Living Wage at SCU:

Real or Imagined?

Santa Clara University is not the average college, and I am not talking about the ridiculous amount of palm trees on our campus. This University is different because we are a Jesuit institution. Jesuits, are a sect of Catholic priests. Therefore, we are Catholic as well. This commitment to catholic ethics and social justice are implied in the school mission. By nature of our catholic identity, we have a calling and a duty to live in accordance with catholic social teaching. One of the most important aspects of social teaching deals with labor. One of the most relevent issues in labor today is the issue of a living wage. Economists continue to debate its effectiveness, but regardless, momentum for the movement has grown. Many universities, such as Santa Clara, have incorporated the idea of a living wage with union representation into their labor procedures and contracts. This university has not always had a living wage, and once enacted, has had a difficult time staying true to its living wage policy. The history of the student involvement with living wage has shaped current policy. However, the fight is not over. As a member of Labor Action Committee, I have an interest in the worker's rights on this campus. I interviewed as many people as I could who were involved in implementing the living wage on this campus, from Bon Appetit Mangers, to the facility gardeners.

Before addressing a living wage, the problems with minimum wage must be defined. According to the most recent census, over 30.7 million americans are currently on a state of federally defined poverty. According to Bill Quigley, esteemed professor of law at Loyola University in New Orleans, "There are approximately thirty million people in the United States who are working full-time but earning poverty level wages" (Quigley 3). So many americans are working in full time jobs, yet remain poor. What is really going on here?

One of the largest factors into the high number of federally defined working poor americans is the problem with minimum wage. The current federal minimum wage, $5.15, has not been changed since september of 1997. There has not been a bill passed which raises the minimum wage to even keep up with inflation. Inflation continues to rise day by day, yet minimum wage is stagnant. This means that the minimum wage worker is earning less per hour every single day. Rent rises, food costs rise, gas prices rise, and virtually every item involved in basic living is inflating. However, minimum wage is not rising to cover these costs.

The obscenely low minimum wage is not just difficult and unfortunate for the worker, but expensive to society as a whole. Americans have traditionally valued the well-being of society and its members. Ever since the end of the Great Depression and the war on poverty of the 60s, hundred of federal programs have been in place to take care and support society's members. From food stamps to welfare to education to social security, America's taxpayers pay billions of dollars to take care of one another. When our citizens can not make ends meet, they turn to the government for help. This is extremely expensive. If people could support them selves out of their full time jobs, our tax dollars would not have to. However, people obviously cannot support themselves at the going rate.

A living wage policy is a proposed way to fix this problem. A living wage should be reviewed yearly, accounting for inflation. In its most simplistic sense, a living wage should keep someone above the poverty line. In 2002, this wage was $8.71 (Quigley 7). However, the living wage varies by region, and naturally so, as some areas of the country (California, New York City) are more expensive to live in than others (Montana, Kansas). A living wage also should ensure that the worker only needs to work one full time (40 hours a week) in order to make ends meet. This should include paying for food, housing, and healthcare benefits (if not already included in the job).

San Jose was one of the very first cities in the country to pass living wage legislation. The city decided to pay all of its workers a living wage in November of 1998. This wage was $9.50 at the time the legislation was passed. The living wage is reviewed once a year, and during the most recent review, the wage was raised to $11.61, excluding healthcare benefits. According to Santa Clara Policy, workers of Bon Appetit are paid in accordance with the living wage of San Jose. However, we must ask ourselves what the cost of the living wage implementation might be. One way to look at costs of a living wage is by examining minimum wage.

Economists are bitterly divided on the issue of minimum wages. Some believe that setting minimum wages actually hurts the poor, because when costs rise for employers, low wage workers are the first to go. This is the prevailing argument in neo liberal economics. Government intervention into the labor market actually causes unemployment. Many believe it also causes inflation. When wages artificially rise, employers will raise the costs of their product, passing it onto the consumers. If all product prices go up (inflation) the real purchasing power of the minimum wage decreases.

