BACKGROUND INFORMATION ON THE LIVING WAGE. Greg Failor Labor Relations Manager Metropolitan Airports Commission

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1 BACKGROUND INFORMATION ON THE LIVING WAGE Greg Failor Labor Relations Manager Metropolitan Airports Commission

2 Labor Initiatives Discussed in 2014 Labor Peace Worker Retention Minimum Wage and/or Living Wage Benefit/PTO Requirements Employee Quality Standards (SFO worker qualification and training requirements coupled minimum wage and benefits levels) Transfer of passenger cart and wheel chair services from airline provided to MAC provided

3 Labor Initiatives Adopted in 2014 Worker Retention Workers jobs are protected for up to 90 days when the company they work for changes ownership or is replaced by another company and the successor company performs substantially the same services as its predecessor. Sick Leave Minimum of one hour of sick leave for every thirty hours of work up to a maximum sick leave accrual of 72 hours. Sick leave may be carried over from year to year. Coverage Applies to Limited Airside and Commercial License Agreement holders with more than 21 employees roughly 11 companies with a total workforce of about 2,800 employees.

4 Overview of the Twin Cities Labor Market 2014 Snapshot Total Employment Twin Cities Metropolitan Area 1,791,390 10% of Twin Cities workforce (179,130 workers) earn less than $9.16 per hour. 25% of Twin Cities workforce (447,848 workers) earn less than $12.51 per hour. Median wage rate for the Twin Cities is $19.59 per hour. Average wage rate for the Twin Cities is $24.79 per hour

5 2014 Occupational Wage Data Twin Cities Metropolitan Area Occupation Number of Employees Median Hourly Rate Janitor/Cleaner 26,900 $11.42 Waiter/Waitress 31,540 $ 8.72 Bartender 8,860 $ 8.89 Personal Care Aide 36,480 $11.04 Baggage Porter/Bellhop 250 $ 8.70 Cashier 32,600 $ 9.31 Retail Sales Person 58,120 $ 9.81 Taxi Driver 1,860 $12.27 Parking Lot Attendant 1,450 $10.20 TSA Screener 680 $18.17

6 Labor Force Characteristics at MSP International Airport 500 different employers with badged employees working at the airport. 19,800 direct jobs related to MSP airport operations both on and off airport property 17,200 of which are located at the airport. 89% of employees are full-time. Average annual salary is $66,270 or $31.86 per hour.

7 Direct Jobs at MSP, by Category of Employer Passenger Airlines 9,600 Airport Concessions 1,900 Government (TSA, FAA, etc.) 1,800 Fixed Base Operators 1,500 Taxis 1,100 Couriers 800 Car Rentals 700 Hotels 700 Catering 500 Limos/Busses/Vans 400 Freight Airlines/Forwarders 400 Security/Skycap 200 Building Maintenance 100 Parking 100 Construction/Consulting 100

8 Types of Wage Concepts Basic Definitions Minimum Wage The minimum wage is set by the federal government, the various states and some cities and counties as an absolute wage floor that no employer that is subject to the law is allowed to pay below. Prevailing Wage Usually applicable to public construction projects, the prevailing wage rate includes the base hourly wage rate, usual benefits and overtime for the majority of workers in a job class by geographic area. Living Wage A living wage is generally defined as the minimum wage rate necessary for a worker who works forty (40) hours per week to meet basic needs such as food, housing, utilities, health care, transport, day care, etc. As a result, the living wage rate will vary by region and family size.

9 Federal Minimum Wage The current federal minimum wage is $7.25 per hour. The federal minimum wage was last increased in July The federal minimum wage is not indexed to inflation. Federal law also authorizes the payment of subminimum wages to certain types of employees such as tipped employees. President Obama has proposed increasing the federal minimum wage to $10.10 per hour and has signed an executive order increasing the minimum wage on new federal service contracts to $10.10 per hour.

10 State and Local Minimum Wages Twenty-nine (29) states and the District of Columbia now have a minimum wage higher than the wage level set by the federal government. The state of Washington currently has the highest state minimum wage at $9.47 per hour. Minnesota s current minimum wage is $8.00 per hour. Minnesota s minimum wage is set to increase to $9.00 per hour on August 1, 2015 and to $9.50 per hour on August 1, Starting on January 1, 2018, Minnesota s minimum wage will be indexed for inflation. Nationally, about twenty (20) cities or counties have adopted higher minimum wage standards than the state in which the city or county is located. None have done so in Minnesota. These city/county minimum wages range from $8.50 per hour (Bernalillo County, NM) to $15.00 per hour Seattle and San Francisco).

