20220613-004D: Living Wage Recommendation — original pdf

Recommendation

M E M O R A N D U M TO: THRU: Mayor and Council Members Spencer Cronk, City Manager Veronica Briseño, Assistant City Manager Joya Hayes, Human Resources and Civil Service Director April 28, 2022 Living Wage Work Group Process FROM: DATE: SUBJECT: The purpose of this memorandum is to provide an overview of the living wage stakeholder review process and transmit to Council a summary of their work and recommendations. In 2014, the City Council passed Resolution 20141016-035 which directed the City Manager to provide staff support for a stakeholder process to develop recommendations regarding the City’s living wage rate and policy. During that process, stakeholders met seven times from January to May 2015, provided their recommendation to Council, and then briefed the Council. After the presentation to Council, the City Manager in conjunction with the annual budget process brought forward a plan to increase the Living Wage rate to $15.00 per hour by 2020. Similar to the 2015 process, the Human Resources Department provided staff support by convening meetings with the community organizations who participated in the previous Living Wage Stakeholder Group. Other organizations were invited upon the Groups' recommendation. The Group met four times: January 26, February 9 and 23, and March 9, 2022. Like the previous process, this memorandum provides the Group’s recommendation to Council. The Group will present their recommendation at a future Council work session. Attached to this memorandum are the summaries of the meeting topics, major data points reviewed, recommendations from the Group, and participating organizations. HRD and the Budget Office have preliminary provided an estimate of costs associated with a $22.00 per hour living wage rate for FY23. The costs to the City budget is estimated between $18.2M to $22.8M. These costs do not include any sworn employees. City staff will provide more information on the budget impact, costs if sworn employees were included, and potential living wage rates that work within a balanced budget. We will also review our current pay grade structure, specifically the number of pay grades that will be impacted, projected increases, and how this impacts our current employees. If you have any questions before the presentation by the Group occurs, please contact me. Attachments cc: CMO Executive Team Department Directors HR Manager’s Forum Living Wage Working Group Participants, Meeting Summaries, Data Reviewed, Recommendations Living Wage Stakeholder Group Participants These are the organizations that attended at least one meeting. Organization AFSCME Representative(s) Carole Guthrie Todd Kulik Christina Ortiz Krissy O'Brien Doug Greco Mother Minerva Camarena-Skeith David Chincanchion Fabiola Barrento Jeremy Hendricks Ben Brenneman Kasey Lansangan Phil Thoden Chap Thornton John Espinosa Richard Segal Tina Cannon Chris Willett Willy Gonzalez Rachel Melendes Kara Sheehan Bob Batlan Central Texas Interfaith Workers Defense Project Laborers' International Union 1095 IBEW Local 520 Austin Chapter of General Contractors Plumbers Local 286 Greater Austin Hispanic Chamber of Commerce Greater Austin Chamber Austin LGBT Chamber Equal Justice Center Unite Here Local Progress Texas Antipoverty Project Page 1  Meeting Summaries During the meetings, the Human Resources Department convened the workgroup and provided staff support. Meeting 1 (January 26): - Goals for the Working Group process were established o Work Group to recommend a new living wage and roadmap for the next 3 – 5 years o Work Group to recommend who the living wage should apply o Work Group to review costing for the budget - Presented o City of Austin living wage history o Living wage data for other cities o MIT website on the living wage for Austin o Fair market data on rent for the Austin area Meeting 2 (February 9): - Briefing from City Procurement on City contractors and the living wage - Group discussion o data to review o cost of living – food, childcare, etc. o Previous process from 2015 o Living wage using cost of labor to align salaries to Austin o United for Alice Wage Tool, as recommended by the Group o MIT Living Wage to include food, childcare, transportation, etc. o Impacts on the City's pay structure Meeting 3 (February 23): - Briefing on - Group Discussion on o Benchmark cities provided by a Group member o Projected rates using Texas CPI o Costs for increasing the living wage o Meeting 4 (March 9): Presented Citywide turnover and vacancy rates - - Group Discussion on o Costs per hire o Starting rates o Projected payroll costs o Five-year costs to the general fund payroll o Final recommendations to be presented to the City Council o City Budget and constraints in increasing costs o Chapter 380 incentives o Retention incentives for employees o Policy considerations to maintain the living wage – using the Consumer Price Index (CPI) living wage cost impact to City services versus benefit of higher living wage impacting local private sector and decreasing utilization of City services Page 2  Data Reviewed COA Living Wage History Date Oct 1998 Apr 1999 Oct 2000 Mar 2001 Jan 2005 Oct 2005 Jul 2007 Jul 2008 Oct 2008 Jul 2009 Oct 2014 Oct 2015 Oct 2016 Oct 2017 Oct 2018 Oct 2021 Living Wage $7.40 $8.00 $8.50 $9.00 $10.00 $10.90 $10.90 $10.90 $11.00 $11.00 $11.39 $13.03 $13.50 $14.00 $15.00 $15.00 Minimum Wage $5.15 $5.15 $5.15 $5.15 $5.15 $5.15 $5.85 $6.55 $6.55 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 Benchmark Data – Other Cities Living Wage Data