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A Decade Later, San Diego’s Living Wage Law Quiets Critics

A worker from Downtown San Diego Partnership's Clean and Safe program scrubs city sidewalks, August 18, 2016.
Megan Wood
A worker from Downtown San Diego Partnership's Clean and Safe program scrubs city sidewalks, August 18, 2016.
A Decade Later, San Diego’s Living Wage Law Quiets Critics
A Decade Later, San Diego’s Living Wage Law Quiets Critics
A Decade Later, San Diego’s Living Wage Law Quiets Critics GUEST:Chris Young, reporter, inewsource

It's been 10 years since San Diego started requiring city contractors to pay their employees well above minimum wage. The so-called, living wage law, initially faced fierce opposition from business leaders. A decade later, many say it's been good for workers and employers. Supporters say it's success helped pave the way for the city to pass a higher minimum wage law this past June. Chris Young from our media partner, iNews Azores reports in the first of a two-part series. I asked the clerk to call the roll. Smack on April 12, 2005, hundreds of San Diego's pact Golden Hall to debate a bill that would pay landscapers, janitors, and other city contract workers five dollars per hour more than minimum wage. Testimony lasted nearly 6 hours and at times it got heated. For supporters, though all was about economic justice. The living wage is a human right. I want my potholes fixed. Just like everyone else does. But I do not want them filled with the sweat of low-wage workers. Opponents counter that the law would kill jobs, cripple businesses and spell disaster for the city's finances. Every other city that has a living wage has unemployment numbers significantly higher than San Diego. Please do not accept this. It will literally shut our doors down for business. In the end, those in favor please raise your right hand? City Council voted by the check in 4 to approve the living wage. Those opposed to raise her hand? 10 years after the law when it to affect, a met with Jose Partida as he surveyed sprinklers soaking the baseball fields at a City Park and Scripps Ranch. The 28-year-old father of two does irrigation work at city properties for Landscapes USA. He is one of about 3900 city contractors currently earning nearly $15 an hour, including health benefits and receiving paid vacation. That's about four dollars better than what he previously made working for a different company. One that did not do business with the city. He said earning the living wage has improved his family's quality of life. We go out to eat with the kids. We go out on vacation. We go on trips. Everything is very different. I can travel and come back without problem. My check is whole. Everything is fine. The law has been good for business too. Was some employers say the increasing cost force them to cut back on hiring, many employers report the living wage has improved their service and reduced turnover. Mikesell Siano is his boss at Landscapes USA. We have much better retention. With retention comes increased quality of service. I think it's a great program. Even business leaders will post the law decade ago has stopped fighting it publicly. The San Diego regional Chamber of Commerce declined an interview request for this story. Workers rights advocates say the living wage means a lot to many low income families. Clare Crawford is the executive director on Center of Policy Initiatives, and local nonprofit that advocates for low-wage workers. The stories that we have heard is that it's not for some people the ability to drop a second job. For the families it's enabled them to move to an apartment that's big enough to fit their family. It makes a tangible difference in people's lives. Researchers have been studying the effects of living wage law's ever since Baltimore past the first one in 1994. To date, more than 130 cities have adopted such laws. For the most part, researchers say they've been successful even if they overall scope is limited. And it's that success they say that has helped give birth to the minimum wage movement sweeping the nation. Alan Chin is an economics professor at the University of San Diego. Two people solve these living wage ordinances being passed in the sky not falling. As a result they felt that you could push for higher minimum wages. In June, San Diego voted an increase to the city's minimum wage. Raising it to $10.50 per hour. The new pay rate is much less than a living wage but it affects tens of thousands more workers. The extent to which the law succeeds will largely depend on how well the city enforces it. Workers rights advocates say the city can learn from its decade of experience policing the living wage. In T'mars report we will explore some of those lessons. Chris Young from our media partner. He joins me now. Welcome. Hello. Back in 2005, businesses who did not want the living wage said it would kill jobs. Did you find there was any truth to that fear? A little bit in a sense that when we look at the living wage experience there were some employers who told us that they had to cut back on jobs because of the increasing costs. But even then, a lot of the employers we talked to said it's been a good thing for businesses because it did two things. And improve the quality of their service and it reduced