Ann Arbor increases 'living wage' requirement for companies doing business with the city
Contractors and vendors doing business with the City of Ann Arbor, as of May 1, now must pay higher wages to ensure their employees are making a decent living.
Mayor John Hieftje said the city adopted the living wage ordinance to ensure companies getting city contracts pay fair wages.
Ryan J. Stanton | AnnArbor.com
The new living wage requirement has been set at $11.83 an hour for employers paying health insurance and $13.19 for employers not paying health insurance.
The city's living wage ordinance applies to companies awarded city contracts exceeding $10,000 in a 1-year period. Companies with fewer than five employees and nonprofits with fewer than 10 employees are exempt from the living wage requirements.
Mayor John Hieftje said the City Council adopted the living wage ordinance a decade ago in order to ensure companies getting city contracts pay fair wages.
"I doubt very much that there's a contractor around that would be qualified to take on a city contract that isn't paying at least the living wage," he said.
Some have questioned the legality of Ann Arbor's living wage ordinance, saying a Michigan Supreme Court decision may invalidate such arrangements.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's e-mail newsletters.
Comments
Michigoose
Tue, May 17, 2011 : 3:20 a.m.
"Living wage" is right- all you can do on a wage like that is live. At $10/hour, you can barely afford gas to get to work. But in the absence of a decent wage for all workers, the government must at least make this gesture. I'm sick of hearing people complain about the tiny wages that companies are asked to pay. If they want city contracts it is not because they will make ends meet, it is because they will make a profit. It is not ethical to make a profit at the expense of decent wages. Somebody gets rich off of providing services to the city which are paid for by taxpayer dollars. First the workers should get a good wage, then the rest of the money can go to profits. Otherwise the city should just hire the workers and buy the machinery directly rather than giving money to rich people that exploit poor people's desperation to get a job. There is no skill level which does not deserve a decent wage, because a minimum wage should be based not just on the value of what an employer is receiving but on what a worker is giving up. How much is a person's time worth, that could be spent growing her own food, taking her own children, or even reading a book?
Marshall Applewhite
Tue, May 17, 2011 : 2:35 a.m.
In many cities, the "living wage" regulations are borderline absurd. For this though, it's tough for me to believe much will change. I can't imagine many of the companies contracting over $10k in projects a year with the city actually pay their employees less than $11.83 an hour. Much ado about nothing.
Marshall Applewhite
Wed, May 18, 2011 : 3:45 a.m.
Of course there are plenty of people making less than $11.83 an hour, but how many of them are doing outside contractor work for the city? I've never heard of anyone working on a city project for less than about $14/hr.
AfterDark
Tue, May 17, 2011 : 9:56 a.m.
You are imagining badly. There are many, many employers who pay less than $10/hr and, in the current economic climate, their employees are damned happy to have even that.
a2chrisp
Tue, May 17, 2011 : 1:13 a.m.
Having worked for a non-profit for 6 years that has contracts with the city and has to pay its workers "living wage", I can say with real experience that this policy is a bad thing. First of all, this increases overhead on contracts, especially in human services, where money that should be going towards helping clients goes instead towards employment costs. It also limits the number of workers you are able to hire, decreasing the overall services you are able to provide. Second, most of these employees are part-time or temporary workers like college students that don't need a living wage. They aren't trying to survive off their income. In addition, because of this, the amount of money left to pay full-time workers who do rely on their income to support themselves is lessened. Finally, I have always found it interesting that though the city forces contractors to pay living wage, the city does not pay living wage even when they are providing the same services that a contractor would. If the city really believes in a "living wage" why don't they pay "living wage" to their workers? The living wage may be well meaning, but in reality it is just robbing Peter to pay Paul.
Lets Get Real
Mon, May 16, 2011 : 8:43 p.m.
Let's Get Real, Mr. Mayor. "I doubt very much that there's a contractor around that would be qualified to take on a city contract that isn't paying at least the living wage," he said. So where is your contract to house those visiting dignitaries, or at what restaurant do you feed them? Are you trying to tell me that the maids at whatever hotel, motel, or B&B make $12 or $13 per hour, or the servers or prep cooks wherever your next banquet or catered event is held earn that much? Are you crazy. I many cases my payroll doesn't include enough cashflow to pay myself that much in a pay period. No wonder prices are so high and the city's deficiet looming. Do you really think that increased cost doesn't get passed on back to the city, with whom they are contracting? Unbelievable! Who thinks like that? We're way over spent, but we'll enact policies that will increase our costs. Yikes!
