cook report to calgary on lw policy (can)

8/8/2019 Cook Report to Calgary on LW Policy (CAN)

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08 Derek Cook report to City of Calgary re living wages of 59

Report to the SPC on Finance and Corporate Services

On the Impact of Implementing a Living Wage Policy for The City of Calgary

Derek Cook

Community and Neighbourhood Services

Social Policy and Planning Division




Executive Summary

This report analyses the social, economic and environmental costs and benefits ofimplementing a Living Wage policy for The City of Calgary, as per a Council Motion

(FCS2007-19). Such a policy would be consistent with the direction of imagineCalgarywhich identifies the payment of living wages by public authorities and their suppliers asa key strategy for achieving the Urban Sustainability Plan’s 30 year targets. Thisanalysis focuses on the potential impact of applying a Living Wage policy to both Cityservice contractors as well as City staff. The analysis contained in this report is basedon a review of case studies of the impacts of Living Wage Ordinances in the UnitedStates, a review of City of Calgary Human Resources records, a survey of City suppliersand input from community stakeholders.

“Living Wages” are wages sufficient for an individual working full-time to reach thepoverty line. In Calgary, a Living Wage has been calculated at $13.25 / hour without

benefits, or $12 / hour with benefits. This wage provides a single person working full-time (35 hours per week) with income sufficient to reach the local poverty line1.

“Living Wage Policies” are policies that require an organization and its contractors topay their employees a Living Wage. Such policies have been widely adopted bymunicipalities throughout the United States and are presently in place in over 125major cities including Atlanta, Baltimore, Boston, Detroit, Los Angeles and SanFrancisco.

Currently there are no Canadian cities that have adopted a Living Wage policy.Several Canadian cities (Toronto, Hamilton and London), however, have adopted

“Fair Wage” policies that apply to specific trades. As well The City of Vancouver hasa Living Wage clause included in its Supplier Code of Conduct, although this isrestricted to a limited number of commodities. The City of Calgary’s Supplier Code of Conduct also contains a clause (3.1.5e) which encourages employers to pay aliveable wage, but this is a non-mandatory clause.

Including a mandatory Living Wage clause in the SEEPP Supplier Code of Conductwould require all service contractors to The City to pay their employees the LivingWage rate. However, as a principle, The City should not request of its vendors whatit does not practice internally. Consequently, including a Living Wage clause inSEEPP would require The City to also ensure that all of its employees are paid the

Living Wage rate.

1The local poverty line in this report is defined as the inflation adjusted Statistics Canada Low Income

Cut-off (LICO) for a single person.




Social Impacts

Based on the experience of Cities in the United States that have implemented LivingWage policies, there are a range of social benefits derived from their application.

Potential social benefits may include increased income and benefits, increasedaccess to credit, improved health and quality of life and reduced dependency ongovernment assistance. As low-wage workers in Calgary are concentrated amongvulnerable social groups, such groups would experience the greatest benefit.

The extent of the benefits of a Living Wage policy is limited by the number ofworkers who would actually experience wage increases as a result of the policy. Ouranalysis indicates that very few employees of City service contractors actuallyreceive wages below the defined Living Wage amount. Within The City of Calgary, aLiving Wage policy would benefit 680 mostly on-call and casual employees, two-thirds of whom are employed in Recreation, with the remaining third employed

largely in Community and Neighbourhood Services.

The potential social cost of implementing a Living Wage policy arising from thesalary cost associated with increasing on-call wages to the Living Wage rate as thiscould result in increased user fees for Recreation programs which operate on a cost-recovery model. This may reduce access for low-income individuals and families, thepopulation that the policy is ultimately intended to benefit, unless additionalresources are allocated to Recreation to cover such costs.

Economic Impacts

The economic impact of applying a living wage policy is not expected to besignificant. Our analysis indicates that many City service contractors are alreadypaying their employees at wage rates equal to or above the defined Living Wageamount. Consequently, it is not expected that the application of a Living Wage policywould adversely impact City suppliers in a major way and therefore the policy shouldnot lead to significantly increased supply costs or a reduction in the supply base.Preliminary research indicates that the most significant economic impact would arisefrom increasing wages for City staff. Such impacts include the possibility of labourmarket distortion, particularly in the Recreation services field.

The economic costs of Living Wage policies may be offset by important benefits.

Research indicates that Living Wage policies result in increased labour productivitywhile at the same time “leveling the playing field”, ensuring that employers that payhigher wages, and thus produce better quality service, are not disadvantaged in thecompetitive bidding process. Ultimately, this ensures that, in the long run, The City isreceiving the highest quality of service. The application of Living Wage policies alsotends to have important benefits to the local economy due to the fact that low-income workers tend to spend more of their earnings locally.




Financial Impacts

The financial impact of a Living Wage policy on City supply costs is not expected tobe significant as most City suppliers are already paying staff at or above the defined

Living Wage amount. This is consistent with studies of American cities that haveimplemented Living Wage Ordinances which have not revealed significant increasedprocurement costs. Further, as a Living Wage policy applied to City suppliers wouldbe implemented through the existing SEEPP process, it is not expected that therewould be administrative costs in excess of those already incurred for theimplementation of SEEPP.

Financial impacts to The City will arise primarily from the increased costs associatedwith increasing the wages of City on-call and casual employees to the defined LivingWage rate. It is estimated that the cost of bringing existing employees up to theLiving Wage rate would require at a minimum an additional $200,000. There may be

ancillary impacts as increasing the lowest band in the Code 81/86 salary grid mayput pressure on non-affected salary bands immediately above the Living Wage rate.As well, the adoption of a Living Wage policy could fundamentally alter The City’sapproach to collective bargaining as the establishment of fair compensation is nolonger determined by the labour market. This may make future contract negotiationsincreasingly complex. The long term effect of the policy on future contractsettlements is unknown.

Environmental Impacts

No significant environmental costs or benefits of a Living Wage policy were found.

In conclusion, there is clear evidence that the adoption of a Living Wage policy wouldgreatly benefit the City in that:

This effort will enable our City to join over 125 other Cities in North America thathave successfully adopted a living wage policy;This policy is not expected to adversely affect The City’s supply base or supplycosts;This policy would affect only approximately 680 of its 13,600 employees;The results from other Cities show that it has attracted better workers, thereby

improving productivity; and,This policy will allow The City to compete adequately for quality resources; thehigher the quality of personnel, the better base for the City to select and employ inother key roles in the organization. With effective succession planning, this hiringpractice will have long term positive effects on our ability to promote within and tohire effectively.




The establishment of living wage at $12.00 plus benefits or $13.25 without benefits isbased on sound a reliable data with research that demonstrates a positive impact onpoverty and related social issues while having minimal financial impact.




Table of Contents

Executive Summary

1. Background

2. Methodology

3. Concept and Definitions

4. Local Context

5. Application of Living Wage Policies / Ordinances

6. Impact

6.1 Social Impacts

6.11 Impact to Low-wage Workers6.12 Impacts on City Programming6.13 Alignment with TBL Policy Framework

6.2 Economic Impacts

6.21 Impact to City Budget6.22 Impact to City Procurement

6.23 Impact to City of Calgary Suppliers6.24 Impact to Local Economy6.25 Alignment with TBL Policy Framework

6.3 Environmental Impacts

7. Summary of Impacts

8. A Living Wage Policy for Calgary

References

Appendix 1: City of Calgary Service Suppliers Survey

Appendix 2: Stakeholder Submissions Regarding the Impact of a Living WagePolicy for Calgary




List of Tables

Table 1: Low Income Cut-offs Before Tax, 1992, Urban Areas 500,000+,

2005

Table 2: Average Hourly Wages and Annual Earnings by Industry, Alberta,2006

Table 3: Size of Firms by Industry, Calgary, 2006

Table 4: Percentage of Workforce of City Service Contracts

Table 5: City of Calgary Positions Below Defined Living Wage Rate, 2007

Table 6: City of Calgary – Code 81/86 Revised Pay Structure, 2008

Table 7: Likelihood of City Service Contractors Continuing to Bid on CityContracts Upon Adoption of a Living Wage Policy, 2007

Table 8: Anticipated Changes in Employment Practices by City ServiceContractors in Response to Adoption of a Living Wage Policy, 2007




Report to the SPC on Finance and Corporate ServicesOn the Impact of Implementing a Living Wage Policy for The City of Calgary

1. Background

At the direction of City Council, City of Calgary Administration prepared a SustainableEnvironment and Ethical Purchasing Policy (SEEPP) to establish minimum ethical andenvironmental standards for suppliers to The City. This policy was approved in principleby Council in January, 2007 (FCS2007-19). As part of the SEEPP, the related SupplierCode of Conduct (scc) includes a clause (3.1.5e) that encourages the payment ofliveable wages. This clause states:

e) Recognizing that wage s are essential to meeting workers’ basic needs, all City of Calgary suppliers and their subcontractors will make every effort to ensure that workers receive wages that exceed legislated minimums that meet basic

needs by local standards.

This clause is currently a non-mandatory clause in the SCC, although suppliers who candemonstrate compliance receive additional points in the bid scoring process.

At time of approval of SEEPP, a Motion Arising further directed City of CalgaryAdministration to report back to the SPC on Finance and Corporate Services:

… on the implications from a triple bottom line context of including a living wagein the Sustainable Environment and Ethical Procurement / Supplier Code of Conduct.

The effect of this motion would be to make the current non-mandatory clause (3.1.5e) amandatory provision within the SCC. This report responds to this request for a TBLanalysis.

The impetus for developing a Living Wage policy also emerges from the imagineCalgaryprocess. The imagineCalgary Plan for Long Range Urban Sustainability identifiesthe payment of living wages as an important strategy for achieving economic well-being.The plan contains an economic target of achieving a poverty rate of 5% by 2036. Inorder to achieve this target, the following strategy was identified.

Strategy 2: Urge all public sector institutions and non-profit sector employers,including all subcontractors, to adopt livable wage policies.

This report assesses the impact of The City of Calgary adopting such a policy as per theabove noted Council Motion. A stated principle of the SEEPP policy is that The City willnot require suppliers to meet requirements that The City is not itself prepared to meet.Consequently, any inclusion of a Living Wage in SEEPP would require The City toensure that all City staff are also being paid at or above the Living Wage rate. This




report, therefore, assesses the impact of a Living Wage policy on City suppliers, Cityprocurement functions, and City human resources.

2. Methodology

This report was developed using a variety of methods including a comprehensiveliterature and best practices review, stakeholder consultations, a survey of Citysuppliers, and a quantitative analysis of City human resource records and wage andsalary expenditures.

In order to assess the impact on City suppliers, a sample of service contracts wasdeveloped based on a review of contracts that had been paid out over a three monthperiod (April – June, 2007). This review provided a sample of 155 surveys which weredistributed, with 55 surveys being returned, a response rate of 35% (See Appendix 1).

3. Concept and Definitions

A living wage is generally understood to be an hourly wage that allows an individual tomeet their basic needs by local standards. The necessary wage amount is usuallydefined as the wage necessary to bring an individual to the local poverty line. InCanada, while there is no official poverty line, Statistics Canada produces annual Low-income Cutoff (LICO) amounts that are commonly used and referred to as poverty lines.

LICO amounts vary by size of community and by the number of people in thehousehold. In 2005, the pre-tax LICO amounts for cities of 500,000 more were:

Table 1: Low income cut-offs before tax, 1992 base, Urban areas, population 500,000 +, 20051 Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7+ Persons$20,778 $25,867 $31,801 $38,610 $43,791 $49,389 $54,987

Living wages may be calculated as the amount required for a single person working full-time to meet their needs, or as the amount required for a single person working full-timeto meet the needs of themself and their family. Discussion of the living wage in Canadahas tended to adopt the approach of calculating the living on the basis of a single full-time worker.

In Calgary, a local coalition of organizations has formed to advocate to business andgovernment to pay living wages to staff. This initiative is sponsored by the United Wayand is being led by Vibrant Communities Calgary (VCC). This “Living Wage ActionTeam” has established a local living wage rate of $12.00 / hour with benefits, or $13.25without benefits. This amount has been established as the wage required to meet aninflated LICO value. In Calgary, a single person working full-time at 35 hours per weekwould be required to earn an hourly wage of $11.41 before tax to meet the LICOamount for a single person of $20,778.




Due to the fact that LICO’s are established nationally, there is concern that the amountof $20,778 may not accurately reflect the cost of living in Calgary. Consequently, aninflated LICO amount has been used for Calgary to establish a poverty line that takesaccount of the rapid inflation that has been occurring in Calgary over the past five years.

To establish this amount, the 2001 LICO was used as a benchmark and then adjustedfor Calgary’s annual inflation rate in the period since. This results in an adjusted povertyline in Calgary for a single person of $21,955. In order to reach this adjusted LICOamount, a single person working full-time in Calgary would be required to earn an hourlywage of $12.00 / hour. For the purposes of this report, the living wage amount forCalgary is understood to align with the local community definition of $12.00 / hour withbenefits and $13.25 without benefits. This amount is deemed to be sufficient for a singleindividual working full-time (35 hours per week) to meet the local poverty line beforetaxes.