turnover in absenteeism which is two things that are very important for businesses. Groups like the regional Chamber of Commerce and other business owners and even other groups that were not going to be affected by the living wage when it passed had spoken out very much against it early on but the experience that the cities had over the years seems to have quieted those critics. Even though a lot of their concerns at the outset were pretty serious about how it would affect the city's budget and how it would affect employers and kill jobs. But, overall, April look back on it and say it's been, for the most part, a success. How does a living wage ordinance actually work for employees? It only takes effect if they are working on a job that has a city contract. Could that mean it's only part of their weekly income? Exactly. First of all, this law covers a very small slice of the overall workforce in the city. It only covers the city contractors so that is landscapers, janitors, security guards, workers of that type. And employers are required to pay the living wage during the hours that workers are working on city contracts. In some cases there are employers that have workers, a whole staff of workers working full-time on city contracts and there's other businesses that have workers that are only working for a handful of hours on city contracts and in those cases the rest of the time they are working on private contracts. They are only going to make whatever the employer pays them for that. They still can pay the living wage beyond the city contracts but not all of them do that. Tell us about why people point to the success of the living wage ordinances as creating the movement for a higher minimum wage? Sure. Back in 1994 in Baltimore was where the first living wage law was passed since then there have been a wave of cities that have been passing living wage law's over the past 10 or 15 or 20 years. We spoke to experts about the living wage law's, they said that while studies showed there's been some modest job losses and increase costs associated with them, that overall, Nathan Gerbe for workers and for businesses. And all that doom and gloom that a lot of people predicted at the outset really never came true. And as I mentioned before, business owners started to see that this could be good for business because it's improving quality of service and reducing turnover. Workers advocates look at that and started to see the success of these laws and say, why don't we brought in this out and why don't we push for a minimum wage and that's much higher that's why you see these cities that are going and pushing for minimum wage. The living wage set the foundation for that. In part two of your feature, what will you be focusing on? Is all about enforcement. It basically is about what lessons can the city of San Diego learn from its living wage enforcement as it goes about trying to start policing its new minimum wage which passed in June and went into effect in July. Really the extent to which the city's minimum wage is going to succeed will largely depend on how aggressively the city enforces it. It depends on how much they are going to budget for it and what we found is that the budget is not as much as a lot of people should think it should be. To San Diego have a history of businesses trying to flout the living wage ordinance? Sure. Wage theft is fairly common. Not just in San Diego but elsewhere. And it's not always that city contractors are doing this intentionally. Sometimes there just oversight that isn't caught. But at the end of the day, unpaid wages mean the same thing for workers if you are not getting paid, you're not getting paid. The city, when we looked at all the money that was recouped for the living wage over the time period during complaint investigations and audits that the city does it for the living wage, the city has recovered nearly $600,000 over the ten-year period through complaint investigations and audits. Over that time period workers had filed more than 60 complaints. About half of which resulted in violations in the city has conducted a 75 audits, about 43% of which resulted in violations found. There are concerns about how the City of San Diego is going to be enforcing the new minimum wage. The higher minimum wage. City councilman Todd Gloria is said the city is in the outreach phase of enforcement. What does that mean? The city is going to be focusing mainly on responding to complaints from workers in order to enforce the law. But in order for workers to file complaints they need to know what to complain about. And they need to know all the intricacies of the law to make sure that they are getting the wages, the $10.50 an hour they are supposed to be getting now and the paid sick days that are required in the law too. It's really important the city wants to partner with community groups and talk to as many people as possible to get the word out, not just to the workers, but also to the business is too. I went to a meeting recently at the employee rights Center in City Heights where there was actually workers, low-wage workers that were getting a lesson in wage theft in the new minimum wage law. The city will want to do that is much as possible. I've been speaking with Chris Young from our media partner. Chris, thank you. Thank you.