Landshaper
Mon, May 16, 2011 : 8:35 p.m.
So who does it effect? All contractors bidding in Ann Arbor must be UNION! "Any labor used on a City construction project bid and awarded by the City of Ann Arbor must be governed by the current collective bargaining agreement of the appropriate Local Unions of the Washtenaw County Skilled Building Trades Council" taken from a City contract. The City is using discrimination by hireing Union Only. The neighbors at Pittsfield demand the same. They just dropped the low local bidder for a UNION contractor 70 miles away at a higher cost to the taxpayers.
outdoor6709
Mon, May 16, 2011 : 5:45 p.m.
Social policy is not about what makes sense, social policy is about what makes you feel good. Unfortunately there is only so much taxpayer money available. If wages go up on city contracts, less city contracts can be awarded. My solution is quit voting for the socialists that run AA.
Snarf Oscar Boondoggle
Tue, May 17, 2011 : 5:58 a.m.
@amalive .. "Pay a little more now, save a lot later." ummmmmm, where, ptaytell?
amlive
Mon, May 16, 2011 : 7:36 p.m.
*Fair. I'd love a minute or two of edit time on the comments.
amlive
Mon, May 16, 2011 : 6:21 p.m.
This is not social policy, it's fiscal policy. It's not about making anyone feel good about ensuring fare wages are paid, it's about requiring fare wages be paid so that laborers can be consumers and contributors rather than aid recipients. None of the motives need to be socially motivated, it's just good fiscal sense. Pay a little more now, save a lot later. The alternate option of allowing an underpaid workforce is simply penny-wise, pound-foolish.
genericreg
Mon, May 16, 2011 : 3:20 p.m.
One thing keep smart workers in state, is pay very little. Why go Santa Fe earn $10 when stay here earn $7? 14,000 year better than 20,000 always.
grye
Mon, May 16, 2011 : 3:15 p.m.
I was told the City refuses to take care if its sidewalks and has adjacent homeowners be legally responsible for the maintenance and repairs so the city doesn't have to pay this higher wage. I'm all for finding a less expensive way to maintain things and get the work done, but to force repair on the homeowners to get around a city policy is wrong.
alan
Mon, May 16, 2011 : 3:23 p.m.
That is standard in most cities. The sidewalk is public property but the homeowner owns the land under the sidewalk. The homeowner is typically responsible for maintenance but many cities have plans to lessen cost such as contracting with the city to do the work and rolling cost into assessment. This is quite common, it is not unique to AA.
amlive
Mon, May 16, 2011 : 2:26 p.m.
While these "living wage" numbers are hardly a wage one could make a decent living with, I suppose it's at least a well-meaning gesture none the less, and an example more cities should follow. We're moving from an economy that used to pay up front and honest, to one that tries to shuffle the numbers to make it appear better in one area while costing more in the end. Require employers to pay a fairly decent standard wage, and yes, the services they provide will cost the consumer (the city and its taxpayers) a bit more. Let them pay less than what it takes for a person to live on at least minimally in the area, and we might save a bit of money on the contracts and services they provide. Of course then we pay it back tenfold through aid and welfare programs, food, housing, and medical assistance, increased crime costing more in law enforcement, jail and prisons, insurance, etc. So employers have slightly higher labor cost, and have to charge a bit more for their services. Taxpayers pay a bit more. Labor is paid enough to live on. Laborers become consumers instead of welfare recipients (saving the taxpayers money). Consumers buy goods and services from other businesses. Businesses stay in business, employ more people, and cover their share of the tax burden. Not that difficult of a concept really.
amlive
Mon, May 16, 2011 : 3:54 p.m.
I agree eagleman, my little synapsis is no doubt far too simplistic, and there is always some different give and take in different circumstances. In general though, I'm just trying to point out to some how this can make sense as part of the "pay it forward, pay it honestly" philosophy.
eagleman
Mon, May 16, 2011 : 3:19 p.m.
