Agenda - 05-21-1997 - 10b - Laserfiche WebLink

Browse Search

► APPENDIX 5. 49 commission was awarded only $121,000 to enforce the living wage in 1996. This would amount to an increased per capita tax burden of 17 cents a year. This figure does not include any money received from fines levied on employers who fail to comply with the law, which would lower the net cost of enforcement to the City. Impact on Contractor Employment Levels Have contractors responded to increased labor costs by laying off workers or by failing to hire as many as they otherwise would have? The evidence here is not yet complete: (1) the majority of contractors bound by the living wage ordinance have yet to rum in payroll information to the Wage Commission and (2) pre-ordinance contractors were not required to submit payroll information. To determine whether the increased labor costs resulted in reduced employment, we interviewed those contractors who held a contract both before and after the ordinance went into effect and whose labor costs increased as a result of the ordinance. This sample consisted of 31 companies, including providers of transportation, janitorial, food and administrative services. None of the companies interviewed reported any reduction in staff levels to compensate for the increased cost of labor resulting from the living wage requirement. The school bus contract- actually a multiple contract with 26 companies that accounts for $14,500,000 of the total -provides the clearest example of how it is often less common in practice than in theory for employers to reduce staff in response to increased labor costs. Because the labor force for bus contracts consists of bus drivers and aides (the latter are required on special needs buses for senior citizens and the disabled), reducing staff levels would be difficult if not impossible. According to the Baltimore Bureau of Management and Budget Research's estimates, the City's janitorial contracts have the highest percentage of costs attributable to labor. Of the two janitorial companies holding pre- and post-ordinance contracts, neither reported reducing staff levels to compensate for the increased costs. In addition, the large janitorial (school) contracts have mandatory staff levels set by the city. Staff levels for these contracts, then, could not be altered by contractors in response to the living wage requirements. Impact on Bidding Practices To determine whether the ordinance discouraged companies from bidding on contracts, we examined those contracts where the labor costs would be immediately increased by the ordinance.16 Of these, 43% either had more or the same amount of bidders as the previous year and 57% had less. Although the average number of bids for these contracts declined from 6.64 to 5.42 (see Table 3), this difference was not statistically significant. 16Information on the number of bids made before and after the ordinance was available for 54% of the contracts. 10