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Living Wage Study

Living Wage Study

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Published by Manasvi Mehta

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Published by: Manasvi Mehta on Jun 17, 2012
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2010-2011FacultySenateLivingWageStudy
___________________________________________________________________________________________________
PreparedbytheUTKFacultySenateBudgetandPlanningCommittee
INTRODUCTION
ThisreportwasdevelopedthroughtheUTKnoxvilleFacultySenateBudgetandPlanningCommitteeduringthe2010-2011academicyear.Itwasauthoredwithinputfrommanymembersofthecommittee,andisbasedondocumentsprovidedbyLindaHendricks,ViceChancellorforHumanResourcesfortheUniversityofTennessee.FormorethanadecadetheUTKFacultySenateissuedreportsandtakenapublicpositionexpressingitsconcernregardingcompensationforthelowestpaidworkersonourcampus.Thesereportsstudiedcompensationforourregularuniversityemployeesandourcontractworkers,employedbymajorcontractorstoprovidediningandcustodialservices.ThisreportbuildsonearlierreportscompiledfortheUTKFacultySenatein2000/2001and2005.InMarch2001theFacultySenatepassedaresolutioninsupportofalivingwage.Inmanyrespects,thisstudyservestoreportwhathascomeofthat2001resolutionintermsofadministrativeactionandimprovementincompensationforlow-wageworkersattheUniversity.ArecordofdocumentspostedontheUTKFacultySenatewebsite,aswellasmajorfindings,includingseveralchartsaresummarizedbelow.Whilethisreportisintendedtostandalonewithnospecificrecommendations,itmaybecitedasthebasisforFacultySenateresolutions.
PRIORUTKFACULTYSENATEREPORTS,FACTSHEETSANDRESOLUTIONS
2005LivingWageStudy:http://web.utk.edu/~senate/wagestudy2005.shtml2000LivingWageFactSheet:http://web.utk.edu/%7Esenate/LivingWageFactSheet.htmlMarch2001ResolutionontheLivingWage:http://web.utk.edu/%7Esenate/ResLivingWage.html2000WageStudy:http://web.utk.edu/~senate/docs/topical/2000WageStudy.pdf ALivingWageFactSheet,whichexplainshowthelivingwageof$9.50/hourwasdeterminedforthefirstLivingWageStudyin2000:http://web.utk.edu/%7Esenate/LivingWageFAQ.html
 
DEFININGALIVINGWAGE
Whilethereisnouniversallivingwagestandard,andconceptsofalivingwagevaryindifferentstudies,itisimportanttounderstandhowthelivingwagestandardwassetat$9.50/hourplusbenefitsforKnoxvilleintheoriginal2000/2001study.Thefollowingpassageisfromthe2005wagestudy:
Thefundamentalideabehindalivingwageisthatanemployeewhoworksfulltimeandyearroundshouldearnawagesufficienttopayforthebasic,bare-bonesneedsofafamilylivingintoday’sAmerica,withouthavingtoresorttoneeds-testedpublicbenefits,crime,orprivatecharity.Livingwagestandardsaredevelopedfirstbyspecifyingbasicnecessitiesfordifferent familytypes,pricingthoseneedsinactuallocalmarkets,andcompilingthecostsintoarangeof familybudgets.Thenextstepsaretochooseafamilytypedeemedareasonablestandardaroundwhichtoconstructacommonmeasureforthelocalityorinstitutioninquestion,andthentofigurethehourlyorannualcompensationthatwouldberequiredtosupportthenecessitiesbudgetofthatfamilytypeinthatplace.AsexplainedbytheEconomicPolicyInstitute:Theabilityoffamiliestomeettheirmostbasicneedsisanimportantmeasureofeconomicstabilityandwell-being.Whilepovertythresholdsareusedtoevaluatetheextentofseriouseconomicdeprivationinoursociety,familybudgets--thatis,theincomeafamilyneedstosecuresafeanddecent-yet-modestlivingstandardsinthecommunityinwhichitresides--offerabroadermeasureofeconomicwelfare.Basicfamilybudgetmeasurementsareadjustablebyfamilytypebecauseexpensesvaryconsiderablydependingonthenumberofchildreninafamilyandwhetherornotasingleparentoramarriedcoupleheadsafamily.Itisimportanttonotethatabasicfamilybudgetisindeed"basic."Itcomprisesonlytheamountsafamilyneedstospendtofeed,shelter,andclotheitself,gettoworkandschool,andsubsistin21stcenturyAmerica.Hence,itincludesnosavings,norestaurantmeals,nofundsforemergencies—notevenrenters'insurancetoprotectagainstfire,floodortheft.
Additionally,tohelpunderstandhowtheoriginalwagerateof$9.50/hourplusbenefitswascalculated,footnote4(.p16-17)fromthe2000livingwagereportstates:
Theamountofalivingwageisdeterminedbyeachlocallivingwagecampaign,takingthelocalcostoflivingintoaccount.AtpresentthereareseveralhundredlocallivingwagecampaignsunderwayintheUnitedStates.TwolivingwagecampaignsarebeingconductedinKnoxville.Since1998theKnoxvilleLivingWageCampaignhasadvocatedastartingwageof$9.50perhour plusbenefitsforCityofKnoxvilleemployees.TheUTKCouncilforaLivingWageandWorker Justicewasformedin1999andalsodefinesalivingwageas$9.50perhourplusbenefits.Thelocalcampaignsusedacombinationoftwomethodsindeterminingthatamount.(1)Morethan40openmeetingswereheldinwhichworkersandothermembersoftheKnoxvillecommunity participated.TheyconstructedanddiscussedmonthlybudgetsinanefforttoreachconsensusontheminimumincomenecessarytosupportafamilyoffourinKnoxville.Thesemeetingsset$9.50 perhourplusbenefitsasthatminimumamount.Manyvariableswereconsideredintheirdeliberations,suchasassumingtwoincomeprovidersinthehouseholdratherthanone.However,childcarecostsandotherfactorswouldhavenecessitatedasubstantiallyhigherlivingwage.Participantsalsoexpressedconcernaboutthedestructiveconsequencesforqualityof
 