11 Prevailing Wage Prevailing wage requirements generally apply to state or federally funded construction projects under the federal Davis-Bacon enacted in 1931 and Minnesota s little Davis-Bacon Act enacted in Under Minnesota law, the prevailing wage rate for any given job is the mode or most frequently occurring wage rate for that job. The MAC has a long standing practice of requiring prevailing wages on MAC construction projects including those that are not funded by the state or federal government. The prevailing wage rate in Minnesota is set by the state Department of Labor and Industry by surveying employers for each job classification in the construction industry almost 290 jobs. Hennepin County and Ramsey County have extended their prevailing wage mandate to include certain service contracts such as janitorial and security services in addition to construction contracts.

12 Living Wage Living wage rate is often set by officials on an ad hoc basis at a politically acceptable level that may or may not be adjusted annually for inflation. Some cities peg the living wage rate to the federal definition of poverty which is adjusted annually. The Minneapolis and St. Paul Living Wage Ordinances both define the living wage rate as follows: 130% of Federal Poverty Guideline (No Health Insurance) $15.16 per hour 110% of Federal Poverty Guideline (Health Insurance Provided) $12.82 per hour

13 Living Wage Laws or Ordinances in the United States 125 governmental jurisdictions in the United States have adopted some form of a living wage requirement. The coverage under these laws generally falls into the following four categories: 1. The jurisdiction s own employees. The lowest paid MAC employees are seasonal snow shovelers that earn $15.26 per hour. 2. Employees of direct contractors or subcontractors of direct contractors that provide services to the jurisdiction under a contractual arrangement. MAC consistently establishes wage and fringe expectations in bid documents based on the market for wages and benefits for each job class expected to perform the work under the contract. 3. Employees of organizations that have received some form of financial assistance or economic subsidies from the jurisdiction. 4. The law/ordinance acts as a local minimum wage covering all employees that work in the jurisdiction. 20 cities/counties have adopted a higher minimum wage than set by either its state or federal law.

14 Minneapolis and St. Paul Living Wage Ordinances The Living Wage Rate The living wage rate under both ordinances is equal to 130% of the federal poverty level for a family of four. In 2015, this wage rate is $15.16 per hour. Employers can pay a lower wage rate if they provide basic health insurance coverage. In this case, the required wage rate is equal to 110 percent of the federal poverty level for a family of four. In 2015, this wage rate is $12.82 per hour.

15 Minneapolis and St. Paul Living Wage Ordinances (cont.) Coverage and Exemptions The living wage requirement generally applies to city contracts or city subcontracts that exceed $100,000 or to a recipient of a city business subsidy such as a direct grant; contribution of real or personal property; or a reduction/deferral of a tax or fee in excess of $100,000. The major exclusions under the ordinances include: For-profit entities that qualify as a small business under Minnesota law (a business with less than 20 employees; or less than $1,000,000 in annual gross revenues ($2.5 million if a technical or professional services firm) and is not a business affiliated with or a subsidiary of a business dominant in its field of operation) 501(c) non-profit entity that qualifies under the small business definition noted above. A recipient of a job readiness and training services contract. A recipient bound by a collective bargaining agreement.

16 Minneapolis and St. Paul Living Wage Ordinances (cont.) Coverage and Exemptions (cont.) An intermediary such as a community development corporation, community investment group or community bank who serves as a pass through agency for assistance. 501(c) non-profit entities that are a sole source provider of a product or service. Temporary internships (less than 12 months) intending to provide career exposure for new entrants to the workplace. Individuals placed as a result of a job training or job readiness program. Seasonal, part-time or temporary employees provided that no more than 10% of such employees may be exempted and use of such employees is not intended to circumvent the requirements of the ordinance.