4. Local Context

In 2001, 11% of Calgary workers were living in poor households. Rates of workingpoverty were significantly higher for Aboriginal persons (20%), Visible Minority persons(16%) recent immigrants (28%), and persons with disabilities (14%). Over two-thirds oflow-wage workers (69%) were over the age of 25. As a percentage of the low-incomepopulation in Calgary, 61% were in fact working in 2001, while almost 20% wereworking full-time for the full-year.

In Calgary, there were approximately 120,000 people living in low-income households in2005, 12.7% of Calgary’s population. Of those, only 40% were receiving any significantfederal or provincial income support benefit. It is estimated therefore that the remaining

60% of Calgary’s poor (72,000 people) are working, a figure consistent with the 2001Census data. The Calgary Inter-faith Food Bank further reported that, in 2006, 40% oftheir clients were working, with the working poor making up the largest proportion offood banks clients.

5. Application of Living Wage Policies / Ordinances

Living wage policies are well-established in the United States, where they exist in theform of local Ordinances (or by-laws). Living Wage Ordinances were developed, in part,as a response to the practice of contracting out services that were previously deliveredby municipalities. Cities that adopted such ordinances were concerned that such

services were being delivered at low cost by suppliers who were paying workers lowwages. Leaders in these municipalities felt that public funds should not be used tosupport poverty wages. Currently there are approximately 125 cities in the United Statesthat have adopted Living Wage Ordinances. The first Living Wage Ordinance wasadopted by the City of Baltimore in 1994. Other U.S. cities to have adopted suchordinances include Boston, Detroit, Atlanta, Los Angeles, Miami, San Fransisco and St.Louis.




At the present time, there are no Canadian municipalities that have adopted a LivingWage policy. The City of Vancouver, however, has included a clause within its EthicalPurchasing Policy Supplier Code of Conduct that states:

7. Wages and Benefits

City suppliers and their sub-contractors: recognize that wages are essential to meeting employees' basic needs and will make every effort to ensure that workers receive wages that meet basic needs by local standards.

While Living Wage policies have not been widely developed by municipalities inCanada, “Fair Wage” policies have been implemented that are similar to Living Wagepolicies. Fair Wage policies are intended to ensure that contractors for the municipalitypay their workers union rates, or for non-union workers, the prevailing wages andbenefits in their field of employment. As these wage rates are based on union rates,

they tend to be substantially higher than the poverty line (LICO). Fair wage rates arenegotiated between the municipality and the unions representing workers in specificsectors. Originally, Fair Wage policies originally dealt with construction trades, thoughtheir scope has expanded over the years. However, they still generally omit many non-construction classifications, particularly those wherein women constitute a majority ofworkers, such as cafeteria workers. Fair Wage policies are currently in place in Toronto,Hamilton and London.

Living Wage Rates

Living wage amounts in the United States vary significantly. Generally, living wages

were determined to be wages above the federal poverty line for a full-time worker with afamily of four. Actual amounts varied from $8.35 / hour in Detroit to $9 / hour at the SanFrancisco Airport, and $11 / hour for The City of San Francisco. Some municipalitiesalso require health care benefits, or the equivalent in wages. In some municipalities,wage levels are also indexed to inflation. At the San Francisco Airport, the policy alsomandates 12 days per year of paid time off, established educational hiring criteria (min.high school completion) and a training standard of 40 hours for new employees.

In Canada, Fair Wage rates are established through negotiations between employeeand employer groups and associations. In Toronto, the Fair Wage policy requires allcontractors for the municipality to pay their workers union rates, and for non-union

workers, that they be paid prevailing wages and benefits in their industry. These ratesare then recommended to Council and reviewed on a three year basis. For theconstruction industry, wage rates are based on the lowest rates established bycollective bargaining. Other occupational rates are based on market and industrialsurveys along with the prevailing wages for non-union workers. Wages and wage ratesare to include fringe benefits such as health benefits, but does not include payrolldeductions. The policy also requires compliance with acceptable working hours andconditions of work.




Policy Coverage

Most Living Wage Ordinances in the United States cover employees working undermunicipal contracts. The literature review revealed that the application of Living Wage

Ordinances in the United States is restricted exclusively to service contracts. Therewere found no examples of such Ordinances being applied to the procurement ofgoods. Some Ordinances also cover municipal employees, employees of businessreceiving public economic development funds, employees of businesses located indistricts that have benefited from significant public investment, or employees ofbusinesses that lease property from the municipality. In Detroit, the ordinance applies toemployers who receive over $50,000 in contracts from the municipality. In Toronto, theFair Wage Policy applies to all employees that are hired by contractors, sub-contractors,suppliers or tenants of City property. The policy does not apply to small business (suchas owner-operators), partnerships or principals of companies.

6. Impact

This report analyzes the potential impacts of a Living Wage policy. This analysis isbased on a comprehensive literature review, stakeholder consultations, a survey of Citysuppliers, and an analysis of City budget and human resource records.

6.1 Social Impacts

The social impacts of the Living Wage policy are reviewed in terms of their impact onlow-wage workers, City programmes and the relationship with the TBL PolicyFramework.

6.11 Impact to Low-wage Workers

In order to assess the potential impacts of a living wage policy on low-wage workers, acomprehensive literature review was undertaken. This review included a number ofpost-implementation evaluation studies of the effects of Living Wage Ordinances inseveral U.S. cities. This review highlighted multiple social benefits arising from suchOrdinances. In general, there are four main areas of impact: increased income,employment opportunities, working conditions and quality of life.

a. Beneficiaries of Living Wage Policies

Low-wage workers include workers working on City contracts as well as City employeeswho are earning less than the living wage threshold. The impact of a municipal livingwage policy is dependent upon the number of employees of firms under contract to themunicipality that would be affected and benefit from an increase in the wage level.




City Service Contracts

Of the 55 service contractors responding to The City of Calgary’s supplier survey, thelargest share of City service contracts are for Business, Building and Support Services

(19%), followed by Construction (15%), Professional, Scientific and Technical Services(14%), Transportation and Warehousing (14%), Finance, Insurance, Real Estate andLeasing (8%), Other Services (5%), and Information, Culture and Recreation Services(4%). Of these firms, over three-quarters (76%) are located in Calgary, while 85% arelocated within Alberta. The remainder are located elsewhere within Canada.

Average hourly wages in all sectors in which The City holds service contracts wereabove the Living Wage rate in 2005 (See Table 2). Average wages in the Business,Building and Support Services sector, the largest segment of City service contracts,however, are the third lowest among the identified sectors, at $15.46. As this is justslightly higher than the living wage rate of $13.25 without benefits, there may be a

significant number of low-wage workers within this sector. This sector includes janitorialand cleaning, staffing, landscaping, pest control and security services.

The majority of firms in sectors supplying services to The City of Calgary are small, with83.7% having fewer than 20 employees (See Table 3). Consistent with this pattern,firms in the Business, Building and Other Support Services sector are also primarilysmall, with 81% having fewer than 20 employees, and over half (53%) having fewerthan 5 employees. This sector, according to Statistics Canada, has one of the lowestaverage wages and earnings in Alberta.




Table 2: Average Hourly Wages and Annual Earnings by Industry, Alberta, 2006

North American Industrial Classification

City of

CalgaryContract-

ors

% of Total

Avg.

Earnings

(Alberta)†

Avg. Hourly

Wage Rates

(Alberta) †

Business, Building and Other Support

Services52 19.0% $29,700 $15.46

Construction 41 15.0% $43,300 $22.37

Professional, Scientific and Technical

Services39 14.2% $68,800 $26.46

Transportation and Warehousing 38 13.9% $42,500 $21.57

Finance, Insurance, Real Estate and Leasing 21 7.7% $79,500 $20.99

Other Services (except Public Administration) 14 5.1% $34,800 $17.85

Information, Culture and Recreation 10 3.6% $35,500 $18.93

Agriculture, Forestry, Fishing and Hunting 5 1.8% na $15.08

Manufacturing 1 0.4% $49,200 $22.28

Wholesale and Retail Trade 1 0.4% $28,700 $16.08

Health Care and Social Assistance 1 0.4% $38,900 $21.56

Accommodation and Food Services 1 0.4% $16,900 $11.96

Calgary Total 224 81.8% $21.12

†Source: Statistics Canada. Labour Force Historical Review, 1980-2006

Table 3: Size of Firm by Industry, Calgary, 2006

City of

Calgary

Contractors

% of Total

City

Contracts

No. of

Firms

(Calgary) †

Number of Employees†

< 20 20 - 100 > 100

Business, Building and Other

Support Services 52 19.0% 2,989 81.4% 14.5% 4.1%

Construction 41 15.0% 5055 86.7% 10.8% 2.5%Professional, Scientific and

Technical Services 39 14.2% 10,673 89.6% 8.5% 1.9%

Transportation and Warehousing 38 13.9% 1,336 82.1% 13.5% 4.3%

Finance, Insurance, Real Estate

and Leasing 21 7.7% 3,864 80.7% 15.4% 4.0%




Other Services (except Public

Administration) 14 5.1% 2,851 89.9% 8.8%

Information, Culture and

Recreation 10 3.6% 905 76.6% 15.9% 7.5%

Agriculture, Forestry, Fishing and

Hunting 5 1.8% 178 86.0% 12.4% 1.7%

Manufacturing 1 0.4% 1,705 66.7% 25.0% 8.2%

Wholesale and Retail Trade 1 0.4% 6,588 80.6% 15.7% 3.7%

Health Care and Social Assistance 1 0.4% 2,949 87.5% 9.8% 2.7%

Accommodation and Food Services 1 0.4% 2,521 70.8% 26.3% 2.8%

Calgary Total 224 81.8% 41,614 83.7% 13.2% 3.1%

†Source: Statistics Canada. Annual Business Register (December, 2006)

Of the 55 service contractors responding to the supplier survey, three-quarters (74.5%)reported that they employed fewer than 50 employees, while 14% employed between50 – 99, and 11% employed 100 or more. Over half of respondents (60%) reported thatless than 25% of their total business was accounted for by City contracts. Roughly one-quarter of respondents (24%) reported that 75-100% of their business was held by Citycontracts. Of those suppliers who responded to the survey, the vast majority (89%)reported that they did not have any staff working at wages below the living wagethreshold (See Table 4).

Table 4: Percentage of Workforce of City Service Contractors Earning Less than the Defined

Living Wage, 2007Number Percent

None 49 89.1< 10% 1 1.810 – 20% 1 1.8> 20% 4 7.3

In the American cases reviewed, the number of workers actually affected by the LivingWage Ordinances varied from 2,300 workers in Detroit to 12,000 in San Francisco. InSan Francisco, this accounted for 2.5% of total employment in the San Francisco area.In addition to the direct beneficiaries of the living wage policy, others not directlyaffected may also benefit as employers may be pushed into providing pay increasesthat are not mandated, to workers currently just above the living wage amount.

Research has shown that those that benefit from living wage policies are generallythose most in need. Thompson and Chapman (2006) note that studies have generallyfound that those benefiting from living wage ordinances are predominantly adult, full-time workers, and also tend to be workers of colour. They also tend to be predominantlyfemale. Most workers lived in households that earned below a basic needs budget. In




San Francisco, it was reported that the primary beneficiaries of wage increases werepredominantly women and / or Latino.

As living wage policies have not been widely implemented in Canada, there is no

comparable research on the impact of such policies in the Canadian context. However,there has been research regarding the profile of minimum wage workers. Shenck (2001)reports that in Quebec, Ontario, Alberta and B.C. in 2001, there were 228,545 minimumwage workers, accounting for 3.6% of the labour force. Of these, 27% are adults age25+, and 35% are young adults age 19 – 24. While 36% of minimum wage workers arewomen, women make up 70% of minimum wage workers over the age of 25. Mostminimum wage workers have low levels of education, with 36% having less than a highschool education while 15% have a high school diploma; 31% have some post-secondary education. Of all minimum wage workers, 55% are teenagers or youngadults living with parents, 6% are young adults or adults living alone, and 23% areyoung adults or adults who are either married or are lone-parents.

While the high proportion of young people may suggest that minimum wage workers arenot independent and therefore do not have the same financial requirements as olderworkers, this is not necessarily the case. First, over one-third (34%) of minimum wageworkers are in families with total family income below the 25th percentile. Shenck (2001)further points out that:

“… live-at-home minimum wage earners are part of a trend toward young people living with their families longer because of poor labour market or job prospects. One could therefore note the obvious, that students had to live at home as the minimum wage they received was so low it prohibited living on their own. A higher minimum

wage could therefore lead to more financial independence.” ( Shenck, 2001:7)

Finally, as mentioned previously (Sec. 4), low-wage workers in Calgary tend to beprimarily recent immigrants, Aboriginal persons, Visible Minority persons and / orpersons with disabilities. One in five low-wage workers were working full-time for the fullyear in 2001. One of the important benefits of a living wage policy as identified byCommunity Stakeholders (See Appendix 2) is that such a policy would serve to mitigateexisting wage disparities between social groups within Calgary.

City Employees

As of August 2007, there were 682 City employees who were earning less than thedefined Living Wage rate of $13.25 / hour (See Table 5). These positions are almostexclusively On-call or Temporary positions (Code 81 / 86), as well as trainee positions(Co-op / SCIP and STEP). As such they are not eligible to receive benefits, andconsequently the $13.25 Living Wage rate applies.