One way to test this theory is to look at the effects of minimum wage in the past. Normally, "increases in the minimum wage coincided with expanding economic activity...A reasonable question is whether employment would have grown even more if an increase in the minimum wage had not occurred" (Nordlund 143). According to various studies in the 1970s, the only workers laid off where those who productive potential was lower than the set minimum wage. This was often the case with teenagers. In a 1970 survey, minimum wages may have reduced employment of 14-15 year olds as much as 56% (Nordlund 144-147). However, in similar studies and surveys done in the 1980s and 90s, "there appears to be no relationship between unemployment and minimum wage in this time period" (Pollack and Luce 34). Results were scattered and inconclusive for the minimum wage effect on teenagers as well (39). In a case study in New Jersey, employment actually increased when the minimum wage increased. This was also the case with the California increase in minimum wage in 1988 (41). This phenomenon in an actual increase in employment is due to productivity. In Los Angeles, a subsidized meat packing plant was forced to obey city of L. A. living wage ordinances. The firm reported numerous benefits due to the living wage, such as "reduced turnover, higher productivity and quality, great flexibility, enhanced cooperation with management.." (158). According to this study, a living wage may actually encourage competition among workers to a better working morale. The most widely cited study in the employment effects are is Card and Kruger's. They conclude by stating,"we believe that, on average, the employment effects of a minimum wage increase are close to zero" (353).

Many economists are concerned with the inflationary effects that an artificial wage increase could create. This would be especially true according to the Card and Kruger study. If firms are not reducing profit by laying off workers, they have to recoup their costs somewhere. Although Pollin and Luce argue that costs are almost fully recouped in increased productivity, the Public Policy Institute of California does not agree. According to their studies on minimum wage increases, families in California paid $133 dollars per year more in consumption due to increased prices to pay for minimum wage (37). The study shows that inflation does not rise drastically. According to Nordlund, "Research shows that a 10 percent increase in the minimum wage leads to about one tenth of 1 percent increase in inflation" (149). Although studies differ in the extent to which inflation increases, it is shown that the increase is minimal. Increased productivity pushes down prices, thus offsetting possible inflation. However, costs of living wage are not passed on citywide to all consumers, because most living wage ordinances are not mandates for all business; they are only mandates for city funded projects.

Living wages are not free. In fact, since most living wage ordinances are set by the city governments, the wage applies to government employees. This means the city and its taxpayers bear much of the burden to pay the living wage. However, many of the higher costs of a living wage are offset by the amount the city saves on social services. When people are paid enough to make a living, they do not need food stamps, medicare, welfare, and government programs. It is uncertain and very difficult to determine, however, the actual cost benefit analysis in this scenario. One way to look at cost is through the cost for minimum wage. In the federal minimum wage increase in 1998, labor costs increases for consumers were $1.40 billion. This cost exceeds the benefit of $1.11 billion by $296 million (Public Policy Institute 45). However, the costs of a STATE wide increase in wages instead of a FEDERAL increase in wages is much lower. The state only minimum wage increase costs falls from $1403 million to $976 million (47). Following this model, the costs of wage mandated increases fall every time it is brought to a smaller scale. From national, to state, to city, and to our University. The economy of Santa Clara is a bit harder to connect with the economic impacts of national increases in wage. To date, no study has been done on possible inflation or unemployment rates on our campus. However, according to Bon Appetit, living wage costs in our school primarily fall upon student resident dining plans. We pay to increases the livelihood of the workers preparing our food. The debate now becomes an ethical issue: How much is the poverty of Bon Appetit workers worth to you? Students have been working on this issue for quite some time.

The history of the living wage movement at Santa Clara is long and complicated. However, from what I am able to piece together, there was a push for a living wage for all campus workers in 2000 and 2001. Labor Action Committee was formed to be in solidarity with the workers on campus. The unions were making the contracts with Bon Appetit and Santa Clara, and the students were supporters. According to a phone interview with a former LAC (labor action committee) coordinator, Stepho, the students played a supporting role. The movement was run by workers. There had always been talk of a living wage campaign, but it really started to take form in 2001.

