AU Solidarity Committee Living Wage Report

A Living Wage for Workers at American University:

A Question of Fairness and Social Responsibility

A Special Report on Workers’ Conditions at American University

American University Solidarity Committee

Center for Action and Social Justice

4400 Massachusetts Ave., NW

Washington, DC 20016

February 1, 2002

Table of Contents

Executive Summary3

Introduction: The Need for a Living Wage 4

A Brief History of the Living wage Campaign at American University6

Research Design7

What is a Living Wage?8

Why Should AU Adopt a Living Wage?10

Workers at American University: Survey Results11

Recommendations15

Appendix I 18

Appendix II 20

Appendix III21

Acknowledgements

AU Solidarity Committee would like to thank American University workers for participating in the information gathering process. We would also like to thank the locals representing workers on AU’s campus, specifically Local 25, Hotel and Restaurant Employees, representing the Bon Appetit workers and Local 82, Service Employees International Union, representing the Aramark workers, for their outspoken support of the living wage campaign on AU’s campus. Local 99, International Union of Operating Engineers, provided us with a helpful sample questionnaire that we used as the basis for our own surveying process, as well as useful advice on how to conduct worker interviews. In addition, we would like to recognize Bon Appetit management for facilitating interviewing dining room workers. We are grateful to the Living Wage Coalition at Washington College of Law for their leadership and hard work. Finally, we would like to recognize the efforts of the Living Wage Advisory Committee (LWAC) comprised of students, faculty, and staff, established by President Benjamin Ladner to look into the feasibility of a living wage for AU’s workers.

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AU Solidarity Committee Living Wage Report

Executive Summary

American University Solidarity Committee, a labor rights group composed of undergraduate and graduate students, researched conditions among full-time foodservice, custodial, mailroom, and landscaping workers through interviews and an anonymous questionnaire. We produced this report to supplement the recommendations of the Living Wage Advisory Committee to President Benjamin Ladner and the University Trustees and to demonstrate the need for a university living wage for contracted workers and direct university employees.

We found that although approximately 57 percent of surveyed full-time workers have worked at AU for ten or more years, their wages and benefits are insufficient to provide for all of their basic needs. For example:

  • The median hourly wage among the workers surveyed was $9.41. One foodservice worker with 35 years of service to the university earns only $11.17 per hour. Workers receive no merit raises or raises for seniority.
  • Nearly 70 percent of the surveyed workers said that they cannot afford the premiums or the co-pays for the employer-offered insurance and 52 percent reported having no insurance at all. Insurance benefits for Aramark custodial workers are capped at $3,000 annually.
  • Approximately 31 percent of the surveyed workers share housing with friends or family members outside of their immediate family in order to save on rent.
  • Eleven percent of the surveyed workers reported taking a second job in order to pay the bills.

As students at American University, we are stakeholders and do not want our tuition to be used for poverty-level wages. It is a matter of fairness that people who work full-time and their children should not be poor or have to rely on welfare programs to meet their basic needs. Nor should taxpayers be required to support full-time workers from companies as large as Aramark, Bon Appetit, Pitney Bowes, Sodexho-Marriot, or a private university.

The Living Wage Advisory Committee is recommending to the University Trustees that American University guarantee to all full-time contracted and direct hourly workers a living wage, as well as health insurance, retirement, childcare, and education benefits comparable to those offered to direct AU employees within the next three years.

AU Solidarity welcomes these recommendations. We advocate for a living wage definition equivalent to standards developed by the Economic Policy Institute and Wider Opportunities for Women, leading to an hourly wage of $14.95 in 2001 dollars as based on a 35-hour workweek, or $12.58 in 2001 dollars as based on a 40-hour workweek. The living wage should be annually adjusted to reflect the cost of living. We thank the Living Wage Advisory Committee for its work. We urge the committee to continue to meet in order to monitor implementation of the living wage and to include worker representation in its deliberations.

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AU Solidarity Committee Living Wage Report

Introduction: The need for a living wage

After the terrible events on September 11, 2001, classes at American University were cancelled and the campus was closed. While most employees were sent home, foodservice and custodial workers were required to stay, because their jobs are essential to the daily functioning of the university. The people who cook our food, clean our buildings, and take care of the campus provide important services that the university community cannot do without, even for one day.

In spite of the centrality of these workers to the campus’s functioning, many of them are living in poverty. Although nearly all custodial, foodservice, maintenance, groundskeeping, security, parking attendants and mailroom workers work full-time, they earn wages that are insufficient to provide a decent standard of living for themselves and their families in the DC metropolitan area. While approximately 57 percent of the hourly workers surveyed have been in their jobs at AU for ten years or longer, many report being unable to afford health insurance for themselves or their dependants. About 52 percent of those surveyed say that they have no health insurance.

