Although increasing the minimum wage for city employees to $20 an hour was good news for city workers, the increase did not automatically apply to contract workers. The previous minimum for city employees was $15 per hour, which the city adopted for the Fiscal Year 2019 budget.
As James Scarboro, the city’s chief procurement officer, explained to the City Council Audit and Finance Committee on Wednesday, the Financial Services Department has been working on finding a way to raise hourly wages for contract employees in certain categories. The city is seeking to raise the wages of those contract workers who labor on city property and fix city vehicles through competitively awarded contracts, which he called “living wage contracts.”
The city currently has about 5,000 outside contracts, but only about 300 of them would fall into the living wage category, Scarboro said.
Shawn Willett, the deputy procurement officer, told the committee the city’s living wage program began in 2002 and at first only applied to city employees. However, that program was quickly expanded to cover some contract workers.
Scarboro explained that in the past there have not been really significant changes from year to year in the minimum wage for employees. So generally, contract workers have been paid at rates consistent with the city minimum wage at the time the contract was awarded. Currently the living wage rate at the beginning of a contract is locked in throughout the contract’s term, but Financial Services needs to study how to include certain contract laborers in the $20/hour wage category.
According to his presentation, there are currently 298 living wage contracts. Scarboro said his department will prioritize raising the wages for contracts allowing employees to be paid less than the city’s current minimum wage of $15 an hour. “We’re going to convert those contracts before the end of this coming fiscal year,” he said. “That doesn’t mean we will wait until the end of the fiscal year.”
The highest priority will be given to 73 contracts in which workers are paid less than $15 an hour – that includes 55 contracts that will expire before the end of FY 2023. Those will be replaced in the usual manner with contracts that mandate higher wages. An additional 18 contracts in which workers are paid less than $15 will expire after FY 2023. Those contracts will be replaced or amended early.
For workers employed under contracts awarded after Oct. 1, the city will include the $20/hour living wage from the beginning of the contract. For older contracts, the city is working on a transition plan to raise those wages to $20/hour.
Some conversions will be through new contracts, Scarboro said, while others will be negotiated. Finally, some contractors will confirm that their wage is already higher than $20 an hour.
The Financial Services Department’s most ambitious plan is a pilot program to study how the city can mandate an adjustable living wage over the life of a contract. Scarboro said Council requested adjustable living wage contracts in 2019, but a variety of factors slowed down the effort.
In response to questions from Council Member Leslie Pool, Scarboro said his office had not been able to find another entity with adjustable living wage contracts. So, the best approach, he said, was to study how that might work over a two-year time period.
“We would like to take a most likely sample of our living wage contracts, apply this particular approach to make sure that it works. We’re pretty confident that it will work, but we would like to apply this technique a few times. And it’s going to be a combination of a different solicitation contract – with a few extra steps – and a different contract approach, again with a few extra steps,” he said. Scarboro told the committee that it was not a pilot that could be run in a few months, but should be at least two years long “to get us through the change in the living wage and then the implementation of the living wage in the contract, which could take another few months.” He promised to return to committee with updates in the near future.
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Austin City Council Audit and Finance Committee: A sub-group of the Austin City Council whose members are charged with oversight of city fiscal operations and anything that falls under the purview of the Office of the City Auditor. Reports and documents for the committee can be found here.