A Decade Later, San Diego’s Living Wage Law Quiets Critics
Part 1/2 The city’s experience over the past decade appears to have silenced business leaders who argued that requiring pay well above the minimum wage would kill jobs and put employers out of business.
A Decade Later, San Diego’s Living Wage Law Quiets Critics
Part 2/2 The city’s experience over the past decade appears to have silenced business leaders who argued that requiring pay well above the minimum wage would kill jobs and put employers out of business.

Two years ago, the paychecks Jose Partida brought home to support his family were barely enough to make ends meet. The landscape company he worked for at the time paid him about $11 per hour, without paid vacation or health benefits.

But life has since improved for the 28-year-old father of two. He now works for a different landscape company, one that does lots of business with the city of San Diego.

inewsource is an independent nonprofit dedicated to providing in-depth, data-driven journalism on the web, radio and TV.

Partida is the beneficiary of a decade-old law that requires city contractors to pay their employees living wages for work they perform on the taxpayers’ dime. He is one of roughly 3,900 city contract workers currently earning nearly $15 an hour, including health benefits, and receiving paid vacation.

“I live better,” said Partida, who does irrigation work on city properties for Landscapes USA. “I don’t have any pressures. … Before it wasn’t like that.”

The city’s living wage law initially faced strong opposition from business groups, who argued that requiring pay well above the minimum wage would kill jobs and put employers out of business. But San Diego's experience over the past decade appears to have silenced those critics.

In fact, many employers report that the law has been good for workers and for business. Experts who study living wages say the overall success of such laws has helped pave the way for the movement to increase minimum wages in cities nationwide, including San Diego.

Workers rights advocates and city officials hope San Diego’s new minimum wage law, which went into effect in July, will have a similar positive effect on workers, businesses and the local economy. But the degree to which the law succeeds will largely depend on how aggressively the city enforces it.

If the budget is any indication, strong enforcement of the new law is unlikely. An inewsource review of the city’s experience policing the living wage suggests that its plans to rely on complaints to enforce the minimum wage law may not be enough to keep employers honest.

Businesses in San Diego have a track record of failing to follow wage laws, whether intentionally or not. And given that low-wage workers are often afraid to file complaints against their employers, workers rights advocates say it’s critical that the city make active policing of its latest wage law a top priority.

“If you look at the lessons learned from the living wage enforcement, the picture is very clear that you do have to do some proactive enforcement in order to ensure that employers feel the obligation to comply,” said Clare Crawford, executive director of the Center on Policy Initiatives, a local nonprofit organization that advocates for low-income families. “You really need the city to make sure those employees are protected beyond just waiting for complaints.”

A popular law

The living wage currently pays $12.21 per hour in cash wages, plus $2.45 per hour in health benefits, and offers workers up to 10 paid vacation days. It covers landscapers, janitors, security guards and a variety of other full-time, part-time and seasonal service employees who work for companies that do business with the city.

Many employees at Qualcomm Stadium, Petco Park, the Convention Center and other city facilities earn the living wage. Earlier this year, the city added paramedics and other medical workers to the list of city contractors covered by the law.

As its name suggests, the living wage is intended to help workers do more than just get by — it’s meant to lift them out of poverty. At least that’s what the City Council intended when it passed the law in dramatic fashion on April 12, 2005.

For nearly six hours before the vote — the outcome of which was uncertain until the very end — opponents and supporters of the measure packed the auditorium of Golden Hall for heated testimony.

Advocates for low-wage workers hailed the ordinance as a way to achieve economic justice (“the living wage is a human right,” one woman said), while many business leaders assailed it as a government mandate that would kill jobs, cripple businesses and spell disaster for the city’s already dismal finances (“it will literally shut our doors down,” one business manager said).

In the end, the City Council voted 5-4 to approve the living wage. Cheers erupted when City Councilman Tony Young — widely believed to be the swing vote — announced his support for the measure. As the applause died down, however, Young stressed that he wanted to reserve the right to rescind the ordinance if the gloom and doom predicted by opponents of the living wage came true.

Tens years later, many say it hasn’t.

“It turned out to be really popular,” said Laurie Coskey, CEO of United Way of San Diego County and a faith leader who fought for passage of the living wage ordinance. “There weren’t any of the doomsday repercussions that were anticipated.”

The living wage got the city out of the business of paying its contract workers low wages that advocates say kept workers and their families living in poverty. And raising the wage floor allowed contractors to bid on city contracts on the basis of service quality, rather than how little they paid their workers.

But the law applies to only a small fraction of workers in San Diego.

Some businesses with lots of city contracts employ dozens of workers who earn the living wage, but other businesses only pay living wage rates for the handful of hours a week one of their employees works on a city contract.

“I have nothing bad to say about (the living wage)," said Mike Salceanu, operations manager at Landscapes USA, which employs about 35 workers who landscape city properties. “We have much better retention, and with retention comes increased quality of service.”

Additionally, he said, the living wage helps motivate his staff who work on private contracts.

