Tuesday, July 24, 2012

New York City Enacts Living Wage Bill Over Mayor's Veto

The New York City Council recently overrode Mayor Michael Bloomberg's veto of the city's controversial "living wage bill." 

The fight may be just beginning, however, as the mayor has vowed to sue to prevent the law from taking effect and the bill's chief proponent, council Speaker Christine Quinn, has pledged to defend it.

3 types of wages:  In general there are three types of laws that specify the minimum amount that employers must pay: 
  • Minimum wages: These wages apply to all workers within in a given governmental jurisdiction.

  • Prevailing wages:  These wages apply to workers performing certain jobs (classifications) on public works construction/improvement projects.
  • Living wages:  Living wages generally apply to all workers on all or some public projects, although the details of these laws varies since they are often adopted by individual cities or counties.
Workers covered by Living Wages:  While the type of workers that living wages applies to varies widely, living wages generally cover the following types of workers:

  • All workers on public contracts:  Living wage requirements often apply to a company's employees working on a public contract. In some cases, the wages apply to all public projects or they may apply to just to some contracts.  Many living laws cover only service contracts or contracts for certain kinds of work.  For example, a 2002 New York City measure specifically applies living wages to in-home healthcare, janitorial & cleaning, security, daycare, temporary clerical, and food service contracts, among others.

  • Workers for companies receiving public assistance:  Living wages sometimes apply to employees who work for companies benefiting from public assistance, such as tax breaks/incentives.  The recent New York City law takes this approach (although with many exceptions and restrictions).
  • Other workers:  In some cases, the living wage movement has expanded coverage to include workers and employers regardless of whether there is any relationship to the government or public projects. While many agencies no longer use the “living wage” label, a similar impetus often drives cities and counties to establish a base wage for the following:  
·         1) Everyone:  Essentially a local (city/county) minimum wage (enacted by cities including San Francisco, CA; Washington, DC; and Albuquerque, NM).

·         2) Specific Companies:  There have been some attempts to target living wage laws towards specific types of businesses regardless of their connection (or lack of connection) to the government. For example, in 2006 the mayor of Chicago vetoed a bill setting a minimum pay rate for retailers over 90,000 square feet, and in 2007 a similar citizen initiative in Spokane, Washington failed to make the ballot.

Characteristics of Living Wages:  Although terminology varies (and the different concepts sometimes overlap), the process of establishing a living wage typically differs in a couple of ways from that of minimum and prevailing wages:
  • Basis of calculation:  Living wage amounts are calculated on how much income is needed to support a household. Prevailing wages, on the other hand, are calculated from surveys of how much workers are usually paid for various types of work. Minimum wages are usually set by legislative action or sometimes are tied to the Consumer Price Index.
  • Established by local governments:  Living wages are usually enacted by cities or counties, although the movement has sparked related campaigns at several universities, and in 2007 Maryland passed the first state-wide living wage law. Both minimum and prevailing wages are traditionally set by state or federal law (although they have occasionally been implemented by cities or counties). 

Selection preference for Living Wages:  Sometimes, contractors that pay all their workers the living wage are given preference in the selection process (attempts to make this mandatory haven’t gained much traction, at least in larger cities and counties). For example, the recent controversial New York City law requires economic development projects to “encourage” living wages, and suggests the implementation of a selection preference as one way to do this. As recently as 2010, President Obama was reported to be considering a so-called "high road" contracting policy to establish a similar preference at the federal level.

Expansion of Living Wage requirements:  The living wage movement has seen support and opposition similar to other worker pay legislation, and often from the same sources. In fact, several states have specifically barred local governments from enacting living wages.  For example, a few months after Atlanta established a living wage bid preference in 2005, the state of Georgia responded by preempting it with a ban on any local attempts to "control or affect" wages of companies with public contracts.  The living wages movement has undeniably made inroads in the past two decades, however, with many estimating that 120 or more laws have been passed across the country, including some of the nation’s largest cities.

Additional resources:

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 

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