Table 5: City of Calgary Positions Below the Defined Living Wage Rate, 2007Position Number of Employees Percent of Low-wage




PositionsRecreation Program Leader 219 32.1Junior Leader / Monitor 74 10.9Special Events Crew 54 7.9Babysitter 52 7.6City Links Worker 51 7.5Sports Leader / Outdoor Leader 41 6.0Concession Attendant 33 4.8Skate Park Monitor 26 3.8Weight Room Monitor 24 3.5Pre-school / Out-of-School Care Instructor 23 3.3Youth / Teen Leader 20 2.9Other 65 9.6

Of these 682 employees, almost two-thirds (63%) are in Recreation, one-third (33%) inCommunity and Neighbourhood Services, and a small number in Parks (3%). Positionsthat fall within this low-wage group include Recreation Program Leaders, Junior Leadersand Monitors (Recreation), Special Events Crew, City Links Workers, Babysitters, andothers. These positions are all non-union positions.

b. Impacts on Wages

The impact of Living Wage Ordinances on wages of covered employees in theAmerican cities reviewed was significant. In Miami-Dade, it is estimated that wagesincreased by 43% for a family of two or three, and 46% for a family of four. In Baltimore,low-wage workers were estimated to have received increased earnings ofapproximately 35%. At the San Francisco Airport, of the 11,000 workers covered,almost 90% received a wage increase as a result of the policy, with pay increases

averaging approximately 22%, with the largest increases among entry-level employees.In Detroit it is estimated that covered workers would gain between $1,312 and $4,439per year in income, and half would also gain full health benefits. The positive impact ofliving wage policies, however, may be mitigated by the fact that many people who areworking in low-wage jobs are working part-time. Consequently, an increase in wages toa “living wage” is still insufficient to raise such workers out of poverty.

In American cities where Living Wage Ordinances have been implemented, it has beenfound that wage increases accrued not only to workers whose wages fell below thedefined Living Wage rate, but also those just above the rate as employers also raisedwages for those just above the mandated amount. Thompson and Chapman (2006)

note that one of the impacts of living wage policies appears to be the compression ofwage scales, as wages at the top of the scale do not increase proportionately to theincrease experienced at the bottom. Employers may raise wages at the margin justabove the living wage threshold (vertical push). A study of the impact of a living wageordinance in Los Angeles found that wages increased for workers earning up to 12%more than the living wage threshold. Wage scales may also experience a “horizontalpush” as employers seek to maintain parity between workers covered by the ordinanceand those not covered.




In addition to increased wages, workers also gain other advantages. First, many low-wage employees received benefits or increases to existing benefits. At the SanFrancisco Airport, approximately 70% of firms chose to provide benefits rather than pay

a wage premium. Workers also benefit from decreased reliance on governmentassistance. In addition to direct wage gains, workers also benefit from increased credit-worthiness, spending power and access to health care. This increase may reducedependence on public assistance. Further, enhanced economic stability may lead aswell to stronger and more stable family structures.

c. Impacts on Employment

One concern of Living Wage policies is that it will lead to reduced employment or thedisplacement of labour. A study examining the potential impact of a Living WageOrdinance in Chicago estimated that it could result in the loss of up to 1,300 jobs.However, studies that have examined the actual impact of living wage policies afterimplementation have found little evidence of this effect. Thompson and Chapman(2002) report that most available studies (e.g. Boston, Los Angeles) have concludedthat there are either no, or very small employment losses following the implementationof a Living Wage Ordinance.

Critics of Living Wage Ordinances also argue that firms may substitute low-skilledworkers with higher-skilled workers, thus in the long run disadvantaging lower-skilledworkers. The alternative argument is that the higher wage will boost the skills andproductivity of lower skilled workers through greater work effort and training. Most of thestudies reviewed for this report found that firms have not in fact changed their hiringpractices following introduction of the Living Wage Ordinance. While the San FranciscoAirport study did find some substitution, the more prevalent employer response was toincrease training rather than to alter hiring practices.

The Survey of City of Calgary Service Contractors asked contractors what impact theyexpected the introduction of a Living Wage policy would have on their employment

practices. The vast majority of survey respondents (85.5%) indicated that such a policywould have no effect on their employment practices. Of those who identified potentialimpacts, 4% expected to reduce staff, 4% indicated that they would increasequalifications of staff, and 2% indicated that they would increase training. Based on thisanalysis, it appears unlikely, therefore, that a Living Wage policy would producesignificant negative employment effects.

d. Impacts on Working Conditions and Quality of Life




In the United States, workers covered by Living Wage Ordinances have reportedimprovements in working conditions and their overall quality of life. At the San FranciscoAirport, workers in jobs covered by the policy reported some changes in working

conditions. Covered employees reported that following implementation of the policy,their jobs did involve increased skill and more effort. In Baltimore, about half of theworkers interviewed reported that they were working harder after the ordinance thanbefore. They also reported improved attitudes toward work.

At the San Francisco Airport, quality of life impacts were also observed among workersfollowing introduction of the policy. Workers were surveyed about changes in time spentwith family, vacation time, personal finances, hours worked in all jobs, housing situationand health status. While few covered workers reported increases in these factors, non-covered workers reported significant decreases in these factors.

“Taken together, these worker -reported chances in quality of life suggest that stagnating pay, decreased benefits, and increased labour market flexibility in recent years has led to significant deterioration in the quality of life among low-wage workers. It took the (policy) to arrest this trend.” (Reich, Hall and Hsu, 1999).

Skillen (2003) notes personal anecdotes that are provided from a number of impactstudies. One such anecdote is about a security guard at the Los Angeles airport whowas able to quit his second job and attend a local college (increasing human capital).Another anecdote is from Baltimore, where a worker benefiting from a living wageordinance was able to purchase a house.

Community stakeholders in Calgary stated that raising wages to a living wage rate mayreduce the requirement for many low-income earners to maintain two jobs (SeeAppendix 2). Consequently, this would increase the time available to individuals tospend with family and friends, and thereby increase the quality of life. Stakeholders alsosuggested that this may increase community participation among low-income earnersand their households. The payment of a living wage, it was noted, also contributes togreater housing security and reduced vulnerability to homelessness. It was also notedthat income is a key determinant of health, and raising income may contribute to anincrease in the overall health of the population. Increasing income and health statuswould contribute to a long term reduction in the strain on Calgary’s health and socialservice systems.

6.12 Impacts on City Programming

The primary impact on City programming emerges from the requirement to increaseCity wage levels to the living wage amount. In 2007, there were 682 employees earningless than the living wage amount of $13.25 / hour (See Table 5). These workers arealmost exclusively casual / on call (Code 81 / 86) staff. As casual / on-call staff, theseworkers are not eligible for benefits. Consequently, the living wage rate of $13.25 is the




applicable rate. Two-thirds of these employees are employed in Recreation, with theremaining third employed in Community and Neighbourhood Services. The range of

jobs that fall below the Living Wage threshold include:

o Recreation program leaders and monitors (Recreation)o Babysitters (Recreation)o City Links workers (CNS)o Concession attendants

In 2007, a compensation review was conducted for Code 81/86 staff. This reviewresulted in an increase in Code 81/86 compensation levels. (See Table 6). This reviewwas initiated in response to current labour market pressures. As a result of the review,Code 81/86 wages were increased, and the lowest compensation band now falls withinthe Living Wage range, although those at the bottom of the first band would still receivewages below the living wage threshold. Human Resources has estimated that the total

cost of raising the lowest band to the living wage threshold would be $200,000. This,however, may under-estimate the total cost as increasing the lowest band may alsohave the ancillary effect of requiring an increase to the bands immediately above thelowest band.

Table 6: City of Calgary - Code 81 / 86 Revised Pay Structure, 2008Grade Pay Range ($ / hour)

1 8 – 142 12 – 173 14 – 194 17 – 225 20 – 30

6 28 – 387 36 - 46

Recreation is concerned about its ability to fund the additional wages required by aliving wage policy. Due to Recreation’s cost-recovery policy, increased wage costs, inthe absence of additional funding, would require an increase in user fees. This mayhave the unintended result of limiting access to programs by lower-income persons whoare unable to afford the higher fees. Alternatively, increased user fees may result inincreased use of the Fee Assistance program, with associated costs to The City.

In CNS, City Links workers constitute a significant portion of low-wage workers. City

Links is a program that provides job skills training for low-income people who are inreceipt of Social Assistance benefits. In response to current labour market pressures,City Links wages were recently adjusted upwards. In addition to wages, City Linksworkers receive a variety of benefits including access to The City’s Employee andFamily Assistance Program (EFAP), as well as the provision of tools, work clothes, aswell as personal and vocational counseling. Consequently, the $12 / hour wage rate isdeemed applicable. With the adjusted wage rates, City Links workers currently earnmarginally less than the $12 / hour living wage amount.




6.13 Alignment with TBL Policy Framework

The Social dimension of the TBL includes five policy themes which are:

o An Inclusive Cityo A Safe Cityo An Active Cityo A Cultural Cityo A City of Strong Neighbourhoods

Of relevance to the discussion of the impact of a Living Wage policy are the themes of“An Inclusive City” and an “Active City”.

a. An Inclusive City

The Inclusive City policy theme states:

The City of Calgary values and promotes independence and is a vital partner in creating an inclusive city where all Calgarians have the opportunity to take an active part in the social, economic and cultural life of the community. To accomplish this The City of Calgary seeks to ensure equitable access to City services and amenities regardless of age, inco me, culture or physical ability …

The development of a living wage policy will advance the TBL goals of an Inclusive City

by increasing wages to low-wage workers, thereby better enabling them to participate inthe social, economic and cultural life of the community. At the same time, the potentialimpact of increased user fees for Recreation programs to offset increased wage costsmay have the effect of limiting access to City services and amenities based on income.

b. An Active City

The Active City policy theme states:

The City of Calgary strives to create and sustain a healthy community by promoting active living through the provision of a wide range of sustainable and accessible

recreational programs, services, facilities and amenities. The City of Calgary provides leadership and encourages physical activity through funding, capital,promotion, partnerships and appropriate urban planning and design.

The development of a living wage policy will advance the TBL goals of an Active City byproviding additional economic resources to low-income families to better enable them toparticipate in recreational activities. At the same time, the potential impact of increased




user fees for Recreation programs to offset increased wage costs may have the effectof limiting access to City services and amenities based on income.

6.2 Economic Impact

Economic impacts of a Living Wage policy include potential impacts to City budgets,impacts to suppliers / contractors, and impacts to the local economy as a whole.6.21 Impact to City Budget

A Living Wage policy might be expected to impact The City’s budget in three possibleways. Budgets may be impacted through increased supply costs, increased humanresource costs, and costs associated with administration, monitoring and compliance.

a. Supply Costs

Critics of Living Wage policies argue that such policies will increase contract costs andthus have a significant and negative impact on City budgets. One study estimating thepotential impact of a Living Wage ordinance in Chicago estimated that the annual costto Chicago would be $20m to cover 8,740 workers, requiring a permanent tax increase.Studies that have actually monitored the impact following implementation, however,have not found that these feared cost increases have actually materialized.

A review of studies examining the impact of enacting Living Wage Ordinances in the

United States indicates that cost increases have been minimal in those cities that haveimplemented such policies. Thompson and Chapman (2002) report that several studieshave examined changes in municipal contract costs, and these studies have generallyfound that the overall cost of contracts does not rise significantly. A study by Elmore(2003) of 20 cities and counties that had implemented living wage ordinances found thatcontract costs increased by less than 0.1% of the overall local budget in the years aftera living wage ordinance was adopted. However, there were a few contracts in each citythat did experience significant price increases; these were labour intensive operationsthat employed a large number of workers at low wages; particularly janitorial andsecurity services.

Factors accounting for the limited impact on contract cost included the fact that, first,relatively few of the covered service contracts employ large concentrations of low-wageworkers, and, second, that most ordinances include size thresholds that exclude fromcoverage small businesses or businesses with small city contracts. Thirdly, mostcontractors absorb some of the labour cost increases, with research suggesting thatcontractors would generally absorb any cost increases up to 10% (Reynolds, Pearsonand Voortkampf, 1999). In some cases, cities negotiated directly with contractors to




share the cost increase. In these cases, contractors often agreed to absorb nearly halfof the labour cost increase.

The willingness of contractors to absorb increased costs may result from the

competitive bidding process. In the studies reviewed, the bidding process employed bymunicipalities appeared to affect the degree of impact of Living Wage Ordinances. Inparticular, unit-cost bidding was found to contribute to increased costs. Unit cost biddingoccurs when it is not possible to predict how much of a service will be required inadvance. In this case, firms bid on the price per hour of service provision, rather than onan amount for a specified period of time. Unit cost bidding may be used for servicessuch as security or temporary office help. At the same time, Living Wage Ordinances insome cities have resulted in cities consolidating multiple services into a single contract,which has produced cost savings.

Contractors may also be willing to absorb some increased labour costs because these

costs are partially offset by savings from reduced turnover and higher productivityamong workers whose wages rose because of the living wage requirements. Studies ofthe implementation of Living Wage Ordinances in the United States indicate that, withbetter wages and benefits, firms should also be able to attract and retain the bestworkers, and over time, deliver the highest quality of service.

