Overview
Recommended actions provide the specific steps that a workforce or economic development agency can take to implement job quality in its local area. These steps are intended to provide both guidance and inspiration by highlighting a variety of options including how to support job seekers, businesses, and their own operations.
Catalog any living wage ordinances (LWOs) that impact your agency’s purchasing and contracting practices.
Your service area may already be operating within an existing LWO and your agency does not have a role in revising or updating that policy.
Use MIT’s Living Wage Calculator, which estimates the living wage based on expenses needed to support families of 12 different compositions. Calculation is available by US metro area, county, state, region or at the national level.
We recommend using the wage for a single adult with no children as the minimum standard for policy and practice change. This should be taken from your job quality strategy.
Using as much concrete evidence as possible, articulate the reasons why the organization should implement a living wage and the anticipated benefits. For example, the cost of constantly recruiting, hiring and training new employees is often higher than the cost of paying existing employees a living wage based on the Aspen Institute’s Cost of Turnover Tool.
This analysis from the Economic Policy Institute found that living wage ordinances benefit working families with few or no negative effects, and living wages laws have raised productivity and decreased turnover among affected firms.
Allocate a percentage or dollar amount of the selected program’s wage subsidy budget to living wages. To formalize this goal, you may find it helpful to establish a working group of key stakeholders to develop a draft policy for approval (e.g., workforce development board, economic development committee of the city council, etc.). This group should include a mix of business representatives, worker advocates and agency staff. This Minneapolis Living Wage and Responsible Public Spending Ordinance is a useful example of a city level ordinance.
Living wage policies can apply to all businesses that contract with local governments or receive economic development subsidies, or they may target specific industries. Living wages can also be included as project- or area-specific provisions of a community benefits agreement, and they may even apply to all private businesses whose employees work on city-owned land (such as arenas or convention centers).
In addition to hourly and salaried employees, it’s important to consider other types of workers who are often disproportionately represented in low-quality jobs. For example:
Tipped Workers disproportionately benefit from increases in minimum wages and living wage ordinances also improve wages for their non-tipped colleagues.
Independent contractors in Florida and Richmond (CA) also raise the living wage standard for independent contractors to account for additional taxes these workers pay.
Many living wage ordinances (LWOs) and programs allow employers to deduct tangible benefits like health insurance, typically $1 to $2 per hour (e.g., Minneapolis, MN; Richmond, VA; Santa Clara, CA). Conversely, some LWOs stipulate that employers must cover benefits or raise their hourly wage (e.g., Berkeley, CA). Determine which approach makes the most sense for your programs.
At a minimum, establish a preference for vendors that pay all employees a living wage. Notify existing vendors of the new policy and expectation for compliance at the next renewal period. If needed, offer support in implementing the changes within their organization and provide a grace period for compliance. See San Diego Workforce Partnership for sample language for RFPs and contracts.
Identify a set of metrics to monitor your progress and course correct where necessary.
Here are some sample metrics to get you started:
Percentage of the procurement budget requiring living wage for the jurisdiction (for a single adult with no children)
Number of workers in living wage jobs by vendors, subrecipients and contractors
Establish a cadence for updates. While the cost of living (and therefore living wage) usually increases every year, it can be helpful where possible to keep standards consistent for two years to reduce the administrative burden of running the program. Regardless of what cadence you choose, make it clear up front and provide ample time for employers and the program to adjust when the standards increase.
Concerned about potential challenges? Go here.