June 30th FCWPC supplemental item 3MIAMI EAC
FINANCE AND CITYWIDE PROJECTS COMMITTEE
SUPPLEMENTAL MATERIAL
Commission Chambers, 3RD Floor, 1700 Convention Center Drive
JUNE 30, 2017 AT 2:30PM
Committee Members
Commissioner Ricky Arriola, Chair
Commissioner Joy Malakoff, Vice Chair
Commissioner John Aleman, Member
Commissioner Micky Steinberg, Alternate
SUPPLEMENTAL MATERIAL FOR ITEM 3
OLD BUSINESS
3. Discussion Regarding The Living Wage Rates For Fiscal Year 2017-2018, In
Accordance With Chapter 2, Article VI, Division 6, Section 2-408, Of The City Code
Commission Item C4G, April 26 , 2017
(Procurement)
Alex Denis, Procurement Director
Status: Item enclosed.
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MIAMI BEACH
City of Miami Beach, 1700 Convention Cen ter Drive , Miami Beach , Florida 33 139, www.m iamibeachfl.gov
TO:
FROM:
DATE :
SUBJECT :
MITTEE MEMORANDUM
Finance and Citywide Projects Co
June 30, 2017
DISCUSSION REGARDING THE DEXING OF THE LIVING WAGE RATE FOR
FISCAL YEAR 2017-2018 IN ACCORDANCE WITH CHAPTER 2, ARTICLE VI,
DIVISION 6, SECTION 2 -408, OF THE CITY CODE (Deferred from May 19,
2017)
BACKGROUND
At its April 26, 2017, meeting, the City Commission, pursuant to Agenda Item C4-G, approved a
referral to the Finance and City-Wide Projects Committee (the "Committee") for a discussion on
whether or not to increase (index) the hourly rate that certain contractors are required to pay
their employees. The discussion item was presented to the Committee at its May 19, 2017,
meeting for indexing the living wage rate in accordance with the options available in the City
code . At that time, representatives of the Service Employees International Union (SEIU) also
presented recommendations to the Committee that it proposes for both the living wage rates
and amendments to the language and requirements of the Living Wage Ordinance (the
"Ordinance"). Following discussion of the information presented by both the Administration and
SEIU , the Committee deferred the discussion to its June 30, 2017 , meeting and requested staff
to meet with the representatives of SEIU to determine the following information for the
Committee 's consideration:
1. The rates mandated by all local cities or counties with living wage laws .
2. The impact of living wage rate options, including those mandated by other agencies and
the rate proposed by SEIU.
3. An analysis of the amendments to the City 's living wage ordinance proposed by SEIU.
The requested information is presented below.
ANALYSIS
1. Local Cities or Counties with Living Wage Laws. In Miami-Dade County, the agencies
with living wage laws include the County, the City of Miami and the City of Miami Beach. In
Broward County, only the County government mandates a living wage requirement. The current
living wage rates in each agency noted above are presented in the table below . The rates
proposed by SEIU are also included in the table.
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FCWPC-June 30, 2017
Discussion Regarding Indexing the Living Wage Rate for Fiscal Year 2017-2018
Agency LWRatewith LW Rate without Health Benefit
Health Benefits Health Benefits Minimum Amount
Miami Beach (current) $11.62 $13.31 $1.69
Miami-Dade County (current) $12.63 $15.52 $2.89
Miami (current) $13.19 $15.00 $1.81
Broward County (current) $12.03 $13.59 $1.56
SEIU (proposed) $13.00 $16.16 $3.16
2. Impact of Living Wage Rate Options. The information provided to the Committee at its May
19, 2017, meeting included options, and each option's estimated fiscal impact, for increasing the
living wage rate in accordance with the options available in the City code, that include: Option 1)
increasing the living wage rate by the corresponding increase in the U.S. Department of Labor,
Bureau of Labor Statistics, Consumer Price Index for all Urban Consumers (CPI-U) for local
area for the preceding period; Option 2) increasing the living wage rate through a catch-up
option that includes the corresponding increases in the CPI-U for all prior years where increases
to the rate where not implemented.
At its May 19, 2017, meeting, the Committee also requested information pertaining to the
estimated fiscal impact of other rate options, including the rates paid by other agencies and the
recommendations of the SEIU. For comparative purposes, the table below includes all the rate
increase options discussed, as well as the potential fiscal impact of each option. The actual
fiscal impact is impossible to determine at this time because, as has happened in the past, not
all contractors have sought reimbursement from the City when living wage rates have
increased; and, it is not possible to project the exact number of employees and each
employee's number of hours worked that may be impacted by increases in the living wage rate.
The potential fiscal impact stated in the table below does attempt to estimate the City's
maximum exposure.
Agency LW Rate with Health Benefit LW Rate without Potential
Health Benefits Minimum Health Benefits Fiscal Impact
Amount
Miami Beach (single year option) $11.91 $1.73 $13.64 $351,622
Miami Beach (catch up option) $12.27 $1.79 $14.06 $799,140
Miami-Dade County $12.63 $2.89 $15.52 $2,354,799
Miami $13.19 $1.81 $15.00 $1,800,729
Broward County $12.03 $1.56 $13.59 $298,346
SEIU $13.00 $3.16 $16.16 $3,036,732
2. SEIU Proposal to Amend the Living Wage Ordinance. In addition to the living wage rate
increases that have been proposed by SEIU, the organization has also proposed amending
portions of the Ordinance in what it believes will provide assurances that the rates will keep up
with rising costs, including health care costs. The language modifications are as follows:
a. Automatic Adjustments and Health Care Cost Index. SEIU is proposing two (2)
changes in this area of the Ordinance. The first change requested is automatic
annual indexing based on corresponding rate increases in the CPI-U. The second
change requested is for the indexing of the health care benefits portion to be
calculated on the CPI-U for medical care, rather than the current general CPI-U
index being utilized. The proposed language modifications follow.