The City of Calgary conducted a survey of service contractors during the fall of 2007 toassess the potential impact of a living wage policy on The City’s service contractors.The vast majority of respondents indicated that there would be no impact from theimplementation of a living wage policy, as almost all contractors were already payingthe living wage rate. As a result, they did not expect to incur additional costs that would

be passed on to The City.

b. Human Resource Costs

Human resource costs would be experienced by The City in its role as an employer.Human Resources estimates that to bring The City’s 682 employees who are currentlyearning less than a Living Wage up to the Living Wage threshold would require anadditional $200,000, a 24% increase from the current $853,987 to a total labour cost of$1,057,244. There may be ancillary effects as wage bands immediately above thedirectly affected bands may need to be adjusted upward in order to maintain theintegrity of the wage grid. This increased payroll cost would be borne primarily by

Recreation, and secondarily, by Community and Neighbourhood Services.

In addition to the direct human resource costs of implementing a Living Wage policy,The City may experience indirect costs as well. First, the introduction of a Living Wagepolicy would fundamentally change The City’s approach to collective bargaining.Currently, wage rates are negotiated based on the market rate for a particular skill oroccupation. The introduction of a minimum wage rate removes the link to the labour




market as a basis for establishing fair compensation. Consequently, it becomes moredifficult for The City to determine what compensation is fair and negotiate accordingly.

Secondly, while it may be possible to estimate potential vertical spillover effects on

wages, it is not possible to determine what horizontal effects may occur. Specifically,the introduction of a Living Wage may impact future contract negotiations. This mayresult in an overall increase in wages over time, but the exact amount would not bemeasurable.

c. Implementation, Monitoring and Compliance

In addition to direct payroll and contract costs, there will be additional costs associatedwith implementation, monitoring and compliance. In Toronto, monitoring andadministration of the Fair Wage policy has included the establishment of a registry ofnon-compliant companies, regular audits and compliance evaluation reports, the

development of performance indicators, and ensuring the provision of sufficient stafftraining. In the United States, several post-implementation studies of Living WageOrdinances have attempted to estimate monitoring and compliance costs. A studyestimating the impact to Miami-Dade County suggests that the County’s compliancemonitoring cost would be $230,000 annually. Another pre-ordinance assessmentestimated the cost to the City of Jacksonville to be $103,500 annually.

It is anticipated that the primary administrative cost arising from the introduction of aLiving Wage policy would be incurred by Finance and Supply through the embedding ofsuch a policy in the Sustainable Environment and Ethical Procurement Policy (SEEPP).The SEEPP currently operates on a complaints based system. Contractors are required

to sign the Supplier Code of Conduct, indicating their compliance with it. Audits andinvestigations regarding compliance are only conducted upon receipt of a complaintagainst a vendor. The inclusion of a Living Wage clause within the Supplier Code ofConduct is not expected to change this procedure. Consequently, it is not expected thatthe introduction of a Living Wage policy would result in The City incurring additionaladministrative costs above those already incurred for the implementation of SEEPP.

6.22 Impact to City Procurement

a. Impact to Supply Base

One concern regarding the implementation of a Living Wage policy is the potentialimpact on The City’s supply base. The concern is that contractors may cease to bid onCity contracts due to the wage requirement. The survey of City service contractors alsodid not identify this as a possible impact (See Table 7). The vast majority (94%)reported that they would likely continue to bid on City contracts following the adoption ofa Living Wage policy, with 85% stating that they were “Very Likely” to do so. Only 5%indicated that they would be unlikely to continue to bid on City contracts if a LivingWage policy were to be adopted.




Table 7: Likelihood of City Service Contractors Continuing to Bid on City Contracts UponAdoption of a Living Wage Policy, 2007

Number PercentVery Likely 47 85.5Likely 5 9.1Unlikely 0 0Very Unlikely 4 7.3

There is a concern, however, that the introduction of a Living Wage policy may result inthe premature disqualification of bids during the tender process. Currently, bidders arerequired to sign the Supplier Code of Conduct (SCC) as a condition for consideration ofa bid. For Canadian suppliers, the SCC currently requires contractors to abide byrelevant Labour, Health and Safety and Employment standards as defined by Canadianand Provincial law. The inclusion of a Living Wage clause within the SEEPP increasesthe minimum standards for conducting business with The City significantly above

existing legislation. Thus, while current contractors do not expect to experience animpact of the policy, it is unknown what effect such a policy will have on the propensityof future contractors to apply.The review of the literature examining the impact of Living Wage Ordinances in theUnited States did not reveal significant impacts to the municipal supply base in citieswhere Living Wage Ordinances have been implemented. Thompson and Chapman(2002) report that most studies have found that the presence or introduction ofcompetitive bidding associated with the implementation of living wage ordinances hasmitigated any potentially negative effects on bidding. Other studies have found that thenumber of bids actually increased following implementation of Living Wage ordinance.Another study noted that the introduction of the Living Wage ordinance “leveled the

playing field” for firms that were paying decent wages.

b. Supply Benefits

While the introduction of a living wage may result in marginal cost increases, studieshave also found important benefits of such an approach. Companies that pay livingwages tend to have reduced staff turnover and higher quality service. Reynolds,Pearson and Voortkampf (1999) note that these impacts should result in increasedvalue to the public authority. With better wages and benefits, firms should also be ableto attract and retain the best workers, and over time, deliver the highest quality ofservice. At The City of Calgary, such effects have already been realized, as Supply

Management instituted a minimum hourly wage for janitorial services due to poor qualityservice from firms paying lower wages.

6.23 Impact to Suppliers

City suppliers may be both positively and negatively impacted by a Living Wage policy.Positive impacts arise from increased productivity. Negative impacts may arise fromincreased labour costs and revised employment practices.




a. Increased Costs

Mandated increases to wages will result in initial labour cost increases to employers.

Costs to employers include direct wage increases, health insurance, and payroll taxcosts. There may be additional costs due to the “ripple effect” as employers increasethe wages of other employees as they adjust their wage scales. Research into thiseffect notes that the effect diminishes as pay increases, resulting in a compression ofwages.

The City of Calgary’s survey of service contractors assessed the potential impact tosuppliers, (See Appendix 1). Respondents to the survey were from Mechanical Services(33%), Leasing / Hauling (27%), Janitorial (18%), Technology (13%) Consulting (7%)and Security Services (2%). Three-quarters of respondents (74.5%) reported that theyemployed fewer than 50 employees, while 14% employed between 50 – 99, and 11%

employed 100 or more. Over half of respondents (60%) reported that less than 25% oftheir total business was accounted for by City contracts. Roughly one-quarter ofrespondents (24%) reported that 75-100% of their business was held by City contracts.Of those suppliers who responded to the survey, the vast majority (89%) reported thatthey did not have any staff working at wages below the living wage threshold (SeeTable 4).

The vast majority of respondents (85%) reported that the adoption of a Living Wagepolicy would have no effect on their employment practices (See Table 8). Of those thatindicated that it would affect their practices, identified changes in practices includedincreasing qualifications of new staff, increasing training, and reducing staff. No

respondents indicated that they would restrict hiring or reduce hours of staff.

Table 8: Anticipated Changes in Employment Practices by City Service Contractors in Responseto Adoption of a Living Wage Policy, 2007

Number PercentNo Effect 47 85.5Reduce Staff 2 3.6Increase Qualifications 2 3.6Increase Training 1 1.8Restrict Hiring 0 0Reduce Hours 0 0Other 3 5.5

This finding is consistent with studies examining the impact of Living Wage Ordinancesin American cities. A review of studies examining the impact of enacting Living WageOrdinances in the United States reveals that the cost increases incurred as a result ofsuch policies have not proved overly burdensome to contractors. The magnitude of thelabour cost increase is dependent on the percentage of the workforce employed atwages below the specified minimum. In Baltimore, research showed that contract costincreases varied by the type of contract. Janitorial services increased the most (16.6%




overall), while school bus contracts rose by just 2.1%. The difference is due in part tothe proportion of workers in a contract type that are paid below the minimum wage. Thevariation is also due to differences in labour intensity of the sector. Some sectors aremore labour intensive than others, so a greater proportion of contract costs go to labour

cost as opposed to equipment or other costs. The greater the labour intensity, thegreater the cost impact of the ordinance.

In the Miami-Dade study, researchers determined that 43% of City contractors wereearning less than a living wage, and that the new ordinance would cost them anadditional $4.2m in direct annual labour costs. In the San Francisco case, researchersestimated that new direct labour costs would be $31m, roughly 4% of the total prioryear’s contracts. Indirect wage gains were estimated to be $3.7m. In a pre-ordinanceimpact study conducted for the City of Jacksonville, it was estimated that the directlabour cost for the 310 impacted workers would be $2.34m annually. In Detroit, the totalcost for bringing all city service contract workers up the living wage level was just over

$6.9m.

In addition to strictly examining the absolute cost of the increase, it is important to viewthe increased cost relative to the total value of the affected contracts. One study(Waterloo) reported that studies show that the cost to business of increased labourcosts averages less than 1% of production costs. This is in line with actual reportedincreases from post-implementation evaluation studies. In Detroit, it was reported that,for over half of contractors, the maximum possible cost increases represented under 1%of the funds they receive for the contracted work. At the most, one quarter of firmsexperienced cost increases of between 5% and 9% of the contract cost. In SanFrancisco, total labour cost increases to affected firms was found to represent roughly

4% of The City’s total contract cost of $728m for covered firms.

How do firms respond to increased labour costs? The pre-implementation impact studyconducted in Chicago predicted that labour costs to contractors would rise by $37.5m.In the face of this increase, employers would respond in one of four ways: raise pricesto the city, reduce cost by reducing employees, not bid on future city contracts, orrelocate out of the city. Other research, however, suggests a fifth way that contractorsmay respond, and that is to decrease profits. Indeed, if wage costs increase and this isnot offset by increased contract costs or decreased labour, the only offsetting costreduction strategy is reduced profits. In fact, a study of the Boston ordinance (Brenner,2005) found that while few contractors reduced employment, 40% indicated that they

had reduced profits in response to the ordinance.

b. Benefits Arising from Living Wage Policies

While living wage policies may result in increased labour costs, many studies note thatthese costs tend to be offset by increased labour productivity. Studies generally tend tosupport the finding that increased wages raise productivity through decreased turnoverand greater work effort, as well as by providing incentives for firms to seek out other




productivity enhancing means. These responses partially offset the increased wagecosts. The reason for the increased worker productivity is that the cost of job loss for theworker increases at a higher wage, thus providing an incentive for the worker to workharder in order to retain their job, and to be less likely to leave their job voluntarily. This

lowers the costs of recruitment and training. Schenk (2001) notes that increasedminimum wages may also induce firms to switch toward production methods thatemphasize more training and, with it, more job stability and income. Skillen (2003) citesthe example of Alberta Carpet Cleaning / Alberta Furnace Cleaning. In response tocompany concerns about high turnover, poor service and low quality in the 1980’s,company devised a strategy to increase wages, invest in training, improve equipment,and provide a safer working environment.

The San Francisco study similarly noted that employers would be expected to realizebenefits from the ordinance, including reduced worker turnover and absenteeism, and inthe more efficient utilization of human resources so that cost increases may be

significantly lower than expected based solely on the per unit labour cost increase. Apost-implementation evaluation study at the San Francisco Airport found that, followingthe introduction of the policy, turnover among the lowest paid workers fell dramatically.The policy was also reported to have impacted productivity. In a survey of employers,those that were covered by the policy were more likely to report improvements in workperformance, employee morale, absenteeism, disciplinary issues, equipmentmaintenance, equipment damage, and customer service. In the Miami-Dade study, itwas also noted that the living wage ordinance had the effect of leveling the playing field.As some companies already pay higher wages, passage of the ordinance would createa level playing field for these companies and increase their competitiveness viz. lowwage companies.

c. Human Service Organizations

Organizations that provide social services (Human Service Organizations) in Calgaryare currently facing significant human resource challenges. While population growth hasplaced increasing demands on the services of such organizations, funding constraintsare limiting their ability to meet the increased demand. Of particular concern is theinability to attract and retain staff due to low compensation levels associated withconstrained funding. A recent report on the human resource challenges facing Calgary’snot-for-profit sector notes:

“The sector finds itself in stiff competition for both skilled and unskilled labour, withgovernment and industry both able to offer higher compensation, better opportunities for advancement and other benefits. Project funding and uncertainty about contract renewals make it difficult for many nonprofits to offer job security. The high and rising cost of living pushes many employed in the sector to look elsewhere for jobs.” (Narine, 20 07).




With respect to a Living Wage policy, consideration should be given regarding the effectof including within the scope of the policy, organizations that are contracted by The Cityof Calgary to provide human services. In Calgary, The City of Calgary does not providehuman services directly, but funds community organizations to provide such services

through the Family and Community Support Services (FCSS) program. This is aprovincial program that is cost-shared with the municipality, with 80% of funds beingprovided by The Province and 20% by the municipality. Funds are intended to be usedfor preventive social services. The City of Calgary currently funds 84 organizationswithin Calgary to deliver such services, providing a total of $26.4m in funding in 2007.