Like many other institutions, American University has increasingly turned to contractors to reduce costs for some campus services instead of employing workers directly. While formerly direct workers have been re-hired by the contractors, their earnings have stagnated compared with those of direct AU employees and they receive far fewer benefits. Under AU’s contract with Aramark, custodial workers’ health insurance is capped at $3,000 annually. Bon Appetit foodservice employees must work for six months before qualifying for hospitalization benefits, while AU direct employees are guaranteed health insurance on the first of the month following their starting date. And unlike direct university employees, these contracted workers receive no retirement benefits, no childcare benefits, no education benefits for themselves and their spouses, and do not have the option of having their children attend American University for free, in spite of many years of service. Many workers report being unhappy with the workplace conditions under Aramark and Bon Appetit, the contractors who replaced UNICCO and Sodexho-Marriott less than one year ago.[1]

AU Solidarity’s Mission

AU Solidarity Committee, a labor rights group composed of undergraduate and graduate students, researched the workers’ conditions and produced this report to demonstrate the need for a living wage for all full-time direct and contracted university workers. We found a great deal of evidence suggesting that workers’ wages and benefits are insufficient to support their basic needs. Although the workers have worked hard and demonstrated commitment to the university through long-term service, American University has not responded to their contribution in kind. These workers constitute part of America’s working poor.

We, as tuition-paying students of American University, feel that it is a matter of fairness that full-time workers, whether they are direct or contracted workers, should not be living in poverty. The members of AU Solidarity believe that it is time for American University to live up to its stated commitment to equity, social justice, and public service.[2] We, therefore, call on the administration and the University Trustees to implement a living wage and equitable benefits for all full-time workers and ask the student body, faculty, and staff for their support.

A Brief History of the Living Wage Campaign at American University

Living wage ordinances have been implemented in 79 cities and counties nationally and at Brown University, Cornell University, the University of Virginia, Johns Hopkins University, and most recently Stanford University. Living wage campaigns are currently ongoing at 34 universities and in about 75 municipalities, including Harvard University and Montgomery County.

The premise of the living wage movement is that the public ends up supporting low-wage workers through welfare benefits such as food stamps and Medicare/Medicaid. Such support acts as a subsidy for companies who do not pay wages that cover the basic necessities for their workers. Living wage campaigns are an effort to hold the companies that have government or university contracts accountable, requiring them to pay a fair wage instead of relying on government subsidies to support their workers.

The American University Living Wage Campaign began during academic year 2000-2001 at the Washington College of Law (WCL), where 75 percent of the law students signed on to a petition supporting an hourly living wage of at least $10.51.[3] AU Solidarity took up the issue beginning in fall 2000 and began collecting signatures of support for a living wage from 328 students and workers during the spring semester of 2001. The Washington College of Law’s Student Bar Association and the Graduate Student Association passed living wage resolutions and a resolution was considered by the Student Confederation in the spring of 2001.

During the summer of 2001, President Ladner established a taskforce composed of faculty, students, and staff to study the issue. The Living Wage Advisory Committee (LWAC) was convened at the beginning of the fall semester and has studied the issue through holding public meetings with workers, consulting with unions represented on campus and economists from the Economic Policy Institute and Wider Opportunities for Women, and examining various definitions of a living wage. The LWAC will issue its recommendations in time for the University Trustees’ annual meeting in February 2002. We issue this report to supplement the Committee’s findings and to demonstrate the real need for a living wage at American University.

Research Design

In order to gather data on full-time direct and contracted American University hourly workers, AU Solidarity conducted in-depth interviews with workers, distributed questionnaires in English and Spanish to them to complete and hand in anonymously, and attended workers’ public town hall meetings sponsored by the Living Wage Advisory Committee. The survey addressed issues such as hours of work, wages, dependants, housing, health insurance, safety, discrimination, training, education, and opportunities for advancement. A total of 62 workers responded; 42 respondents were Aramark custodial workers (39.6 percent of 106 Aramark workers), 19 were Bon Appetit food service workers (10 percent of 190 Bon Appetit workers), and one was a groundskeeper directly employed by AU. No Pitney Bowes mailroom workers are represented in the survey results, but AU Solidarity held a discussion with three workers.

The members of AU Solidarity attempted to gather as much qualitative and quantitative data as possible during November and December 2001. Although the results are not from a random sample and are not statistically representative of all full-time hourly workers, we emphasized qualitative data gathering and attempted to understand the workers’ situations as they see them. Primarily day-time workers were surveyed. Statistical estimates are based on those people surveyed. The goal of the surveying process was to provide workers with a voice that is not often heard in the AU community.