 familylifewhenwagesaresolowthatbothparentsmustwork(oftenatmorethanonejob)to providealivingincome.
MARKETSANDWAGES
TheUniversityofTennesseeiscurrentlyinvolvedinacomprehensivemarketassessmentconductedbytheCompensationAdvisoryBoard(CAB).ThecompensationconsultantsareintheprocessofassessingalljobsattheUniversity,includingnon-exemptandexemptstaffaswellasfaculty.Forsomepositionsthemarketswillbelocal,someregional,somenationalandsomeinternational.Inadditiontocomparingtohighereducationandtop25institutions,theCABwillalsobecomparingtobusinessandindustryandothersthattheUniversitycompeteswithfordifferentpositions.Theresultswillbebycampus/institute,sotheresultsforUTKwillbeagainsttheUTKmarketandnotdilutedbyothercampusorinstitutepeersormarkets.Vice-PresidentLindaHendricksreportsthatshebelievesthatUThasneverdonethisbefore.Shehasindicatedthatshehopesthemarketassessmentwillshowusthegaps,andthentheCABwilldevelopandrecommendamulti-yearplantoclosethegapsforallpositions.ItshouldbenotedthattheFacultySenateBudgetandPlanningCommitteehasbeenlookingattheacademicmarketforthepastdecadewithitsannualfacultysalarystudies.Whilemarketdatacanbeusefulforhigherpayingfacultyandstaffpositions,manyarguethatthebottomendoftheemploymentscalehasadifferentdynamic,oneinwhichthemarketforcesdonotalwaysoperateinthebestinterestsofourcommunities,theregionandthestate.Theyalsoobservethatduetoitssize,UTKitselfplaysasubstantialroleinshapinglocallabormarketsandsettinglocalwages,afactthatraisesrealquestionsabouttheuseofmarketstudiesinthiscontext.Inanycase,whatevermarketcomparisonsmightshow,thereareconsequencestoUTKoperationswhenmanyofourlowestpaidworkerstakeasecondjobtomaintaintheirhouseholds.Therearealsosocialcoststohavingsomanyworkingfamiliesonthemarginsofpoverty.ConsideringthatonemissionoftheuniversityistoimprovethequalityoflifeandeconomicdevelopmentforthecitizensinTennessee,someareconcernedthatweseektodothiswithmanyofourlowestpaidworkerswhoareatornearpovertylevels,ofteneligibleforvariousformsofpublicassistance.Atrueaccountingoftherealandsocialcostsofwagedisparitiesshouldbeconsidered.Asamajoremployerintheregion,ItcouldbearguedthatUTKhasthecapacitytoimprovethebottomofthepayscalefornotonlyouremployees,buttoimprovemarketratesforothersintheprivatesectoraswell.
BRINGINGUPTHELOWESTWAGES&ADDRESSINGSALARYCOMPRESSION
Principlesoffairnessandjusticeshouldguideanycompensationplanthatisimplemented,especiallysinceraisingthelowestpaygradescancreatesalarycompression.Thecommitteehasbeentoldthattherecentincreaseoftheuniversityminimumwagefrom$7.50to$8.50hasresultedinwagecompressionthateffectsmoraleamongthelowestpaidworkers.Howacross-the-boardraisesaredistributedoffersanopportunitytomakeprogressinbringingupthelowestpaidworkers.Thelasttwotimesacrosstheboardraiseswereawardedaminimumraisewasestablishedtohelpbringupthewagesatthebottomofthescale,inparttooffsettheimpactofincreasedpremiumsemployeespayforhealthbenefits.Mostoftenacrosstheboardraisesareawardedasapercentageoftheemployee’sbasesalary.Inthiswaya3%

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