The treatment of human services and human service organizations within a LivingWage policy pose a unique challenge. Wages within human services, particularly withinthe non-profit sector, tend to be lower than average. While research suggests that theimpact of wage increases to private contractors relatively small, the impact to humanservice organizations may be much greater. This is due to the fact that they may employ

more low-wage workers, and they are less able to absorb cost increases either byreducing profits or passing such increases along through price increases. To the extentthat cost increases can be absorbed, this would likely occur through a reduction inservices which would ultimately negatively impact vulnerable populations, such as thosethat a Living Wage policy is intended to benefit.

The review of the impact of Living Wage Ordinances in the United States revealed that,in cases where human service contracts are covered, these contracts saw larger thanaverage contract cost increases, ranging from 0.3% to 2.79% of the human servicebudget. Although higher than other contract cost increases, such increases are notsignificantly high (Elmore, 2003). In their evaluation of the Detroit Living Wage

Ordinance, however, Reynolds, Pearson and Voortkampf (1999) note that there may beimpacts on non-profit organizations that are unable to increase wages without unduehardship. It is estimated that the ordinance would cost this sector $4.9m, or betweenunder 1% to 6.8% of the value of City contracts. In Detroit, a substantial number ofcovered low-wage workers are believed to be working in the non-profit sector.

Studies of Calgary’s voluntary sector have revealed that most organizations are payingstaff close to the living wage rate already. Applying the living wage policy to humanservice organizations, however, may pose important challenges. First, suchorganizations are unable to absorb cost increases or pass such increases on in the formof increased prices. Consequently, any increased labour cost would require either

increased funding or reduced levels of service. Consequently, there may be additionaldemands for funding from The City as a result of applying a living wage policy to FCSSfunded agencies.

Agencies may also be disadvantaged due to the fact that they most often receive fundsfrom multiple funders. If The City were to require recipient organizations to pay livingwages to all staff, regardless of the source of funding, organizations would be require toreflect this cost in all funding proposals, not just FCSS proposals. Consequently, FCSS




funded agencies may face a competitive disadvantage when applying to other fundersviz. organizations that do not receive FCSS funds. Alternatively, if the living wage policywere applied only to staff working on FCSS funded programs, this may createinequitable salary structures within organizations.

Although the application of a living wage policy to FCSS funded agencies may haveimpacts on those agencies, there are also compelling reasons to include this sector inthe policy. Currently, the non-profit sector in Calgary is experiencing a serious humanresource crisis. Low levels of funding have resulted in a significant salary gap betweenthe non-profit sector and the private and government sectors. This is resulting indifficulties recruiting and retaining staff. In order to build and maintain capacity in thesector, requiring living wages for agency staff would encourage organizations to reflectthe true cost of programs in funding proposals, leading to a more realistic fundingregime.

In the United States, Municipalities have addressed the issue of non-profits in a numberof ways. In some cases, non-profits are exempted from the policy totally. In other cases,non-profits may be exempted based on a prescribed formula, supplementing the grantor contract to aid the organization to meet the living wage levels, or a combination ofthese approaches. If a Living Wage policy were to be developed for The City of Calgary,further discussion with the non-profit sector would be required to fully assess the impactof such a policy on the sector and to determine the most appropriate approach to thesector in the development of a policy.

6.24 Impact to Local Economy

The impact of a Living Wage policy to the local economy will be dependent upon thenumber of workers covered by such a policy (scope) as well as the number of workerswho would actually experience a benefit from such a policy. Suppliers providingservices to The City of Calgary represent a fraction of the 90,472 firms reported to beoperating in Calgary in the sectors covered by the proposed policy; consequently, sucha policy may have little overall positive or negative impact on the city economy. Theeconomic impact is further attenuated by the fact that the vast majority of covered firmsare already paying their employees a Living Wage. While this suggests that theeconomic impact of such a policy on the existing supply base would be insignificant, thisdoes not factor in future impacts as new firms bidding on future contracts would berequired to meet the Living Wage requirement. The impact on future contracts is not

known. The most significant economic impact arising from the Living Wage policy wouldtherefore be realized through the increase in wages paid to City staff (See Section6.21b).

While this initial analysis suggests there would be little impact to Calgary’s localeconomy, most studies of the impact of Living Wage Ordinances in the United Statesreport positive economic impacts of such Ordinances. Several studies report that theimpact of a living wage policy to the local economy is greater than other investments




due to a greater multiplier effect as low-wage households tend to spend a higherproportion of their income within the city and on locally produced goods and services.Reich, Hall and Hsu (1999) estimate that the proposed San Francisco ordinance wouldresult in an additional $20.8m per year flowing to the city’s economy. Skillen (2003)

cites a study of Santa Rosa Ca. which found that, if all 5,391 lowest-wage individuals inthe city were paid a living wage, this would circulate an additional $23,818,301 in thelocal economy per year. In the San Francisco case, researchers estimated that newdirect labour costs would be $31m, while indirect wage gains were estimated to be$3.7m. This would result in economic growth in the San Francisco economy of $20.8m / year, with 40c of each additional dollar being spent locally (Weiss and Clements, 2002).As increased wages are spent locally, this can lead to local employment gains.

In addition to increased local economic activity resulting from the increased wages,there may be other indirect local economic benefits. Nissen (1998) notes that taxpayersbenefit from living wage policies through reduced subsidies paid to lower income

families. In Jacksonville, it was estimated that taxpayers would save between $3,000 – $4,000 per family per year, with those savings being largely realized at the federal andstate levels.

The actual impact on public subsidies will be in part dependent upon the degree towhich living wage policies actually raise family income above the poverty line. In thecase of Baltimore, it was found that, due to the part-time nature of contracts, the livingwage ordinance did not raise living standards to poverty levels, so the offsetting impactof the increased wages on public assistance was not largely realized.

There are some concerns that a living wage will chase away business and discourage

new investment. However, Skillen (2003) points out that relocation is expensive andmany businesses have assets whose value is place specific (e.g. hotels), makingrelocation impractical. In addition, there are other more salient factors determining acompany’s location decision including access to markets and transportation systems,infrastructure, education and skill level of the available workforce and overall quality oflife.

One specific concern with the Living Wage policy is the impact of increased City wagesin the Recreation sector. There is concern that, if City wages for Recreation staff areraised to a living wage rate, this will result in a market distortion in the recreation sectorwithin Calgary. There is a concern that non-profit community organizations may lose

staff to City programs due to the higher wages being paid to City staff. This may resultin labour problems for community recreation providers, leading to increased costs andincreased user fees, and / or reduced programming.

6.25 Alignment with Triple Bottom Line Policy Framework

The Economic dimension of the TBL includes five policy themes which are:




o Attracting and Nurturing Businesso Creating a City Where Citizens Want to Live and Investo Strategically Invest in Infrastructureo Invest and Leverage Investment in Community Infrastructure and Programso Encouraging a Creative City

Of relevance to the discussion of the impact of a Living Wage policy are the themes of“Attracting and Nurturing Business”, “Creating a City Where Citizens Want to Live andInvest” and “Invest and Leverage Investment in Community Infrastructure andPrograms”.

a. Attracting, Retaining and Nurturing Business

This policy theme states:

The City promotes long term economic prosperity by:

o providing a business environment that attracts new industry and jobs; o ensuring that an adequate supply of appropriately-zoned land is available for

industrial and commercial development; o providing a stable yet competitive environment for existing businesses to

succeed and prosper; and o ensuring an environment that allows for local innovation and entrepreneurial

spirit to nurture new industry and business creation.

The living wage policy may impact this policy theme by increasing labour costs for firms

supplying services to The City. There is some concern that this may compromise thecompetitive environment within Calgary, and may fail to attract new industry and jobs.

Research, however, also reveals a variety of economic benefits from theimplementation of a living wage policy. First, living wage rates tend to increase humancapital and labour productivity. Secondly, increased productivity and service quality mayin the long run improve the quality of services provided to local authorities. Finally, livingwage policies may serve to ensure a stable competitive environment by leveling theplaying field and providing advantage to firms that pay adequate wages.

b. Creating a City Where Citizens Want to Live and Invest


The City recognizes that Calgary's high quality of life is one of the major reasons why businesses choose to locate and stay in Calgary. Calgary's high quality of life and attractive physical environment make it a desirable place in which to live. As well, The City's policies support strong job creation, housing choices, access to services, amenities and mobility options.




The Living Wage policy may impact this policy theme by ensuring that wages areadequate for the cost of living in Calgary. High housing costs and comparatively highrates of inflation over the past several years are impacting the affordability of Calgary as

a place to live. Consequently, this may be a deterrent to labour mobility, negativelyimpacting the local labour supply by restricting migration. Consequently, any strategiesto enhance wages may positively impact the labour supply.

c. Invest and Leverage Investment in Community Infrastructure and Programs


A strong social infrastructure is integral to a strong economy. The City supports community activities by investing in infrastructure and programs. Requests by Civic Partners to contribute to funding for sport facilities, community resource centres and

facilities will be considered with benefits to the community being a factor. The City has a funding mechanism to support the development, acquisition and management of public art in civic facilities, and supports selected non-profit services and social programs through approved funding mechanisms.

The Living Wage policy may impact this policy theme to the extent that the living wagepolicy is applied to and impacts human service contracts, specifically those that arefunded through The City’s FCSS program. While the living wage policy may negativelyimpact the financial capacity of organizations, in the long run it may also result inincreased sector capacity through ensuring that funding contracts reflect the true costsof delivering programs and services.

The living wage policy may also impact this policy theme to the extent that it impacts thecost structure of recreation service providers. Cost increases to City recreationalprograms may result in increased user fees, potentially limiting access. Marketdistortions introduced into the recreation sector through increased City wages may alsonegatively impact the recreation sector and result in increased user fees generally.

6.3 Environmental Impact

A review of studies examining the impact of Living Wage Ordinances in American citiesdid not reveal any environmental impacts. The City of Calgary’s Triple Bottom Line

Policy Framework includes six Environmental Policy Themes. These themes are:

o Improving Air Qualityo Ensuring Land Stewardship and Protectiono Protecting Water Resourceso Reducing Energy Use and the Rate of Climate Changeo Protecting Open Spaceo Reducing Calgary's 'Footprint' on the Environment




The implementation of a Living Wage policy is not expected to have a positive ornegative impact on any of these policy themes.

7. Summary of Impacts

The following section provides a summary of the key impacts expected to be associatedwith the implementation of a Living Wage policy by The City of Calgary.

7.1 Social Impacts

Living Wage policies tend to benefit those who are the most disadvantaged. Low-wage workers in Calgary are over-represented by recent immigrants, Aboriginalpersons, Visible Minority persons and persons with disabilities.Benefits to low-wage workers arising from Living Wage policies include increased

income, increased benefits, increased access to credit, improved quality of life andreduced dependency on government assistance.The benefits realized from the application of Living Wage policies are dependent onthe number of workers who may actually be affected by such a policy. The survey ofsuppliers conducted by The City of Calgary in 2007 indicates that a very smallpercentage of employees of service contractors are actually earning less than theliving wage. Within The City of Calgary, the policy would provide benefit to roughly680 employees, mostly on-call and casual employees.The increased human resource cost associated with bringing City employees up tothe Living Wage rate may result in increased user fees, particularly within Recreationwhich operates on a cost-recovery model. This may have negative social impacts by

reducing access to low-income individuals and families, the population that thepolicy is ultimately intended to benefit.

7.2 Economic Impacts

Living Wage policies have not been found to adversely impact suppliers inmunicipalities where such ordinances have been applied. The City of Calgary’ssupplier survey revealed that virtually all existing service suppliers are alreadypaying their workers a living wage.Research demonstrates that suppliers benefit from Living Wage policies asincreased wages tend to result in increased productivity. Such policies also tend to

“level the playing field”, ensuring that employers that pay higher wages and thusproduce better quality service are not disadvantaged in the competitive biddingprocess viz. companies that pay lower wages but may deliver inferior service as aresult. Ultimately, this ensures in the long run that The City is receiving the highestquality of service.Due to the fact that almost all service suppliers are paying a living wage, it is notexpected that there would be any direct impact on City procurement costs.




The application of a Living Wage policy is not expected to negatively impact TheCity’s supply base. In The City’s survey of service suppliers, 95% indicated that theywould likely continue to bid on City contracts, despite the application of a LivingWage policy.

The direct impact of applying a Living Wage policy to City staff would be anincreased human resource cost of $200,000. This cost would be born primarily byRecreation and to a lesser extent by Community and Neighbourhood Services. Theindirect impact of such a policy on total human resource costs is unknown, as thepolicy may influence the collective bargaining environment.Increasing the wage scale, particularly in Recreation, may impact the Recreationsector across the city, by distorting the labour market and leading to cost increasesfor community recreation providers. This may impact their ability to retain staff andcontinue to provide programs and services at existing fee structures.The adoption of a Living Wage policy would fundamentally alter The City’s approachto collective bargaining as the establishment of fair compensation is no longer

determined by the labour market. This may make future contract negotiationsincreasingly complex.The application of Living Wage policies tends to have important benefits to the localeconomy due to the fact that low-income workers tend to spend more of theirearnings locally. Therefore, there tends to be a greater multiplier effect of suchinvestments, generating increased benefits to the local economy.

7.3 Environmental Impacts

No environmental impacts of a Living Wage policy were identified.