I see your point, I think you neglecting those who are neither rich or poor. Those are the people who will be impacted most by this. It seems like a great idea for the bourgeois in Ann Arbor to do because they make more then enough money to compensate. But what about the lower middle class? Less money in their pockets means bringing them closer to the working poor. There are trade-offs to everything we do. That said, one percent is hardly an onerous hike.
alan
Mon, May 16, 2011 : 2:28 p.m.
Thank you for saying that much more eloquently than I did in the previous post.
alan
Mon, May 16, 2011 : 2:15 p.m.
Sounds like more political rhetoric from frequent posters. If you want to pay a teenager $8 to work in the summer that's great. But if you pay a single mother with one child $8/hr then she qualifies for food stamps, rental assistance, etc., all at my expense. It seems to me that the people who think that government shouldn't interfere with private employers setting wages are the same ones screaming about people getting public assistance. I don't want people living in the street but I don't want to pay their expenses because they can't earn enough to pay for basic human necessities. Why not pay them a wage that will allow them to at least begin to take care of themselves?
leaguebus
Mon, May 16, 2011 : 7:11 p.m.
Well Rick and the new breed of Republicans will have them off the welfare rolls ASAP by cutting the funds. Then you don't have to worry about it. Out of sight out of mind...
John B.
Mon, May 16, 2011 : 4:10 p.m.
Oops, you just used logic, reason, and common sense. The usual suspects here don't really like that behavior very much....
baker437
Mon, May 16, 2011 : 1:58 p.m.
All of next year's contract bids just went up 1%. So how does this help the AA budget deficit?
Snarf Oscar Boondoggle
Tue, May 17, 2011 : 5:49 a.m.
All of next year's taxes (bids) just went up 1%.
a2junkie
Mon, May 16, 2011 : 1:54 p.m.
Smoke and Mirrors folks does not apply to anyone in the city unless you bid on city work over 10,000. Then why is this news The city doesnt even pay there temp workers that. for example <a href="https://www2.ultirecruit.com/cit1009/jobboard/JobDetails.aspx?__ID=" rel='nofollow'>https://www2.ultirecruit.com/cit1009/jobboard/JobDetails.aspx?__ID=</a>*FC67C5E1B5ACC2E9
DeeAA
Mon, May 16, 2011 : 1:41 p.m.
I wonder if any of the people saying having a small increase in the minimum wage are actually working at or below this wage point? If you have a higher wage or are retired and living comfortably, don't begrudge those less fortunate than you.
Enso
Mon, May 16, 2011 : 1:32 p.m.
More money to the people = more money in the economy. More money to the corporations = more money in over-seas bank accounts and investments in other countries. Give the money to the people and the economy will recover. Give the money to the millionaires and you'll have more of the same.
Hot Sam
Mon, May 16, 2011 : 3:49 p.m.
Why stop at $11.83???
Enso
Mon, May 16, 2011 : 3:18 p.m.
I don't buy it. Business is not going to stop selling because they get a few percentage points less of a share... There will always be business, no matter what the tax rate. And if some business leaves, another will start up and take its place. I think the common man's admiration of the capitalist class is really pathetic. They only have as much power of you as you allow.
eagleman
Mon, May 16, 2011 : 3:13 p.m.
Who generates the money? Business. Taking more from business means raise in prices and/or less jobs. That means LESS money in the economy.
Enso
Mon, May 16, 2011 : 2:38 p.m.
Small business owners generally aren't millionaires. That is not who I am talking about.
Marshall Applewhite
Mon, May 16, 2011 : 2:22 p.m.
I strongly doubt that any small business owners in Ann Arbor have Swiss bank accounts.
Hot Sam
Mon, May 16, 2011 : 1:26 p.m.
If $11.83 is a "living wage", then we must ask "living where, and doing what?"
Hot Sam
Mon, May 16, 2011 : 6:22 p.m.
You may be above someones idea of the poverty level, but I doubt you'll be living in your own place in Ann Arbor...
Mick52
Mon, May 16, 2011 : 4:56 p.m.
I believe the idea here is to raise the employees income to a level above the poverty level.
Gorc
Mon, May 16, 2011 : 1:10 p.m.
Hmm...if I need work done on my home and a contractor bids $10,000. And then I reject his/her offer because their employees' pay is not enough. Should I counter offer with a bid of $12,000? In theory that is what the city is doing...driving up their costs of doing bussiness. It's nice to know the city can afford do that.