What is a Living Wage?

The living wage level is usually the wage a worker must earn to meet his or her basic needs and support a family above the federal poverty line. A living wage should cover the basic needs of workers and their dependants, including the cost of food, housing, health care, childcare, clothing, and transportation, without requiring a family to use public or private assistance. Families earning poverty wages have to make difficult budget choices every day. Therefore, it is necessary for low-wage workers to earn enough to support their families above the poverty line.

The federal minimum wage is the minimum amount that a worker can be paid an hour. But inflation has eroded the real purchasing power of the minimum wage and its real value. The current federal minimum wage is $5.15 per hour. The minimum wage for the District of Columbia is $6.15 per hour.

A poverty wage is an hourly wage that is needed to keep a family above the federal poverty line. The basis for determining the poverty level in the United States is the assumption that a family should spend no more than 30 percent of its total income on food. The current federal poverty wage is $8.50 per hour.

Currently there are a number of study methodologies that use geographically specific data on expenditures (food, housing, health care, transportation, and childcare) to calculate a living wage for different family sizes in different cities and states.

The Economic Policy Institute (EPI) in Washington, DC conducted a review in 1999 of the family budget study of the above expenditure categories to determine a livable annual income. A livable income for a family size of three (one parent and two children) was $45,696 per year ($21.97 per hour based on a 40-hour work week and $26.11 per hour for a 35-hour work week. For a family size of four with two parents and two children in Washington, DC, a livable income would be $49,218 per year ($11.87 per hour based on a 40-hour work week and $14.06 per hour for a 35-hour work week).[4]

In 1998, The Wider Opportunities for Women (WOW) developed a Self Sufficiency Standard that measures how much income is needed for a family of a given composition in a given place to adequately meet its basic needs without public or private assistance. In Washington, DC, a single parent with one preschooler needs $33,924 per year ($16.06 per hour) to meet the basic needs of the family. If the single parent has two children, one preschooler and one school age child, then the annual income of $47,916 ($22.69 per hour) would meet basic needs. For a family with two adults and two children, a living wage would be $12.48 per hour for each adult to meet the family’s basic needs.[5]

While the Self Sufficiency Standard in Washington, DC for a family of three (one adult, one preschooler, and one school-age child) was $47,916 annually in 1998 and the median family income in the District was $65,100 per year, the minimum wage provided only $15,448 per year. The official poverty line for a family of three in 1998 was $13,133 per year, and the maximum qualification income for food stamps and welfare was $10,464 per year. Therefore, only the Self Sufficiency Standard is adequate to support a family’s basic needs without private or public subsidies.

For an estimation of the impact of a living wage defined as $12.58 per hour at American University, refer to Appendix I. At this estimated pay level, a total of 391 direct and contracted workers would benefit, resulting in a total budget increase of $2,195,043 annually. Benefit adjustment, which would include health insurance coverage and retirement benefits equivalent to those of direct AU employees, would increase the budget by $1,214,500 annually, assuming that all workers will use these benefits in full. The total annual increase would be $3,409,543.

All non-supervisory Aramark, Bon Appetit, Follett Campus Store workers, Pitney Bowes, WCL contract workers, and direct AU employees would benefit by an increase to $12.58 per hour. The current hourly wages for Bon Appetit workers range from $7.65 to $11.94 and for Aramark workers from $8.40 to $10.35. WCL contract workers earn between $7.05 to $10.55 per hour and low-wage AU employees have hourly wages between $10.01 to $12.67. For more details on current salary ranges, see Appendix II.

These cost figures represent a scant amount of American University’s total annual budget. For Fiscal Year 2002, these costs are approximately one percent of the annual budget of $272,566,000. AU Solidarity believes that the annual costs are negligible compared to the positive impacts that such a wage and benefit increase would have on workers and their families.

Why should AU Adopt a Living Wage? How and Whether it Reflects the Tradition of AU and our Priorities and Goals

American University should adopt a living wage for both economic and ethical reasons. Businesses that pay living wages have found that with higher base pay and benefits, productivity is increased and turnover is dramatically reduced. These companies are able to keep better qualified employees who require less supervision. Morale is higher and absenteeism is lower. One study determined that turnover costs at least 150 percent of an employee’s base pay in training, lost productivity, and recruitment costs.[6] As a result, higher direct labor costs can be offset by higher productivity and lower indirect labor costs in recruitment, training, and supervision.