7.4 Financial Impacts

Based on this analysis, it is not expected that the application of a Living Wage policywould produce significant increased procurement costs. The vast majority of Cityservice suppliers indicate that they are already paying their staff the defined LivingWage amount. In the United States, where Living Wage Ordinances have beenimplemented, research has shown there to be minimal cost increases, generally lessthan 0.1% of City budgets.The primary financial impact of a Living Wage policy would be increased humanresource costs for The City of Calgary as an employer. It is estimated that the cost ofbringing existing employees up to the Living Wage rate would require an additional

$200,000.As a Living Wage policy applied to city suppliers would be implemented through theexisting SEEPP process, it is not expected that there would be administrative costsin excess of those already incurred for the implementation of SEEPP.

8. A Living Wage Policy for Calgary




The following section provides a discussion of considerations and options for thedevelopment of a Living Wage policy.

8.1 Definition of a Living Wage

In accordance with accepted definitions of a Living Wage being used by other jurisdictions and advocacy groups, any definition of a Living Wage should reflect thewage required for a full-time worker to reach the poverty line. In Calgary, VibrantCommunities Calgary (VCC) has established a rate of $12.00 / hour with benefits and$13.25 without benefits as the appropriate living wage. This reflects the wage requiredfor a single person working full-time to meet the poverty line (LICO), adjusted forCalgary’s inflation rate. The development of a policy would need to consider how such athe Living Wage rate would be adjusted on an ongoing basis to ensure that the value ofthe Living Wage was not eroded over time by inflation.




8.2 Scope

The scope of a Living Wage policy could be restricted to the city of Calgary, to Canada,or applied to all contracts both domestic and international. If the policy were to be

applied to all contracts, both domestic and international, there would be significantcomplexity in determining an appropriate Living Wage amount for locations outside ofCanada. If the policy were to be applied only to Canadian based suppliers, a scheduleof appropriate Living Wage amounts would need to be developed. Such a schedulecould be easily developed based on the Statistics Canada Low-income Cutoffs tablewhich provides varying income thresholds based on community size. While this requiresa certain level of complexity in reviewing bids, it is not overly complex. Finally, the policycould be applied strictly to suppliers within the city of Calgary. This is the approachtaken by most Living Wage Ordinances that have been enacted in the United States.This however, may disadvantage Calgary suppliers relative to those in surroundingmunicipalities such as Strathmore, Airdrie, Cochrane and others. Further, such an

approach would likely be in violation of the Agreement on Internal Trade (AIT) and theTrade, Investment and Labour Mobility Agreement (TILMA), and consequently not anoption to be pursued.

8.3 Application

There are several considerations with respect to the application of a Living Wage policy.First, the policy could be applied strictly to City of Calgary employees without applying itto suppliers and thus separating it from the SEEPP. If, however, the policy is to beapplied to suppliers, this would require The City to also apply the policy to City staff, asthere is an established principle in SEEPP that The City would not require suppliers to

meet standards that The City was not prepared to meet itself. If the policy were to beapplied to City staff, consideration would need to be taken as to whether the policywould be applied to all City staff, or if not, which class of employees should be covered.

If the policy were to be applied to suppliers as well as City staff, the policy could beapplied to the whole range of suppliers, or limited. In the cases reviewed in the UnitedStates, Living Wage Ordinances are almost exclusively applied to suppliers of services.In fact, this research found no example of a Living Wage Ordinance being applied to theprocurement of goods. This is the approach that has been taken in this report as well.

In addition to restricting the policy to service contracts, there are other possible

exemptions. In the review of municipalities that have enacted Living Wage Ordinances,the application of such ordinances is often restricted in some ways. Some Ordinancesexempt employers with fewer than a specified number of employees. Others apply onlyto contracts above a specified value.

Finally, consideration should be made as to whether the policy should apply to otherorganizations affiliated with The City of Calgary. This may include Civic Partners,organizations that lease premises from The City, and organizations that receive funding




from The City. With respect to funded organizations, particularly consideration will needto be given to human service contracts, specifically to organizations that receive fundingthrough the FCSS program.

8.4 Implementation

Although this report was directed to examine the impact of embedding a Living Wageclause within SEEPP, including such a clause within SEEPP requires a larger policythat extends beyond SEEPP. This is due to the principle referred to earlier that SEEPPwill not require a supplier to meet a standard that The City itself is not prepared to meet.Consequently, including a policy within SEEPP requires associated policy dealing withCity human resources that extends beyond the scope of SEEPP. Consequently,implementation of a Living Wage policy would require the development of a separatepolicy that would be broadly applicable to both The City’s procurement and humanresource activities.

Implementation of a Living Wage policy would need to occur, therefore, simultaneouslythrough both The City’s Human Resources and Procurement activities. Implementationof the policy for City employees would require consultation and an examination ofcurrent pay structures to determine what, if any, impact a salary readjustment wouldhave on higher pay bands. Following such a review, implementation through a salaryreadjustment could occur immediately, pending funding for such an adjustment.

Implementation of the policy through the procurement process would occur through theinclusion within the SEEPP Supplier Code of Conduct of a mandatory Living Wageclause. Implementation of the policy as it pertains to suppliers would then proceed

alongside the implementation of SEEPP. Currently SEEPP is being applied to a limitedrange of commodities based on a risk analysis of various commodity groups. Due to thefact that SEEPP applies to goods as well as services, there may be a disconnect inimplementation as the Living Wage policy should apply to all service contracts, some ofwhich may be beyond the current SEEPP implementation schedule.

With respect to affiliated organizations (Civic Partners, leaseholders and fundedagencies), implementation could be phased. Implementation could proceed with HumanResources and Procurement, while consultation continues with respect to scope andthe potential inclusion of affiliated organizations.




References

DePutter, M., S. Morris, T. Lafrance, W. Armstrong, and A. Law. (2004). Living WageCase Studies – Final Report. Peterborough, ON: Peterborough Social Planning Council.

Elmore, A. (2003). Living Wage Laws and Communities: Smarter EconomicDevelopment, Lower Than Expected Costs. New York: Brennan Center for Justice, NewYork University School of Law.

Narine. S. (2007). A Workforce Strategy for Alberta’s Nonprofit and Voluntary Sector .Unpublished Report Prepared for the Edmonton Chamber of Voluntary Organizationsand the Calgary Chamber of Voluntary Organizations by Samster Communications.

Neidt, C.; G. Ruiters; D. Wise and E. Schoenberger (1999). The Effects of the LivingWage on Baltimore. Washington, D.C.: The Economic Policy Institute.

Nissen, B. (1998). The Impact of a Living Wage Ordinance on Miami-Dade County.Centre for Labour Research and Studies, Florida International University. Available[online]: www.fiu.edu/~publications/living_wage_miami_1999.html

Reich, M.; P. Hall and F. Hsu (1999). Living Wages and the San Francisco Economy:The Benefits and the Costs. Berkely, CA: Centre for Pay and Inequality, Institute ofIndustrial Relations, University of California.

Reich, M.; P. Hall and K. Jacobs (2005). “Living Wage Policies at the San Francisco Airport: Impacts on Workers and Businesses .” Industrial Relations. Vol. 44, No. 1.

(January 2005).

Reynolds, D.; R. Pearson and J. Voortkampf (1999). The Impact of the Detroit LivingWage Ordinance. Centre for Urban Studies and Labour Studies Centre, College ofUrban, Labour and Metropolitan Affairs, Wayne State University.

Schenk, C. (2001). From Poverty Wages to a Living Wage. Toronto: the CSJFoundation for Research and Education, the Ontario Federation of Labour.

Skillen, K. (2003). A Living Wage for Waterloo Region. Waterloo, ON: OpportunitiesWaterloo Region.

Thompson, J. and J. Chapman (2006). The Economic Impact of Local Living Wages.Briefing Paper. Washington, D.C.: Economic Policy Institute

Weiss, K. and Clements, J. (2002). The Value and Impact of Living Wage Legislation. AReview of Research Literature on Living Wage Legislation. Jacksonville, FL.:Jacksonville City Council, Research Division

http://www.fiu.edu/~publications/living_wage_miami_1999.html







Appendix 1: City of Calgary Service Suppliers Survey

Purpose

The purpose of the report is to access the impact of including Living Wage criteria incontracts for City of Calgary service suppliers. The survey was designed to respond tothe following concerns:

Will City of Calgary suppliers need to increase staff wages to meet the LivingWage requirement.Is the City of Calgary at risk of losing suppliers if Living Wage is a contracturalrequirement.How would a Living Wage condition affect the supplier’s employment practicessuch as, reduced staff hours, new hire restriction etc.What is the profile of the firms that would be impacted by the Living Wage

contract conditions.

Survey Content

The SEEP Team interviewed various North American municipalities to betterunderstand the impact Living Wage would have on the City of Calgary operations andCity purchasing activities. The research found that Living Wage was being applied onlyto services and not products. As such the survey focused on service providers in theCity of Calgary. The SEEP team created a list of Calgary based services companiesthat had been paid by the City over a three month period. This approached ensuredthat only active suppliers would be surveyed. The Living Wage survey was issued to

155 companies through royal mail or electronic mail. The survey included a briefoverview of the project and a explanation of Living Wage.

The survey was directed at service providers in 10 different industries including:

Financial and Legal Services Security Services Janitorial/Maintenance Services Mechanical Services Technology Services

Leasing/Rental Services(included Trucking)

Consulting/Training Services Waste Management Advertising/Communications Creative/Design Services




Survey Results

Summary

A total of 55 responses were received. Responses were not received from firms inFinancial and Legal Services, Waste Management, Advertising/Communication, andCreative/Design Services.

The majority (89%) of the respondents are paying their staff a Living Wage. One firmwith more than 100 employees and one firm with less than 50 employees pay more than20% of their employees less than Living Wage.

86% of the firms indicated they would continue to bid on City of Calgary contracts, ifLiving Wage became a condition of contract. Three firms (5.5%) indicated that futurebidding was very unlikely if the condition was applied.

86% of the respondents did not believe the Living Wage condition would have any affecton their hiring practices. Only two firms anticipated staff reductions. Both firms haveless than 50 employees. One of the firms relies on The City for more than 75% of theirbusiness.

75% of the firms surveyed have less than 50 employees. Eleven of these firms rely onThe City for over 75% of their business.

Industry Breakdown

Security Services – 1 response

Only one response was received for Security Services. This firm pays its employees aliving wages and does not believe the Living Wage condition will affect their hiringpractices. They have over 100 employees and are very unlikely to bid on future Citycontracts.

Janitorial/Maintenance Services – 10 responses

The majority of the respondents (70%) pay their employees a Living Wage. Two firms(20%) pay their employees less than Living Wage. Of these two firms, one has less

than 50 employees and one has over 100 employees. All of the respondents willcontinue to bid on City contracts and they do not anticipate the Living Wage conditionwill affect their hiring practices. The respondents include 70% with less than 50employees and 30% with more than 100 employees. Only 20% of the respondents relyon The City for more than 75% of their business.

Mechanical – 18 responses




All respondents are paying their employees a Living Wage. The respondents will likelybid on future contracts and the majority do not anticipate any changes to their hiringpractices due to the Living Wage condition. Only one firm with less than 50 employeessuspected the Living Wage condition would result in staff reductions. This same firm

relies on the City for over 75% of their business. The majority (72%) of the firms haveless than 50 employees. Three of these firms rely on the City for more than 75% oftheir business.

Technology – 7 responses

Only one of the respondents with 50- 99 employees is paying less than 10% of itsemployees less than Living Wage. All respondents will bid on future contracts and 86%do not believe the Living Wage condition will affect their hiring practices. One firmbelieves the condition will result in increased qualifications for new hires. All of the firmsrely on The City for less than 25% of their business. Six of the firms have less than 50

employees and one firm has 50-99 employees.

Leasing / Rental Services (included Trucking) – 15 responses.

This category includes hired truckers. All of the firms pay their employees Living Wage.All firms but one will likely bid on future City opportunities. The firm that will not bid onCity business has less than 50 employees and relies on The City for 25-50% of theirbusiness. Eighty percent of the firms do not anticipate an impact on their hiringpractices. One firm expects Living Wage will require them to increase their new hirequalifications. Seventy-three percent of the respondents have less then 50 employees.Six of these firms rely on The City for more than 75% of their business.

Consulting / Training Services - 4 responses

Two firms pay employees Living Wage and two firms have more than 20% of theiremployees earning less than Living Wage. All firms have less than 50 employees. It isvery unlikely that one firm that relies on the City for less than 25% of its business, willbid on future City business if the Living Wage condition is applied. One firm does notanticipate an impact on their hiring practices, whereas one firm expects it will reducestaff and another expects training will need to be increased. One firm relies on the Cityfor over 75% of their business whereas the balance of the companies rely on the Cityfor less than 25% of their business.

Conclusions

The majority of the firms surveyed are paying their employees a Living Wage.




Appendix 2: Stakeholder Submissions Regarding the Impact of a Living WagePolicy for Calgary

In October, 2007, an invitation was circulated to 12 community stakeholder

organizations, soliciting input on the proposed Living Wage policy. Identifiedstakeholders were asked to provide comments on what they perceived to be the social,economic and environmental costs and benefits of a Living Wage policy. Stakeholderscirculated included:

The Calgary Chamber of CommerceDeloitte and Touche (Calgary Office)The Conference Board of Canada (Calgary Office)Alberta Human Resources and EmploymentThe University of CalgaryMonica Pohlmann and AssociatesThe Canada West FoundationSustainable CalgaryTransfairThe Parkland InstituteThe Pembina InstituteVibrant Communities CalgaryThe United Way of Calgary and Area

Written submissions were received from:

The Parkland InstituteVibrant Communities CalgaryThe United Way of Calgary and AreaSustainable Calgary

These submissions are attached.




