Council Meeting:  February 22, 2005                                                            Santa Monica, CA

 

 

 

TO:                  Mayor and City Council

 

FROM:            City Staff

 

SUBJECT:     An Ordinance for First Reading Requiring that Certain Contractors Providing Services to the City of Santa Monica Pay a Living Wage to Employees Performing Work Under Contracts With the City

 

 

Introduction

This report presents an ordinance for first reading requiring that effective July 1, 2005, certain contractors providing services to the City of Santa Monica pay a living wage to employees for work performed under their contracts with the City.

 

Background

Pursuant to City Council direction, staff is preparing to implement a living minimum wage of $11.50/hour for City employees and for employees performing work under contracts for service to the City in an amount of $50,000 or more.  An initial step was taken with adoption of a salary resolution governing City as-needed job classifications at the City Council meeting of February 8, 2005.  Institution of the living wage for City employees covered by collective bargaining agreements will be a subject of negotiations over the next year.  While the salaries of City employees are set by resolution, an ordinance is required to implement the living wage for City contractors.  

 

Other local governments in the region, including the City of Los Angeles, Los Angeles County, Pasadena and West Hollywood have adopted similar requirements at varying wage levels in recent years.  The currently applicable wage in each is listed in Attachment “B” to this report.

 

Discussion

In addition to establishing a wage requirement of $11.50 per hour the attached proposed ordinance:

  • Specifies an applicability threshold of contracts in excess of $50k;
  • Establishes exceptions for government agencies, City grantees and other nonprofits;
  • Includes escalator clauses for both the wage level and the contract threshold; and
  • Provides for an effective date of July 1, 2005.

 

Commentary on the impact of establishing a living wage for government contractors suggests that prospective application of the wage as contracts are competitively bid will serve to control the incremental contract cost increases to the City.  Additionally, applying the requirements only to new contracts as they are bid will avoid legal disputes with existing contractors, promote fairness and avoid significant administrative difficulties.  As directed by Council, that is the way in which the proposed ordinance will be implemented.  Both the amount of the wage ($11.50) and the threshold contract amount for applicability ($50,000) will increase annually on July 1, based on the January to January Consumer Price Index for Urban Wage Earners and Clerical Workers 1967=100 for Los Angeles-Riverside-Orange County, CA published by the U.S. Department of Labor, Bureau of Labor Statistics.  Findings to support the institution of a living wage are made in the ordinance.

 

 

Budget/Financial Impact

It is not possible to predict with any certainty the financial impact on contract costs stemming from the requirement that contractors pay a higher wage.  To inform prior Council deliberations estimates of from $500,000 to several million dollars were provided.  As planning for the FY 2005/06 budget goes forward, provision will be made to include a prudent amount, based on contracts anticipated to be bid during the fiscal year. 

 

Recommendation

It is recommended that the City Council hold first reading of the attached ordinance establishing a minimum living wage of $11.50/hour for employees performing work under contracts for services to the City of $50,000 or more, to be effective July 1, 2005.

 

Prepared by:              Susan E. McCarthy, City Manager

Marsha Jones Moutrie, City Attorney

 

Attachments:              A)        Ordinance

B)        Current Living Wage Amounts in the Region

 

 


Attachment B

 

 

 

Current Living Wage Required of Contractors

by Other Public Agencies in the Region*

 

 

Pasadena

$10.28

 

 

City of Los Angeles**

$10.03

 

 

County of Los Angeles

$9.46

 

 

 

*     Listed wages include health benefit amount

 

**   West Hollywood follows the City of Los Angeles formula