Comparison Cities vs. Austin, Texas Current Living Wage Cost of Labor Geo Factor Corpus Christi, Texas Dallas, Texas Fort Worth, Texas Houston, Texas Las Vegas, Nevada Memphis, Tennessee Oklahoma City, Oklahoma Philadelphia, Pennsylvania Phoenix, Arizona Portland, Oregon San Antonio, Texas San Jose, California Tulsa, Oklahoma Denton, Texas $10.01 $15.50 $11.34 $14.25 $15.10 $12.00 $10.37 $14.25 $15.00 $14.00 $15.60 $24.07 $14.19 $15.00 106.76% 98.33% 103.09% 96.77% 97.28% 106.52% 113.10% 94.10% 101.61% 93.20% 106.40% 77.10% 106.04% 99.82% Adjusted to Austin1 $10.69 $15.24 $11.69 $13.79 $14.69 $12.78 $11.73 $13.41 $15.24 $13.05 $16.60 $18.56 $15.05 $14.97 1 Cost of Labor shows the impact of the living wage in the local labor market, compared to what an employer would need to offer in Austin in order for the offer to have the same level of attractiveness to the candidate. In other words, if a potential employee in Corpus Christi might be attracted to a job at a rate of $10.01, a similar employee in Austin might not be interested until the offer was increased to $10.69. Page 3  United for Alice Tool - Projections • https://www.unitedforalice.org/wage-tool • Asset, Limited, Income, Constrained, Employed • Estimates the bare minimum cost of household necessities (housing, child care, food, transportation, health care, and a basic smartphone plan), plus taxes and a contingency fund (miscellaneous) equal to 10% of the budget. • A Family of 3 – 2 workers, 1 child would need $17/hour to support their family in Travis County • A Family of 2 – 1 worker, 1 child would need $25+/hour to support their family in Travis County MIT Living Wage Calculation - Projections https://livingwage.mit.edu/counties/48453 Includes annual projection on food, childcare, transportation, etc. 1 Adult 2 Adults (1 Working) 0 Kids 1 Kids 2 Kids 3 Kids 0 Kids 1 Kids 2 Kids 3 Kids Living Wage $15.42 $31.54 $38.87 $49.98 $24.39 $29.30 $32.69 $35.58 Poverty Wage $6.13 $8.29 $10.44 $12.60 $8.29 $10.44 $12.60 $14.75 Minimum Wage $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 Food $3,177 $4,670 $6,990 $9,294 $5,825 $7,238 $9,305 $11,345 Child Care $0 $8,694 $17,387 $26,081 $0 $0 $0 $0 $2,760 $8,866 $8,554 $8,694 $6,270 $8,554 $8,694 $8,347 $11,856 $16,272 $16,272 $21,156 $13,608 $16,272 $16,272 $21,156 Transportation $5,113 $9,378 $11,672 $13,896 $9,378 $11,672 $13,896 $12,611 $1,811 $3,889 $3,554 $4,127 $3,889 $3,554 $4,127 $3,889 $2,875 $4,687 $5,144 $6,216 $4,687 $5,144 $6,216 $6,235 $27,593 $56,456 $69,574 $89,464 $43,657 $52,435 $58,510 $63,675 Hourly $13.27 $27.14 $33.45 $43.01 $20.99 $25.21 $28.13 $30.61 Annual Taxes $4,473 $9,152 $11,279 $14,503 $7,077 $8,500 $9,482 $10,323 $32,066 $65,608 $80,853 $103,968 $50,735 $60,935 $67,996 $73,998 Hourly $15.42 $31.54 $38.87 $49.98 $24.39 $29.30 $32.69 $35.58 Medical Housing Civic Other Required annual income after taxes Required annual income before taxes Page 4  Living Wage Work Group Recommendations - - - - The City should acknowledge that it is working toward a living wage and that it will take a financial commitment to provide a living wage that would meet actual living expenses. The City should adopt a wage rate of $22.00 per hour that accounts for compression to take effect at the beginning of Fiscal Year 2023. This wage rate should apply to all regular and temporary employees of the City of Austin, excluding employees in the summer youth program, regardless of position or number of hours worked. The City should plan to increase the wage rate each year to reach an hourly rate of $27 per hour by 2027. - Once the City has reached a living wage, use the average of the annual increases in the CPI-U in Texas to increase the rate each year. Please note that adjusting the living wage will also apply to any contracts the City issues for City work and require those receiving Chapter 380 incentives to pay the new rate. It is important to note the Group's expertise and passion throughout this process. The Group wants to acknowledge their recommendations will move the City to a higher wage, but it is not an actual living wage for the City of Austin. Page 5  ANIMAL ADVISORY COMMISSION RECOMMENDATION 20220613-04D Seconded By: Commissioner Herrera Recommended increase of Living Wage to $22/hour Date: 6/13/22 Subject: Motioned By: Commissioner Nilson Recommendation The Commission recommends that the Living Wage for all employees of the Austin Animal Center (AAC) be increased to $22 per hour. Description of Recommendation to Council The recommendation is self-descriptive. Rationale: The cost of living in Austin continues to climb. Inflation, many causes of which are beyond control of the City of Austin (COA), continues to climb. Housing costs continue to climb. With a non-livable minimum wage, recent hires either quickly apply for better-paying jobs elsewhere within the City, or leave City employment for higher-paying work in the private sector. Workers are forced to live further from their place of employment, increasing traffic congestion. Part-time workers are particularly affected, and do not remain in their positions for any length of time, all resulting in a high turnover rate, which costs the AAC time and money to recruit and train new workers. Many jobs remain vacant continually, making Shelter management more difficult. Without fixing this, budget and planning become increasingly problematic. In the end, raising the Living Wage will most likely save the AAC and the COA money, and enable the AAC to provide better services to the public. Vote For: 12 Against: 0 Abstain: 0 Absent: 1 (vacant) Attest: 1 of 1