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Published: Monday, 3/5/2001

City struggles with implementation of living wage

BY LISA A. ABRAHAM
BLADE STAFF WRITER

Toledo city council wrestled for a year to pass a living wage law, and putting it into practice has become equally as difficult.

The law was aimed at decreasing the number of Toledo's working poor by requiring companies that do business or get incentives from the city to pay their employees amounts above federal poverty guidelines. Toledo's living wage is $9.01 per hour.

“What we're learning is that there are so many issues that were not thought through in their entirety,” said Perlean Griffin, commissioner of affirmative action and contract compliance, who coordinates living wage.

Since the law took effect July 14, various situations have caused officials to take second and third looks at the law.

  • Companies were taken by surprise to learn the living wage rate increased on Jan. 1, from $8.58 an hour to $9.01, when federal poverty guidelines were adjusted.

    Living wage is calculated as 110 percent of the poverty guideline for a family of four.

  • A foreign company sought a city contract, but was rejected because its wages did not equal the living wage and city officials could not find a way to monitor its compliance.

  • Longtime city contractors, like Fifth Third Bank, the city's official depository, have found the salaries of their employees don't always match the living wage.

    After taking bids last fall, the city administration earlier this year asked council to award a three-year contract to Fifth Third Bank to be the city's official depository.

    But when Fifth Third submitted its bid to the city, it failed to sign the required affidavit confirming living wage compliance, said Gene Borton, the city's commissioner of taxation and treasury.

    Ms. Griffin said the bank would have to ensure that all employees who work on city business are being paid the living wage.

    But it has not been able to do that because the city uses various bank branches and the bank can't assign specific employees to city work, she said.

    Karen Fraker, vice president of marketing for Fifth Third, said while not all bank employees earn $9.01 per hour, the bank offers a benefits package that bank officials believe boosts the lower salaries to well above the living wage level.

    Entry level tellers are paid about $8 per hour, but also receive 10 paid holidays, annual profit sharing, matching stock purchase plans, matching 401(k) plans, medical, dental, life and disability insurance, paid vacations, discounts on financial services, tuition reimbursements, and sick pay, she said.

    Tellers also are offered incentives for selling certain bank products, such as $25 for every platinum credit card account they open for customers, Ms. Fraker said.

    The question is how strictly the city intends to define what constitutes wages, and discussions between the city and Fifth Third are ongoing, said John Madigan, the city's general counsel.

    Ms. Fraker said the bank values the city's business, but she questioned whether living wage would cause companies that contract with the city to begin inflating their bids to accommodate living wage.

    Councilman Louis Escobar, who chaired the committee that formed the law, said living wage takes into account such things as tips for wait staff in restaurants, so he did not see why it could not consider commissions or profit sharing in the banking industry.

    Mr. Escobar said he is willing to have council consider amending the ordinance to give better consideration to such issues, or waiving the requirement for the bank, depending on the information the bank gives the city about its employee compensation.

    “Council would have to decide whether they want to do that or not,” Mr. Escobar said.

    Fifth Third's problem is one of several issues that have come up as living wage requirements become entrenched in the city's business.

    Magnosoft, a company from India, found itself on the wrong side of living wage when it was rejected for a digitized mapping project for the department of public utilities, even though it was low bidder.

    “They were not paying the living wage in India,” said Councilman Peter Gerken, who spearheaded the living wage effort and is a member of the Living Wage Review Committee.

    “They believed [they were] paying over [their] poverty level. But we maintained you have to pay $9.01 per hour, U.S., to be in compliance,” he said.

    Ms. Griffin noted that the city would have trouble monitoring the compliance of a firm in India.

    Mr. Gerken said the law may limit foreign companies' ability to do business with the city, but that is not a chief concern. He believes it's prudent for the city to use its tax dollars in the local economy.

    Mr. Escobar, however, said he was not as comfortable insisting that other countries live by U.S. standards or with shutting out foreign businesses in a global economy.

    Mr. Madigan said he has been fielding questions from companies throughout the city that are concerned about their compliance.

    The review committee was established to field complaints from workers who believe they are not being paid adequately. But employers concerned about how to comply with the law are using it more than employees, he said.

    Ms. Griffin said her office and the review committee have been trying to anticipate problem situations and come up with solutions, so that when they do arise, the city can provide quick answers for companies seeking guidance. “There are still some very gray areas. We need to minimize the amount of time it takes for us to make the decision,” she said.



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