized in Baltimore. The cost of the affected city contracts did not increase, and
in fact decreased. Most payroll employment data for the relevant city contractors is not yet
available, but interviews with contractors indicate that they did not reduce their workforce in
response to the higher wage. The number of bidders for the contracts in our sample declined, but
this change was not statistically significant. And finally, there is no evidence that the ordinance
discouraged investment generally in Baltimore.
It will take more time, as well as fiirther research, to determine exactly how contractors are
responding to the ordinance, and how their responses affect employmem, productivity, and costs to
the city government. As the living wage continues to rise to 57.70 per hour over the next two years,
there will be greater potential for cost increases and other effects. But for now, it is clear that in the
21 months since it was enacted by the city, the stated fears of those who oppose living wage
legislation have found no basis in this case.
It also must be noted that the present analysis includes no assessment of the significant
potential benefits of the living wage ordinance—substantially higher income for low-wage workers
and their families, with attendant increases in their quality of life and cost savings as the demands
these individuals place on federal, state and local government programs is reduced. The full extent
of these benefits awaits analys a.But any fimtre costs to the city of Baltimore that may arise from the
living wage ordinance must be weighed against these benefits.
Memorandum to: BOCC
John Link
From: Ted Abernathy and Pam Jones
Date: September 15, 1997
Subject: Living Wage Ordinance
On May 12, a report examining a living wage ordinance for Orange County was presented. The
report gave a background on the history to date of living wage ordinances across the country and
posed a series of questions. This letter will provide an update on activities since May and cite
areas in which clarification is needed before additional progress can be made.
Actions Since May
Salary reclassification - During the 1997-98 budget process,the BOCC provided funds to
eliminate the County's lowest salary grade (56)and moved the eight positions up to grade 57.
This action cost$2,500 and resulted in the lowest-paid, full-time,permanent staff at Orange
County earning $8.24 per hour.
Loan Pool - The BOCC approved the new Orange County Small Business Loan Pool on
September 2, 1997. As part of the eligibility for borrowers, the BOCC included requirements
that all employees of any business receiving a loan earn at least the Orange County living wage,
if adopted, and that the employer pay at least 50% of employee health benefits.
Federal Minimum Wage - On September 1,the new Federal minimum wage of$5.15 took
effect. A few part-time County employees, such as library pages, were increased to the new
Federal minimum wage.
Legal Interpretation - The County Attorney has examined the question of local living wage
requirements and has expressed an opinion that Orange County does have broad ability to require
action. Geof believes that, in cases that are not covered by State bid requirements,the County
can require private and private not-for profits to adhere to locally developed wage requirements.
This broad interpretation requires that the staff get additional input from the BOCC before
proceeding.
BOCC/JLink
Living Wage Ordinance
September 15, 1997
Page 2
1. What do you want to cover?
Purchases - Orange County processes 3,000 purchase orders annually, ranging from $100 to
millions of dollars from businesses ranging in size from the very small to large national firms..
If the Living Wage is enacted for the purchases of goods, how can the County impact the
policies of the companies with thousands of customers who may be unwilling to modify their
policies? How do we ensure that the County's ability to buy goods at the lowest possible cost is
not unduly negatively impacted? (Examples: Walmart, Office Depot, Lowe's)
Legal and Accounting - Should the ordinance apply to legal or accounting contracts,two of the
largest service contracts which Orange County has currently? It is generally believed that all
permanent employees are likely to meet our minimum wage requirements. However, interns,
apprenticeships,which are integral to the training process in each of these areas,may not meet
the wage requirement.
Non-Profits- Should contracts with non-profit agencies be included? Many non-profit agencies
traditionally pay lower wages and may be unable to afford a living wage while still providing the
same level of service. Others, such as the Triangle Residential Options for Substance Abusers
program, use unpaid or partially paid client labor.
UNC-CH/UNC Hospitals - The University of North Carolina at Chapel is considered separately
from other non-profits since its involvement in County programs is so extensive. Most of the
programs in the Health Department are supported by professional staff through UNC or UNC
Hospitals. Similarly,the County's emergency medical system relies almost exclusively on the
Hospital or the School of Medicine for medical professional support(Medical Director, Medical
Affairs Officer). Should the University or the Hospital be included?
2. At what financial level should a contract be covered?
Some communities considering living wage ordinances have proposed considering only those
contracts above a certain level such as $25,000 or$50,000. Orange County executes hundreds of
small contracts annually. At your May meeting $5,000 was suggested as a minimum.
3. Should any local ordinance apply to companies receiving local subsidies?
Although Orange County may not supply tax abatements, it has participated in two water and
sewer expansions for specific companies over the past 10 years. Orange County's current policy
requires that the company's average wage be above the local average wage, but does not set
r
• J 7
BOCC/JLink
Living Wage Ordinance
September 15, 1997
Page 3
minimums. Appendix 4, the Minneapolis-St. Paul Living Wage Policy, is an example of an
ordinance that addresses requirements for companies receiving local subsidies. You have
included this requirement for companies receiving loans from the new loan pool.
4. Which contract employees should be affected?
If a large company has employees working on an Orange County contract, should all of that
company's employees be subject to the Orange County minimum or just those working on the
County project?
5. What is the appropriate living wage for Orange County?
The report provided in May offers a variety of options. At your May meeting $7.94 was
suggested . That represents the poverty level for a family of 4 adjusted for the Raleigh-Durham
Region cost of living.
6. What are the next steps?
As you may have read,Durham City is also considering adopting a living wage ordinance
specifically for service contracts. They have scheduled two community forums for October 28
and November 13. Durham is planning to bring a Baltimore City official down to present at the
forums. Baltimore was the first city to adopt a living wage ordinance and has 2 years experience
in operating the program. It would be very useful for us to attend these forums in that we will be
facing many of the same issues and may be able to gain some insight from their experiences.
An opportunity for Orange County citizens to provide input on this issue could be scheduled for
late November or December. This timing would allow us to gather your input to the questions
we asked and suggest a design for our program.
After you have had time for review,we will be contacting each of you receive your input
regarding these questions. Following this we will be prepared to complete an analysis of
operational and budgetary impacts and report back to the Board.