“All of the employees want to be assigned to a city contract because it’s better benefits, better pay, better stability in their work,” Salceanu said. “We made it into a kind of a reward program.”

Mike Salceanu Explains How The Living Wage Has Improved His Business

Other employers have reported similar benefits in annual reports filed with the city. In 2009, the first year the city asked employers for feedback on the living wage, 41 percent reported that paying the living wage improved their quality of service, while the same percentage said it reduced turnover and absenteeism.

The Downtown San Diego Partnership is one of the city’s newest — and biggest — living wage employers. The nonprofit’s Clean and Safe program, which employs workers to sweep sidewalks, trim trees and remove graffiti downtown, recently signed its first city contract covered by the law.

“We definitely noticed an increase in morale,” said Bahija Hamraz, executive director of Clean and Safe. “We are experiencing better retention. And we’re able to attract employees more effectively than we did in the past, so we’re more competitive.”

The downside, Hamraz added, is that the budget increase caused by the living wage has stalled hiring a bit. She said the nonprofit had hoped to hire more employees when it renewed the contract, but the added costs have prevented that so far.

Still, “I think it’s a net plus,” she said. “You have a more productive team, with better morale and also an ability to retain a team, which all translates into cost savings.”

Aztec Landscaping was among the first set of participants in the city’s program. Since the law went into effect in 2006, it’s held 210 living wage contracts, more than any other firm, according to an inewsource analysis.

Aztec’s vice president, Rafael Aguilar, agreed that the living wage law has benefited his workers, but “it did kill jobs,” too. Positions he had to cut after the law went into effect have never been restored, he said.

Despite such complaints, business leaders who were once strongly against the living wage law are no longer criticizing it publicly. A spokeswoman for the San Diego Regional Chamber of Commerce, which led the fight against the law in 2005, declined an interview request for this story. “We are going to pass,” she wrote in an email.

To date, more than 130 cities have adopted living wage laws nationwide. Economics experts have been studying their impacts on workers and businesses ever since Baltimore passed the first one back in 1994.

For the most part, researchers say, the experiences of many workers and businesses in San Diego appear to reflect broader research about living wage laws in cities across the country. While studies have found the laws result in modest job losses and increased costs, researchers have generally concluded that they help stabilize the lives of low-income families — allowing them to pay down debt, see a dentist or quit a second job — and improve the performance of businesses.

Experts say the overall success of living wage laws helped give birth to the minimum wage movement sweeping the nation. As David Fairris, professor emeritus at the University of California, Riverside, put it: “The living wage movement showed that … it didn’t all go to hell in a handbasket.”

Enforcement lessons

In June, San Diego voters overwhelmingly approved a ballot measure to raise the minimum wage and provide workers in the city with paid sick days. The law, which went into effect in July, added 50 cents to the minimum wage, raising it to $10.50 an hour.

The city’s minimum wage will jump to $11.50 next year, but its gradual increases will eventually be eclipsed by the state’s minimum wage, which will reach $15 per hour by the year 2022.

The question now facing San Diego is how it will enforce the new wage mandate. City officials acknowledge it won’t be easy, but workers rights advocates say the city could learn important lessons from its decade of experience policing the living wage.

Since the living wage law went into effect, the city has recovered on workers’ behalf about $594,000 in unpaid wages from city contractors through complaint investigations and compliance reviews.

To date, workers have filed more than 60 formal complaints against their employers, alleging a wide variety of living wage violations, including unpaid wages and unpaid leave. An inewsource analysis showed the city confirmed violations in 52 percent of the complaints and required employers to pay a total of $408,000 in back pay.

The city has recouped an additional $186,000 for workers through proactive enforcement. A separate inewsource analysis showed the city has conducted more than 70 compliance reviews since the law went into effect in 2006, roughly 43 percent of which resulted in violations. Last fiscal year, more than half of the compliance reviews found violations.

Employers subjected to audits have been cited for failing to pay living wages and failing to compensate workers for vacation, among other violations. Some violations have been minor, but others have been substantial.

Last year, for example, a city audit of three contracts held by Ace Parking found multiple living wage violations, requiring back pay totaling more than $72,000, the highest amount paid as a result of a compliance review.

The parking services company, which declined an interview request, failed to pay required wages, offer paid leave and maintain proper records, among other violations. The city has paid Ace Parking more than $45 million in living wage contracts, more than any other contractor.