17 Minneapolis and St. Paul Living Wage Ordinances (cont.) Enforcement and Sanctions Employers are required to provide written notice to employees of the living wage requirements of the ordinance. The ordinance prohibits employers from taking actions against employees who seek to enforce the living wage requirement. The ordinances are enforced by city staff who can request wage records to verify compliance with the ordinance. In the event of non-compliance with the ordinance, employers may face various penalties including ineligibility for future contracts with the city, withholding contract/subsidy payments to the extent of the underpayment of wages and costs related to investigating or enforcing the requirements of the ordinance including attorney s fees and the cost of conducting the investigation.

18 Living Wage Rates at Select US Airports Chicago O Hare and Midway $13.00 Boston Logan $10.00 in 2015; $11.00 in 2016 JFK, Newark and LaGuardia $10.10 Dulles and Reagan National $13.17 to $13.54 Philadelphia $12.00 Seattle $11.22; minimum compensation of $13.72 (includes tips, healthcare and other benefits) St. Louis $12.56 (health benefits); $16.58 (no health benefits) San Jose $14.13 (health benefits); $15.38 (no health benefits) Los Angeles $11.03 (health benefits); $15.84 (no health benefits) San Francisco $13.02 ($13.52 for Quality Standards Program) Large hub airports without any living or minimum wage requirements include: San Diego, Salt Lake City, Atlanta, Detroit, Dallas-Ft. Worth, and Charlotte.

19 Policy Considerations Determining the Initial Wage Rate and Future Increases Coverage Implementation and Timing Exemptions Enforcement Penalties and Sanctions for Non-Compliance

20 Determining the Initial Wage Rate and Future Increases How will the initial wage rate be determined? Should it be set at a specific dollar amount or at a specific percentage of an existing index or measure like the state minimum wage or federal poverty rate? If tied to an existing index or measure, what percentage of the index or measure (e.g. 100%, 110%, 130%) is appropriate? Will the wage rate increase annually by indexing it to inflation or by pegging it to a measure such as the state minimum wage or federal definition of poverty which changes periodically? Should a lower wage rate be authorized if the employer provides basic health insurance to its employees? If the program covers concession employees will a tip credit against the living wage rate be allowed for employees that receive tips?

21 Coverage How broad should the coverage be? In other words, what MAC written contracts, leases, permits and other written instruments should a living wage requirement apply to? Should it include all or some of the following? 1. Contracts for the purchase of services 2. Concession Agreements 3. Lease agreements including subleases 4. Licensing agreements such as the MAC s Limited Airside License Agreements. 5. Airlines with valid operating permits or operating agreements including the airline s subsidiaries and subcontractors.

22 Implementation Should existing contracts, leases and license agreements be grandfathered so the wage mandate applies only upon the renewal date of an existing contract, lease or license agreement or to a new contract, lease, or license agreement? Should any wage requirement enacted by the board apply to the current concession bidding process? If the current round of concession bidding is excluded is it fair to include future concession bids from the living wage mandate? In other words, is the disparate treatment of vendors with different contract expiration dates a problem?

23 Exemptions Should certain types of employers be exempt from the living wage requirement? Common exemptions in other living wage ordinances include: 1. Contracts under a certain dollar amount. Minneapolis and St. Paul exclude contracts under $100, Small business exemption. The Minneapolis and St. Paul ordinances exclude small businesses as defined by Minnesota law. 3. Temporary and/or seasonal workers, interns and workers-in-training. 4. Businesses whose employees are covered by a collective bargaining agreement. 5. Ground transportation providers at airports. 6. Construction contractors. (Note: These would typically be covered by prevailing wage requirements). 7. Governmental entities.

24 Enforcement How will the living wage ordinance be enforced? Will posting and notice requirements informing employees of their rights under the living wage requirement be needed? Will MAC staff enforce the living wage requirement? If so, what staffing and funding levels are necessary to ensure compliance with the living wage requirement? Should a private cause of action be granted to employees to pursue claims against employers? Should the forum for a private cause of action be arbitration or court? Will employers be required to produce wage records in order to periodically audit compliance with the requirement? Should the ordinance bar retaliation against employees that file complaints with appropriate sanctions for employers that retaliate against employees?

25 Penalties and Sanctions For Non-Compliance What types of penalties or sanctions, if any, should be adopted to discourage employer violations with the living wage requirement? For example, some living wage ordinances impose fines for violations and ban employers who violate the law from bidding on contracts for a certain period of time. What types of remedies should employees have against an employer who violates the living wage requirement? Possible remedies include back pay, with or without interest, and punitive damages.