Submission Received from Sustainable Calgary

_________________________________________________________

What are the potential social, economic and environmental costs and benefits of The City ofCalgary implementing a Living Wage policy?

On behalf of Sustainable Calgary Society, I would like to say that I appreciate the

opportunity to discuss Living Wage policy with the City of Calgary. I am please that

the City has taken this discussion forward and I strongly urge The City to

implement a Living Wage policy for its employees and contract employees. Calgary

is in such a state of confusion from the rapid growth. Individuals and families arefacing extreme pressures just to live normal lives. Providing in a Living Wage policy

will make a difference to some people facing this pressure and will set an example

for others.

In the Citizens’ Agenda process, one thousand Calgarians came together to review

our community indicators and selected 12 priority and action issues that if

implemented over the next five years would improve Calgary’s health, and vibrancy.

A Living Wage was the number one issue they selected. Sustainable Calgary

supports the work that the Living Wage Committee of the Vibrant CommunitiesCalgary has been completing in this area researching, raising the discussion of this

issues and working to define what a living wage is all about.

It is difficult to separate the social, economic and environmental costs and

benefits of the City of Calgary implementing a Living Wage policy so they will be

considered together. The key benefit of a living wage is that individuals and

families will be able to secure their basic needs to maintain a safe, decent

standard of living in their community. They will be able to save for the future and

feel secure. Employers benefit by attracting and retaining more qualified

employees, reducing absenteeism and turnover. This will reduce recruiting, training

costs and will save time on the job. The indirect benefits include increased

customer satisfaction and employee productivity. Employees benefit because they will be able to work less hours to make the same

wage and will not need to work at more than one job. This will reduce stress and




exhaustion from having to travel, work longer and miss out on work and family

events. Changes in work patterns will lead to increased productivity and feeling

that they are part of the workplace and part of the team rather than having to

rush off to the next job site. This will enable promotions, perhaps raises.Employees will improve their standard of living, gain economic security, enjoying

opportunities for increased family time and time to contribute to the community.

They will have more disposable income and can contribute to the economy. The community benefits through the reduction of poverty and its associated costs

to the social system, health care system, education system, increased spending in

the local economy and an increased tax base. Poverty, resulting from low wages is a

contributor to crime, homelessness, school drop-outs and other social situations

that cost the City money. By paying a Living Wage, the City can contribute to thereduction of financial and social costs of poverty through improved health, reduced

costs, and associated with the provision of social supports.

Providing a Living Wage will not solve the issues that Calgary faces from its

current growth patterns. The difficulty finding affordable housing, and

sustainable, equitable and smart transportation systems that serve the low income

and marginalized, create dramatic barriers to their success and infringe on their

rights in this City.

This is an important step in the direction of doing the right thing for people whoare caught in the middle and are falling between the cracks but we feel that in

order for Calgary to move forward, other issues need to be addressed in

conjunction with the living wage and these include, providing affordable housing and

addressing sustainable transportation needs so that the poor and marginalized are

not segregated and left without support. This is just one step but a good step

forward.

All the Best,

Colleen McCracken




Submission Received from the Parkland Institute

Impact of Including a Living Wage Policy Within the Sustainable Ethical andEnvironmental Procurement Policy

1. What are the potential social costs and benefits of The City of Calgary implementing a Living Wage policy?

2. What are the potential economic costs and benefits of The Cityof Calgary implementing a Living Wage policy?

3. What are the potential environmental costs and benefits of TheCity of Calgary implementing a Living Wage policy?

________________________________________________________________

1. What are the potential social costs and benefits of The City of Calgaryimplementing a Living Wage policy?

Social Costs:

The Parkland does not see any social cost for the City of Calgary implementing a LivingWage Policy.

Social Benefits:

The City of Calgary would be taking a leadership role by implementing a living wagepolicy. Calgary is a world class city and by implementing policies that reflect the citiesgoals and values it sets an example for other cities to follow.

The social benefits of the City of Calgary Implementing living wage are vast. Byimplementing a wage that ensure families have adequate food and shelter, ability topay their bills, and have appropriate health care coverage will significantly take stressoff the social system and empower Calgarians to stand on their own.

According to Canadian Policy Research Networks 2007 ,Workers in low-income households in Alberta , “in 2005, Alberta had the highest percentage of employed people




accessing food banks”. By implementing a living wage policy working Albertans will nothave to rely on hand outs for essentials, such as food in order to survive.

A living wage for families would allow a better quality of life. A living wage policy would

allow Albertans to potentially have one job, in stead of two or three, which is the casefor many Albertans in this overheated economy. This would provide people with morequality time with family and friends and in turn, having only one job to concentrate onwill increase productivity at work and on the job site.

As the City tirelessly works on a strong plan for growth and sustainability,implementation of a living wage make sense. We are in a critical worker shortage,with a 3% unemployment rate and an economy that is booming, looking at options thatwill entice people to Calgary is imperative for growth. Paying people a living wagewould create incentive for workers to come to Calgary and stay. It would take stress off

the social system and health care system and would allow people to be moreindependent and healthy and that is good for Calgary and good for business.

2. What are the potential economic costs and benefits of The City Of Calgary implementing a Living Wage policy

Economic Costs:

There is the potential for a small portion of jobs to be lost as the shift occurs fromminimum wage to living wage. But the parkland believes that loss of jobs is minimal incomparison to the overall quality of life that will increase for Calgarians by

implementing Living wage.

Economic Benefits:

According to the Calgary Committee to End Homelessness Community Update August 2007, “ Right now, half of all Calgarians who are homeless have a job, but are notearning enough to afford housing.” The face of homelessness has changedenormously in AB. To have such a substantial number of working people living withouta home holds the City back from it’s goals of being a strong, equitable, andeconomically viable community.

By the city implementing a Living Wage Policy it will set the standards for economicleadership, fair wage, fair trade in turn encourage more workers to come to the city andmore importantly to stay here.

Implementing a Living wage will offer a decrease of dependence on the social andhealth care system. According to the latest report on homelessness by the ChumirFoundation, Shelter : Homeless in a Growth Economy, Calgary spends $30,000 to




$40,000 in care (health care, emergency shelters, policing etc) for each homelessperson in the city. By implementing this living wage policy it would reduce these yearlycosts and allow the city to use those funds for alternative concerns.

3. What are the potential evinronmental costs and benefits of The City Of Calgary implementing a Living Wage policy

Environmental Costs:

The parkland can not see any substantial environmental costs for the City of Calgaryimplementing a Living Wage Policy.

Environmental Benefits:

When quality of life is good then people are more aware of the world around them andthat includes the environment. If rent and poverty are dominating your life’s concernsthen the environment is going to be low on your priority list. Implementing a LivingWage Policy will Increase quality of life potentially increase environmental awareness.

Sincerely,

Julie HrdlickaSouthern Alberta Outreach Coordinator

The Parkland Institute




Submission Received from Vibrant Communities Calgary

Vibrant Communities Calgary1227 Kensington Close NW Calgary, AB T2N 3J6

Phone: (403) 283 -2193 Fax: (403) 283-2105

Impact of Including a Living Wage Policy Within the SustainableEthical and Environmental Procurement Policy


Social CostsIncreased competition for vacant jobs: A study of the effect of Living Wage ordinances in

Boston, New Haven and Hartford found that poverty significantly declined among workers

covered by the policy1. Similar developments in Calgary may increase the attractiveness of theworkforce for some people, enticing them into the workforce, increasing the size of labour, and,potentially, the skill level, increasing the level of competition for vacant jobs.

Social BenefitsIncreased personal time for low income workers: Low income workers working multiple

jobs often have limited time to spend with family and friends, to become and remain physicallyactive, and to enjoy cultural and learning opportunities. According to a Statistics Canada LabourForce Survey, between 2001 and 2004, the number of Albertans older than 55 who held downmultiple jobs increased by 47.4 per cent. A Calgarian earning an $8 per hour minimum wage, forexample, has to work 83 hours per week to afford a one-bedroom apartment without spendingmore than 30 per cent of his or her

income on shelter. A single parentliving with a child will have to work101 hours per week to afford a two-bedroom apartment. More informationis noted in the following table.Individuals earning a Living Wage areless likely to need to work two or three

jobs to meet their basic needs, andare more able to maintain a safe,decent standard of living in theircommunity and to save for futureneeds and goals, thereby improving

their standard of living.1 Brenner, M.D. and Luce, S. (2005), Living Wage Laws in Practice: The Boston, New Haven and Hartford Experiences 2 Canada Mortgage and Housing Corporation (Spring 2007), Rental Market Report: Alberta Highlights 3 Net Income includes vacation pay and the following deductions: federal and provincial income tax, EI and CPP

Reduced wage disparity: A City of Calgary Living Wage policy would immediately reducegender, age, racial, and other wage inequalities found within the workplace. During the first six-months of 2007, for example,

A Living Wage:

o Increases mental and physicalhealth

o Reduces homelessness andvulnerability to homelessness

o Increases the return on taxpayersdollars

o Benefits employers, employees andthe community




- 74,700 (13.3%) of employed Calgarians over the age of 15 earned less than $12 an hour 4

- Over 60 per cent of the 74,700 employed Calgarians earning less than $12 per hour arewomen5;

-

Not all low wage earners are teenagers; 39,000 Calgarians over the age of 25 are trying tosupport themselves on less than $12.00 per hour6;- 26,300 adult women in Calgary over the age of 25 earn less than $12 per hour 7;

Unit Type Calgary AverageRent in April

20072

Required Hours of Work perWeek to

Afford Housing at 30% NetIncome for

an $8 per hour MinimumWage Earner3

Bachelor 608 591-Bedroom 849 83

2-Bedroom 1,037 1013+ Bedroom 968 94

- Calgary’s poor also includes one-third of all people with disabilities, over half of all recentimmigrants, close to one-third of all visible minority persons, over half of all single parentfamilies, over one quarter of the elderly, and one-fifth of Calgary’s children8. Aboriginalchildren, children who are visible minorities and immigrant families are two to three timesmore likely than the general population to experience poverty9. The implementation of aLiving Wage policy would immediately reduce this wage disparity for many hardworkingCalgarians.

Increased mental and physical health: A Framework for Reform: Report of the Premier’sAdvisory Council on Health, Dec. 2001, explains that “infant mortality is two-thirds higher in thepoorest neighbourhoods than in the richest ones”; “people in the lowest income groups aretwice as likely to be smokers”; and that “people with low incomes are more likely to: be heavyusers of physician services, visit emergencies, be admitted to hospital, take multiplemedications, and require home care services” (p. 15). From an evidence-based perspective,there is no doubt that poverty and income are key determinants of health. According to thePoverty Reduction Coalition, a community collaborative initiated and supported by United Way

4 Statistics Canada (2007), Labour Statistics Division, Labour Force Survey 5 Ibid.6 Ibid.7 Ibid.

8 City of Calgary (2005), Prospoverty: One Being Without in the Land of Plenty 9 Statistics Canada, Canada Census, 2001

of Calgary and Area, “Poverty creates anxiety. It demands sacrifice. It steals opportunity and itrobs pride”. As such, employers with the public, private and nonprofit sector have aresponsibility to pay their employees a Living Wage; their workers’ health depends on it.

Reduction in homelessness and vulnerability to homelessness: During the first six-months of 2007, an estimated 74,700 Calgarians earning less than $12 per hour, many of whom




do not meet the $11.80 per hour core need income threshold necessary to rent a bachelorapartment. Many more people do not meet the $11.87 per hour minimum housing wage neededfor average monthly rent for a bachelor apartment in Calgary Census Metropolitan Area (CMA),2006. These people are at the greatest economic risk of homelessness and many are included

in Calgary’s homeless population. A 2002 Calgary Homeless Foundation study, for example,found that 50% of the absolute homeless were working full time, part time or occasionally.Absolute homelessness is defined by United Nations as “individuals living in the street with nophysical shelter of their own, including those who spend their nights in emergency shelters”.Ensuring adequate income to gain and maintain housing is a critical component of successful10 year plans to end homelessness.

Increased community participation: Poverty excludes and marginalizes people. John Rook,the CEO of The Salvation Army Community Services in Calgary, agrees that a significantnumber of the shelter residents do not have one of the necessary identifications to vote inCalgary municipal elections, preventing them from exercising an important democratic right andresponsibility. By paying a Living Wage, we not only increase the likelihood that low income

people will have the necessary identification to vote, we also provide them with the financialmeans to engage in arts and recreation, learning, and the many other opportunities that Calgaryhas to offer.

2. What are the potential economic costs and benefits of The City of Calgaryimplementing a Living Wage policy?

Economic Costs

Impact on work force: Some evidence suggests that increasing wages associated with theimplementation of Living Wage policies force employers to lay workers off to cover increasedlabour costs. While implementing the Living Wage ordinance in Los Angeles, for example,

employers cut less than 1% of jobs affected by the Living Wage policy. An evaluation ofBaltimore’s Living Wage ordinance found no job loss as a result of the ordinance and workersreported no changes in the number of hours they worked. We believe that the negative impactresulting from a modest reduction in the number of employees is offset by the benefits to theworkers earning a Living Wage.