In 2010, the city permanently banned J.L. Krueger Landscape Services from bidding on city contracts after an audit found some of the same violations.

In both cases, the companies were found to have violated a fundamental requirement of the law, which records show many employers have ignored: They failed to inform employees of their rights under the living wage law.

Enforcement “needed to be proactive,” said former state Assembly Speaker Toni Atkins, who led the effort to pass the living wage in 2005 when she was on the San Diego City Council. “You need to shine the light.”

Workers advocates have largely praised the city’s efforts to enforce the living wage law, but they say a lack of funding has limited the scope of its work. The enforcement office is run by just three full-time employees who are tasked with sifting through payroll records and interviewing employees in order to detect violations.

In fiscal year 2015, the city proactively reviewed 22 percent of its active living wage contracts. That’s a lower audit rate than the city of Los Angeles, which reviewed 28 percent of its living wage contracts.

Three years earlier, San Diego didn’t conduct any compliance reviews because its skeleton staff was busy investigating an unusually high number of complaints.

Some business owners say the limited proactive enforcement is a problem. In 2010, security contractor Elite Show Services filed a complaint with the city, alleging that some of its competitors working for the Convention Center had “snubbed their noses” at the living wage law. The company requested that the City Council “take immediate action to follow through on (living wage) enforcement … so that the playing field for all companies is leveled.”

Records indicate that the city found no violations.

“It’s good for them to do (compliance reviews)," said Aguilar of Aztec Landscaping, which has been subjected to three audits. “It weeds out people that are trying to do shady business.”

Workers advocates agree. They stress that the high violation rates found through complaints and compliance reviews suggest the need for more proactive enforcement — something they hope will be prioritized as the city starts to monitor its newest wage law.

“People will make mistakes, people will try to cheat, people will just not know,” said Donald Cohen, the former executive director of the Center on Policy Initiatives, who helped craft the city’s living wage law. “If you’re not out there being proactive, then our worst selves can come out.”

Clare Crawford On Living Wage Enforcement In San Diego

Minimum wage connection

If a lack of funding has hampered enforcement of the living wage law, it’s likely to pose a much greater obstacle for minimum wage enforcement.

The city has budgeted $400,000 to administer and enforce the new minimum wage law in fiscal year 2017. That’s only about $3,000 more than it has allocated for enforcing the living wage law. In other words, the city plans to spend almost as much money to police a law that covers 172,000 low-wage workers citywide as it does to enforce a law that applies to fewer than 4,000 city contract workers.

The city is still in the early stages of creating a program to enforce the minimum wage law. In August, the City Council passed an enforcement ordinance that subjects employers to civil penalties of up to $1,000 per violation and creates an office with the power to review payroll records and interview workers.

The city plans to rely on complaints to monitor compliance.

“They did not build into the ordinance a requirement to do proactive enforcement,” said Crawford of the Center on Policy Initiatives. “We see that as one of the weaknesses.”

Mayor Kevin Faulconer opposed the minimum wage increase. A spokesman for his office declined an interview request for this story.

City Councilman Todd Gloria, who led the effort to raise the minimum wage, said he understands the importance of compliance reviews. While the new law doesn’t explicitly mandate proactive policing, he said it allows for audits to be a part of the city’s enforcement repertoire.

“It’s my intention that that tool is at the disposal of the enforcement office,” said Gloria, who plans to further discuss minimum wage enforcement during a Sept. 14 Budget Committee hearing. “It cannot simply be just a complaint-driven process because too often too many people are not going to feel empowered to come forward.”

The city plans to spend almost as much money to police a law that covers 172,000 low-wage workers citywide as it does to enforce a law that applies to fewer than 4,000 city contract workers.

Gloria said the city plans to follow the lead of other cities that have enforced minimum wage ordinances, prioritizing education outreach and cooperation between the city, the state Labor Commissioner’s Office and local community groups.

“We should be in an educational role right now,” Gloria said, noting that his office has already received calls from workers claiming they weren’t being paid the new minimum wage. “Are we getting notices to employers? Are we working with nonprofit partners in neighborhoods that can help us spread the word?”

But eventually, Gloria said the city will have to take stock of its enforcement efforts.

“We’re going to really have to start looking at the metrics,” he said. “If the council saw that there were no proactive (compliance reviews), they’d have to ask why we’re spending the money we’re spending on the enforcement office and whether or not we’re getting our money’s worth.”

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