Snarf Oscar Boondoggle
Tue, May 17, 2011 : 5:40 a.m.
the city can ... but only if if the city coucil memvers make up the differnce out of THEIR POCKETS, not mine. oh, wiat, nevermind.
grye
Mon, May 16, 2011 : 1:01 p.m.
For a city that is huring financially, this policy is archaic.
Snarf Oscar Boondoggle
Tue, May 17, 2011 : 5:39 a.m.
you are so polite ..... city ai;t polite to taxpayers, but then, it;s not THEIR money being profligately destroyed.
EyeHeartA2
Mon, May 16, 2011 : 1:01 p.m.
"I doubt very much that there's a contractor around that would be qualified to take on a city contract that isn't paying at least the living wage," Then why waste city council time on this? Oh, that's right, to make a statement. Also, we are really interested in what the AA city council has to say about illegal immigration. No, really. Maybe if they made the hard decisions instead of goofing off on this kind of garbage we wouldn't be in the ditch like we are? Of course we will never know, since they won't stick to their knitting.
Lifelong A2
Mon, May 16, 2011 : 12:46 p.m.
Natalie and others appear to not understand how this works: The Living Wage ordinance does *not* apply to every business in Ann Arbor. It applies *only* to businesses that wish to receive a contract in excess of $10,000/year from City government. If you're a business who wants to make a profit off of the taxpayers, then you must pay your employees a living wage. Any business that is unwilling to pay a living wage has an easy choice: don't bid on City contracts.
Boo Radley
Mon, May 16, 2011 : 12:38 p.m.
What kind of a "Living Wage" will the Ann Arbor police officers and firefighters have after the city lays them off? So, the city cannot afford to pay it's own employees, but thinks it is appropriate to dictate to contractors how much they should pay their employees. Naturally, the contractors will then have to charge the city more money for the work. What kind of fiscal irresponsibility and mismanagement is this that causes the city to pay more for work done in the city when the city is already broke?
Snarf Oscar Boondoggle
Tue, May 17, 2011 : 5:37 a.m.
that would be the profligate destructinsists cheating the taxpayres yet again. negotiating f ro the best valuse is an ethicla obligation. ethics, oh, wait, nevermind.
Patriot
Mon, May 16, 2011 : 10:47 p.m.
That would be Liberal Democrat Spend and Tax Fiscal irresponsibility and mismanagement that we elect to run our City.
dotdash
Mon, May 16, 2011 : 12:27 p.m.
Good for the city. They will always have bidders on city work so no, unemployment probably won't go down at all. If companies can't afford to pay a living wage (and $11.83*2000 = $23,600 is not a lot, mind you), then they can't afford to sell whatever they are selling at the price they are selling it for. And frankly, if we as consumers cannot afford to pay for products that are made by people who can feed their children, then we cannot afford those products.
Forever27
Mon, May 16, 2011 : 1:50 p.m.
*too META: aa.com how about we use comments that can be edited?
Forever27
Mon, May 16, 2011 : 1:49 p.m.
that's way to rational and logical of a thought for an internet message board.
CincoDeMayo
Mon, May 16, 2011 : 1:25 p.m.
Agree. Completely.
alan
Mon, May 16, 2011 : 12:19 p.m.
To read some of these comments I would think $8/hr jobs are going to save America from recession.
alan
Mon, May 16, 2011 : 2:04 p.m.
Not sure why the sarcasm. A single parent with just one child earning minimum wage qualifies for assistance under federal poverty guidelines. You and I pay for food stamps and rental assistance for that person. Paying that person a living wage seems much more efficient to me than paying them minimum wage and then requesting taxpayers to make up the difference with added administrative costs.
andys
Mon, May 16, 2011 : 12:41 p.m.
But those $8/hour jobs are everything to those who want them and are denied the opportunity. But let's not let that get in the way of liberal feel-good policy.
mojo
Mon, May 16, 2011 : 12:13 p.m.