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FCWPC -June 30, 2017
Discussion Regarding Indexing the Living Wage Rate for Fiscal Year 2017-2018
2-408(d) Indexing. The living wage rate and heal-th care benefits rate may, by
resolution of the city commission, shall be indexed annually for inflation using the
Miami PMSA Consumer Price Index for all items for all Urban Consumers (CPI-U)
Miami/Ft. Lauderdale, issued by the U.S. Department of Labor's Bureau of Labor
Statistics. The supplemental benefit rate shall be adjusted annuallv for inflation
using the Miami Consumer Price Index for medical care for all Urban Consumers
(CPI-U) Miami/Ft. Lauderdale.,,"Jotwithstanding the preceding, no annual index shall
exceed three percent; nor shall an annual increase exceed the corresponding
annual compensation increase (if an)1 prml-ided to unrepresented (i.e., unclassified)
city employees. The city commission may also, by resolution, elect not to index the
living Vlage rate in any particular year, if it determines it would not be fisca!!y sound
to implement same (in a particular year). The determination to index (or not index)
the li~'ing wage rate shall be considered annually during the city commission's
rev-iew and appro•l{l/ of the city's annual operating budget.
in the event that the city commission has determined, in any particular fiscal
year (or years), to not index the living wage rate, and thereafter determines that
maldng up a!! or any part of the prior year's (or years') unindexed percentage would
not ha•;e an ad'lerse fiscal impact upon the city, then the city commission shall also
ha~'e the right, but not the obligation , to cumulatively index the hiving wage rate to
"make up" for any deficiencies in the prior year (or years) where there was (were)
no increase(s) (the "catch up" election). The "catch up" election must be approved
by resolution , and may only be considered during the city commission's re•,tfew and
approval of the city's annual operating budget.
Administration's Comments: The Administration does not object to the proposed
changes, especially utilizing the medical cost specific portion of the CPI -U to
calculate the health care benefits portion of the wage requirements. However, the
Administration does point out to the Committee that the automatic adjustments may
impede the City Commission from foregoing increases to the living wage rate in
those years when, as stipulated in the Ordinance, "i t would not be fiscally sound" to
do so. The requested changes would also eliminate the current restriction that the
living wage rate shall not be adjusted in those years when cost of living adjustments
(COLA) is not approved for unclassified City employees .
b. Changes to Procurement Specifications. SEIU is proposing that specifications for
solicitations (ITB, RFP, RFQ, etc.) contain provisions for annual adjustments to
contract prices and a requirement that vendors submit a minimum number of
required labor hours. The proposed language modifications follow.
2-409(a) Procurement Specifications. The living wage shall be required in the
procurement specifications for all covered services contracts on which bids or
proposals are solicited on or after the effective date of this division. The
procurement specifications shall include;_JJ a requirement that service contractors
and their subcontractors agree to produce all documents and records relating to
payroll and compliance with this division upon request from the city; 2) a provision
for annual adjustments to the contract price to reflect increases to wage and
benefits requirements ; and 3) a statement of the minimum number of required labor
hours. All covered service contracts awarded subsequent to the date when this
division becomes effective , shall be subject to the requirements of this division.
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FCWPC-June 30, 2017
Discussion Regarding Indexing the Living Wage Rate for Fiscal Year 2017-2018
Administration's Comments: The Administration does not object to the language
allowing annual adjustments to contract prices based on changes to the living wage
rates. Most City contracts currently include cost adjustments provisions and, in the
past, changes to the living wage rates have, in some cases, resulted in contract
cost adjustments.
c. Compliance Requirements. SEIU is proposing that the City amend the reporting
requirements for contractors required to pay the living wage rate. The proposed
language modifications follow.
2-409(c) Reporting Payroll. Every six months, the covered employer shall file with the
city's procurement director;_jJJ. a complete certified payroll showing the covered
employer's payroll records for each covered employee working on the covered
services contract for one payroll period; and (2) proof that, for covered employees to
whom health plan benefits are provided, that the cost of the health plan benefits
provided to the covered employee are equal to or greater than the rate mandated in
Section 2-408(a). Upon request from the city, the covered employer shall produce
certified its payroll records and proof of any health benefits coverage provided to
each covered employee. including proof of the cost to the covered employer of
providing such health benefits coverage for any or all of its covered employees for
any period covered by the covered services contract. The city may examine, inspect,
and/or copy such payroll records and proof of health benefits coverage as needed to
ensure compliance with the requirement of this division.
Administration's Comments: The Administration does not object to the proposed
language requiring certified payrolls. However, for some employers, it is difficult to
calculate the actual cost of health benefits on a per employee basis.
CONCLUSION
The City Administration is seeking guidance from the Finance and City-Wide Projects
Committee on indexing the living wage rate, to be effective January 1, 2018, and on the
ame~n~to the City's Living Wage Ordinance proposed by the SEIU.
JLM~ D/FM
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