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Shooting Too High

Memo overestimates cost of ordinance for increasing city wages.

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Former city finance director Joseph Lee grossly overestimated the cost to the city of implementing a living-wage ordinance, according to the Living Wage Coalition.

In a memo dated May 17th from Lee to city chief administrative officer Keith McGee, Lee proposed that raising the wages of all permanent staff would cost about $2.7 million. However, in a written refutation presented to the City Council last week, David Ciscel, an economics professor at the University of Memphis, stated that a raise for permanent staff in accordance with the ordinance would cost only $600,000.

According to a study by Ciscel, for the average two-parent/two-child family in Memphis to meet all their basic needs without relying on public assistance, each parent would have to earn $10.04 an hour. A living-wage ordinance would grant all city employees $10 an hour if they're provided with health insurance, and $12 for uninsured employees.

In Lee's memo, the figures are based on a raise that would bring all 519 permanent city employees to $12.56 per hour. However, Ciscel's refutation states that according to the ordinance, these employees would only receive $10 an hour since most permanent, full-time positions include health coverage. Temporary employees, those who work less than a year, are usually uninsured.

Ciscel also points out that Lee's estimate assumes that all 519 permanent employees are currently working below a living wage. When the Living Wage Coalition requested May 2003 city salary rosters, they found only 226 city employees working for less than $10 an hour.

"Not only did Lee's memo make the cost for each employee higher, he also pulled in all the employees who are making $11, $11.50, or $12 an hour. Those people are not supposed to be affected by the ordinance," said Rebekah Jordan, director of the Mid-South Inter-Faith Network for Economic Justice.

Ciscel also said Lee's memo stated incorrect information on the cost of implementing a living wage for temporary workers. These uninsured workers would be raised to $12 an hour, but they work a maximum of 1,040 hours a year. In Lee's memo, the cost was calculated as if they were full-time employees working year-round. He says bringing temporary workers up to a living wage could cost anywhere between $11.9 million and $24 million depending on the number of workers at any given time.

According to Ciscel's figures, most temporary workers are already making above a living wage, yet Lee's memo makes it seem as though none are. Ciscel said the average temporary worker makes $13.92 per hour. At the council meeting, several council members stated that according to their research a majority of permanent and temporary employees are already making a living wage.

"Lee's memo shows that it's so expensive that it can't be implemented right now. The city's in a budget crisis, but Tajuan Stout-Mitchell said the city is already paying most workers a living wage," said Jordan. "If there are no workers not being paid a living wage, then there'd be no cost to the city for implementing the ordinance."

Carol Chumney claimed she has information showing there are some transitional temporary city workers who don't bring home a living wage, and since the number of those employees working below a living wage is low, she suggested it couldn't affect the budget too much.

"There were other choices made in the budget process that shouldn't have been made if we had a budget crisis," said Chumney. "Here comes the living wage and they're saying we don't have any money now."

At the meeting, the coalition asked for a new study on the cost to the city of a living-wage ordinance, and Brown said one had already been ordered. There is no word yet on who will be conducting the study or when it may be completed. •

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