Another forced tax! It has been shown over and over that forcing higher minimum wage levels just increases unemployment. (maybe AA wants that) . . . . "A 2008 book by labor economists from the University of California-Irvine and the Federal Reserve Board examined research from both sides of the minimum wage debate over the last two decades and found that 85 percent of the best studies on the subject pointed to job loss following an increase in the minimum wage." <a href="http://washingtonexaminer.com/opinion/op-eds/2011/02/only-thing-living-wage-raises-unemployment-especially-among-teens#ixzz1MW5LmpuV" rel='nofollow'>http://washingtonexaminer.com/opinion/op-eds/2011/02/only-thing-living-wage-raises-unemployment-especially-among-teens#ixzz1MW5LmpuV</a> and .<a href="http://www.jobbankusa.com/News/Unemployment/unemploy70305b.html" rel='nofollow'>http://www.jobbankusa.com/News/Unemployment/unemploy70305b.html</a> and "A new study from Dr. Joseph Sabia, a labor economist at West Point, found that each 10 percent increase in a state's minimum wage leads to a drop in teenage employment of 3.6 percent." and many other links and studies to prove the consensus negative outcome. Forcing higher minimum wages crushes folks at the poverty levels and first job seekers. It is these folks who will have fewer and fewer jobs opportunities.
Are you serious?
Mon, May 16, 2011 : 12:11 p.m.
Nate Ardle So you think a 1% increase (about 12 cents) will increase unemployment? I assume the city will continue to get their projects bid on and completed, so how does that effect unemployment?
Nate
Mon, May 16, 2011 : 7:37 p.m.
You are right that companies will continue to bid on city projects, as others have pointed out in their comments. Also, as others have pointed out, that simply means they will all bid more on each project. The companies will not lose more money--the city will pay more money (meaning us the taxpayers). But you ask how will this increase unemployment. This small increase, by itself, will not significantly increase unemployment, especially since the city doesn't have to abide by it for its own jobs. But, the combined "living wage" ordinances do increase unemployment. Companies who could have done a job at a lower cost with relatively unskilled labor may choose not to bid on jobs because of the labor cost involved. The companies who do bid on the project do so at a higher level. The city fits the bill at a level higher than would occur if market wages prevailed. This takes more money away from taxpayers and from business due to the need for higher taxes to pay for higher cost projects. Higher taxes on businesses lead them to be unable to hire as many workers, thus costing jobs. Either way you look at it, forcing companies to pay a certain wage no matter the work or the skill level required costs money and jobs down the line. Those most hurt by these laws are the young and the poor, the very people claimed to be helped by them. Ultimately people will work for the best wage they can get. If they are worth more than the minimum or "livable" wage, then they will make more than that. If their skill level is not high enough yet, lower wages allow them to gain the experience needed to rise to a higher wage level. Almost all people in this country start with low skills, experience and then see rising wages as they gain in both of those categories.
stunhsif
Mon, May 16, 2011 : 11:41 a.m.
No wonder Ann Arbor is in financial distress !
tdw
Mon, May 16, 2011 : 11:29 a.m.
Does that include the city itself ? I see a lot of city " temp " jobs on TV saying a lot less than that
Mick52
Mon, May 16, 2011 : 4:53 p.m.
Good point TDW. I have always felt the city is a little two faced about this, though I do have no problem with the living wage regulation. Its just a question of leading by example.
AfterDark
Mon, May 16, 2011 : 3:48 p.m.
There are library employees earning less than if they got jobs at Chipotle.
andys
Mon, May 16, 2011 : 12:35 p.m.
That's great, "do as I say, not as I do"!
Awakened
Mon, May 16, 2011 : 11:51 a.m.
No it does not.
Craig Lounsbury
Mon, May 16, 2011 : 11:25 a.m.
This should make the cab company's requested fair hike a slam dunk.
Nate
Mon, May 16, 2011 : 10:54 a.m.
Great idea! Do something that has been shown to cause a rise in unemployment when it is already so high in the area. I'm sure people who used to work for these companies who will now lose their jobs are happy about a living wage that the company can no longer afford to pay them. The reality is that there are jobs that don't require the labor skill to support these wages. A company cannot stay in business when it pays more than the job skill level requires, so these companies will stop doing business in our city. Simple economics.
Craig Lounsbury
Mon, May 16, 2011 : 11:24 a.m.
"so these companies will stop doing business in our city. " They will stop doing business WITH our city but not in it. It applies to folks doing contracted work for the city. You and I can still hire somebody privately who pays less.