Impact to the public sector: In 2002, Andrew Elmore’s survey of 18 cities with Living Wagepolicies found overall local contract costs increased by less than 0.1%. The costs for citygovernments are small, in part, because relatively few workers are directly affected; and, thewage increase reduces worker turnover and lowers recruitment and training costs.

Economic Benefits

Increased return on taxpayer dollars: Calgarians would benefit from a Living Wage policythrough a reduction in poverty and its associated costs to the social system, health care system,education system and justice system, decreased demand on social services, increasedspending in the local economy and an increased tax base10.




Decreased employee turnover and absenteeism: A study of home-care workers in SanFrancisco discovered that turnover fell by 57 per cent following the implementation of a LivingWage policy. As well, San Francisco airport’s Living Wage policy reduced annual turnoveramong security screeners to 19 per cent from 95 per cent 11 . A study of the Los Angeles

ordinance found that absenteeism declined, and the decrease in turnover offset 16 per cent ofthe total cost of the Living Wage ordinance.

Less difficulty attracting and retaining employees: Vibrant Communities Calgary recentlydiscovered that many employers in Calgary who pay a Living Wage experience significantlyfewer difficulties attracting and retaining employees than employers who do not pay a LivingWage. Between March and July 2007, Vibrant Communities Calgary interviewed 150 low payingemployers in Calgary. Ninety-one per cent of employers paying less than a Living Wage reportthat they have experienced difficulties attracting and retaining employees during the past year.Fifty-five per cent of employers paying a Living Wage report that they had no difficulties attracting and retaining employees during the past year. Employers who pay a Living Wage alsobenefit by attracting and retaining more qualified employees, reducing employee theft and

absenteeism, and by increasing customer satisfaction12. By adopting a leadership role andpromoting Living Wage policies, The City can play an integral role assisting Calgary businessesto minimize their current labour struggles.

Poverty reduction: In a 2002 study for the Public Policy Institute of California, economistDavid Neumark concluded that Living Wage policies reduce poverty. Neumark collected datafrom 36 cities with Living Wage ordinances and compared it to data from cities without LivingWage ordinances. He found that a Living Wage 50 per cent higher than the minimum wagewould raise average wages of workers in bottom 10 per cent of the wage distribution by 3.5 percent. A small, but significant decrease in the percent (1.8%) of families living in poverty wasfound.

Increased spending in the local economy: Research conducted by Peter Philips providesan increased understanding of the positive effects of increased low-wage spending on localeconomies. The results of his work suggest that if all of the 5,391 lowest-wage individuals livingin Santa Rosa made a living wage, they would circulate in the local economy an additional$23,818,301 per year. This amount would be spent in the following manner:

10 United Way of Calgary and Area (June 2004), The External Costs of Poverty: A Conservative Estimate

- Housing 11.9%;

- Auto purchases 13.6%;- Auto repairs 6.8%;- Clothes 9.1%;- Food 6.2%;- Movies 3.0%;- Video rentals 0.8%;- Restaurants 5.0%;




- Credit card debt 8.0%;- New purchases for home and miscellaneous 9.1%;- Vacations/travel 3.0%;- Tapes and CDs 2.3%;-

Sports activities 2.3%;- Books and magazines 0.6%;- Schools and childcare 3.5%;- Savings 14.8%13.

During the first six-months of 2007, 37,200 Calgarians earned $9.99 or less per hour. If each ofthese hardworking Calgarians were provided a $12 per hour Living Wage, they wouldadditionally circulate over $136 million in our local economy per year.

Increased contract bidding competitiveness: Multiple studies show that bidding formunicipal contracts remains competitive or even improves as a result of living wageordinances14.

Access to new markets: Employers’ demonstrating a commitment to corpor ate socialresponsibility and Triple Bottom Line principles improves the good will of the business. Forgingnew partnerships with other Living Wage employers who prioritize purchasing and/or supplyingLiving Wage goods and services can open up new markets. Vibrant Communities Calgary firmlybelieves the relatively minor economic costs of Living Wage policies are mitigated by thesubstantial economic benefits to the private, public and nonprofit sector.

11 Economic Policy Institute (16 February, 2006), The Economic Impact of Local Living Wages 12 Vibrant Communities Calgary (2007), Living Wage and The City of Calgary Frequently Asked Questions 13 Peter Philips (December 2001), A Living Wage Makes Good Economic Sense for Local Communities 14Economic Policy Institute (2006), The Economic Impact of Local Living Wages

3. What are the potential environmental costs and benefits of The City of Calgary

implementing a Living Wage policy?

Environmental Costs

Increased consumerism, stressing the environment: The minimum wage in Alberta, as ofSeptember 2007, is $8 per hour – the third lowest in Canada. Working a standard work week40 hour per week, 52 weeks per year, an individual employed at minimum wage would have aBfore-tax income of $17,306 (including holiday pay). This is $3,896 below Statistics Canada’s2006 before-tax Low Income Cutt-Off (LICO) for an individual in a large city ($21,202) and




$15,144 below the LICO for a family of three ($32,450). The net monthly income (afterdeduction and taxes) for a single-income family of three working full-time at minimum wage is$1,230.97. Consider the following information based on the average cost of some basicnecessities in Calgary:

Household Expenses Average Monthly CostHousing (average rental for a twobedroom apartment in Calgary)

$960 (Canada Mortgage and HousingCorporation, December 2006)

Food (average food costs for Calgaryfor a family of three, including a man25-49 years, a woman 25-49 years,and a boy 13-15 years)

$519.31 (Alberta Nutritious FoodBasket Report 2006)

Utilities (telephone, power, water,sewer, garbage collection anddrainage)

$164.35 (City of Calgary, 2006)

Transportation (Low Income Transit

Pass)

$37.50 (Calgary Transit, 2007)

Health Care (Alberta Health CareInsurance Plan family premium)

$88.00 (Alberta Health and Wellness,2006)

Total $1,769.16

Based on the above, a family of three needs an additional $538.19 every month to provide thebasic necessities. This does not account for other living expenses such as child care, clothing,household furnishing, medical prescriptions, hygiene products, insurance and recreation – manyof which could be called necessities. By increasing low income earners income to a LivingWage, they are more likely to be able to afford these necessities – potentially increasingconsumerism.

Environmental Benefits

Reduced traffic congestion and pollution: Due to low wages and high housing costs, anincreasing number of Santa Barbara workers live outside the city, increasing traffic congestionand pollution15. Increasing rental rates16

combined with real average earning decreases17 may

also force people who work in Calgary to live in the surrounding communities. The provision of aLiving Wage increases people’s financial ability to live near their place of work, thereby reducingpollution and traffic congestion.

Sincerely,Connie Johnson,Interim Director

Vibrant Communities Calgary(403)[email protected]

For additional information, please contact:Jordan HamiltonResearch and Policy AnalystVibrant Communities Calgary(403) 244-8940




[email protected]

15 Santa Barbra for a Living Wage (2007), Frequently Asked Questions, Santa Barbara Living Wage Ordinances16 The City of Calgary (May 2007), Facts and Stats on Homelessness and Affordable Housing #07 17 The City of Calgary (2007), FF-08 Trends in the Calgary Housing Market

mailto:[email protected]

mailto:[email protected]




Submission Received from the Poverty Reduction Coalition

External Resource Group InformationSubmissionRe: Sustainable Ethical and EnvironmentalProcurement Policy City of Calgary

December 2007The Poverty Reduction Coalition is a community collaborative, supported by United Way of

Calgary and Area, aimed at reducing poverty in Calgary. We work together in the belief thatpoverty can be reduced in Calgary and that we have the human and capital resources to doit.

In 2004, the Sustained Poverty Reduction Initiative was formed with the hope of instigatingthoughtful social innovation in government policies, in the provision of social services, in

systems reform and within the business community. Since that time, our name haschanged, but not our intention.

The newly-coined Poverty Reduction Coalition works with all orders of government, the

business community, social service organizations and community members to address the

systemic barriers and policies that prevent low-income individuals and families from movingbeyond the cycle of poverty. We partner and collaborate with others to ensure sustained

change.

External Resource Group Information Submission Re:Sustainable Ethical and Environmental Procurement Policy-City of Calgary


The modern living-wage movement began in 1994, when Baltimore passed NorthAmerica’s first living-wage law. Since then, over 70 American cities have followedsuit. One policy of note was implemented at the San Francisco International Airport

(SFO), the largest living way policy in the nation. Evaluations of the living-wageordinances in Baltimore and at SFO highlight the potential impacts of a living wagepolicy on individual workers, employers, and a city.

At an individual level, employees affected by the Baltimore living wageordinance experienced reduced financial stress and had greater potential tobe economically self-sufficient.Employees impacted by the Baltimore living wage ordinance felt greater jobsatisfaction and put in a greater work effort. The SFO saw improved




worker performance, improved morale, less absenteeism, and improvedcustomer service as a result of the living wage policy.Large decreases in employee turnover were seen as a result of the livingwage ordinance at the SFO.

Employees NOT covered by the living wage ordinance at the SFO were morelikely to report decreases in their quality of life (e.g., time spent with family,vacation time), than were employees who were covered by the ordinance.Employers who implemented living wages in Baltimore assisted in reducingpoverty among many of their employees, by contributing to family stabilityand improving community circumstances.A common concern expressed about living wage ordinances is the possibility of lost jobs as employers adapt to the increase in wages. There was no evidence

that employment levels or work time had changed because of the livingwage policies implemented in Baltimore or at SFO.Another related concern is that employers will look to hire more skilled workersas a result of being forced to pay higher wages. However, it is possible that aliving wage ordinance will encourage employers to invest in training andeducation for existing workers, rather than looking for new employees withhigher skills (Thompson & Chapman, 2006). This would be particularly relevantto Calgary, considering the current labour crisis.

2. What are the potential economic costs and benefits of The City of Calgary implementing a Living Wage policy?

Economic analyses were conducted as part of the living-wage evaluations inBaltimore and at SFO. The studies indicated:

A budgetary analysis of the living wage impact on service contracts in Baltimoreshowed that, on average, the total price of a contract increased by 1.2%.When taking into account the rising cost of inflation, the total price actuallydecreased.Possible explanations for this are: costs are absorbed by the employer withoutasking for more money through contracts; less worker turnover, reducing thecosts recruitment and training; and an increase in the intensity of work,completing the same job in less time.Implementation of a living-wage ordinance in Baltimore has not resulted instrain on the city’s budget, according to the evaluation by Neidt et. al.. The cost to implement a living wage policy at the SFO was 0.7% of airline

revenues; for the most part, these costs were incurred by the airlines operatingat the SFO.Rather than affecting the cost or number of contracts, living wage ordinancesmay level the playing field; bids are more consistent overall, as employerscannot pay lower wages in order to offer a lower bid (Thompson & Chapman,2006).Costs for employers may vary, depending on the proportion of workers whosehourly pay is below the living-wage level before a policy is implemented. Also, if a large proportion of the contract price goes to labour, as opposed to equipment



and overhead, this may present a greater cost to the employer whoselabourers are being paid less than a living wage (Niedt et. al., 1999; Thompson& Chapman, 2006).If employees are more financially self-sufficient, there will be reduced costs to

the health care system and social services (Public Interest Alberta, 2007).Municipalities will see the proportion of people accessing social assistanceand other government subsidies decreased (Public Interest Alberta, 2007).Employees impacted by living wage policies will have more disposable income tosupport the local economy and communities will see increases to theirtaxpayer base (Public Interest Alberta, 2007).

3. What are the potential environmental costs and benefits of The

City of Calgary implementing a Living Wage policy?

In Calgary, a city where half of the homeless population has a job (CalgaryCommittee to End Homelessness, 2007), a living wage will make a tremendousdifference in the social environment of Calgarians.Decreases in poverty will also benefit Calgary’s esthetic environment. Low income neighbourhoods and at-risk areas have the potential to be revitalizedand improved as increased income could be invested in the upkeep of homes.

References

Calgary Committee to End Homelessness (2007). Quick Facts. Available at:http://www.endinghomelessness.ca/default.asp?FolderID=2176

Niedt, C., Ruiters, G., Wise, D. & Schoenberger, E. (1999). The Effects of the LivingWage in Baltimore. Economic Policy Institute, Working Paper No. 119. Available

at: http://www.epinet.org/Workingpapers/BUILD.pdf Public Interest Alberta (2007). Working Poor or Making a Living? The Realityof Low

Wages in Alberta. Available at:http://www.pialberta.org/program_areas/living_wage/view

Reich, M., Hall, P. & Jacobs, K. (2003). Living Wage Policies at San Francisco Airport: Impacts on Workers and Businesses. Institute for Research on Laborand Employment, Working Paper Series (University of California, Berkeley).Available at:http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1096&context =iir

Thompson, Jeff & Chapman, Jeff (2006). The Economic Impact of Local LivingWages, Economic Policy Institute Briefing Paper #170, 16 February 2006.

Available at: http://www.epi.org/content.cfm/bp170

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cook report to calgary on lw policy (can)

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