From another phone interview with Blair, a very influential and involved activist at SCU who graduated in 2004, the first problem was with facilities workers. The workers paid by the university got decent wages with great healthcare benefits and educational benefits for thier kids. However, Santa Clara decided to outsource the facilities workers. These workers were paid as low as 7 dollars an hour, when the living wage was $10.77. The workers were paid by DSM, and DSM had a contract with Santa Clara. The union representing the workers tried to fight the unfair wages and policies in thier contract to no avail. Students became involved.

According to Blair, as well as another facilities worker I interviewed, students attended rallies, signed petitions, made buttons, and met with university employees. The workers especially emphasized that if it was not for the students, all the workers would have been outsourced. In the end, students and faculty came together to agree to only outsource a small percent of workers. A policy was put in place to ensure that all workers, including Bon Appetit get paid a living wage. One way that living wage, and labor rights in general can be bargained for is with the use of unions.

People in a union, on average, make more than their non-union counterparts. In 2001, full-time union workers earned $718 per week, compared with only $575 for non-union workers (Quigley 81). Individual workers lack the financial and organizational bargaining power to fight businesses. There is power in numbers, and in the collective power of workers. Unions do not only raise wages, but are large contributors on election politicians and passing laws that favor low wage workers. Unions help to ensure a higher wage, a living wage.

However, Union membership has been declining. 32.5% of workers in the United States were unionized in 1953 compared to 13.5% unionized currently (Quigley 81). Minimum wage, adjusted for inflation, was also much higher back then. Adjusted for inflation, it is estimated that the minimum wage of 1968, $1.60, would amount to about $8.50 today (Quigley 115). The decline of union power may be one of the factors in the very low minimum wage.

Unions are very important in getting a living wage for workers at Santa Clara University. Bon Appetit, for example, works with the local union SEIU 715. There is a contract between Bon Appetit and the union that is renewed every four years. It is the responsibility of the union to fight for the living wage in the contract on behalf of its workers. However, the contract, which is long, complex, and written in legal jargon, is often difficult for the workers to understand. For many of the workers, english is a second language. Also, many of these low wage workers have not attended legal classes, and do not understand the language of the contract.

Another problem that begins to surface is the effectiveness of the union itself. Lori Flashner, manager of Bon Appetit, believes that the union is not essential. She maintains that the happy relationships Bon Appetit has developed with its workers take away much of the need for a union. She would prefer that the workers feel comfortable talking to her with their grievances, even if they speak spanish, which she speaks with some degree of fluency. She is neutral as to the effectiveness of the union, but respects its right to exist.

Out of the 7 workers I interviewed, 4 had not heard of the union or what it had done for them. This is in part due to the language barrier. 3 of the 4 interviews were in spanish. Another issue is the nature of the job. According to one worker, there is no time to chat. The local union is also a bit disorganized. Nina Jenkins, leader of Labor Action Committee, which is a student working group run out of SCCAP involved in workers rights, attempted to call the SEIU representative over 4 times in the course of a month. The representative never called back. The union leader is late for meetings, and has missed them altogether.

The problems with the local union have not always been occurring. This summer the SEIU, called the teamsters, split with the AFL-CIO. The AFL-CIO is the most powerful union in the country. They work to influence policies that affect labor in the US. However, the SEIU accused the A.F.L.-C.I.O. of spending all its money on candidates, and not enough on organizing workers. Since the split, the SEIU has had a hard time organizing, and the local unions, like the one at Santa Clara, have suffered as a result.

Of the 3 workers I interviewed that were familiar with the union, 2 were shop stewards. The 3 shop stewards for Bon Appetit go to union meetings and are responsible for organizing the rest of the workers. However, it has been hard to organized the workers. One shop steward in particular said that people are afraid to get fired, and therefore are afraid to stick up for themselves. I then spoke with this steward about a complaint I had heard from a few cashiers. The lines open up on both sides of the register now, instead of just one side. This means that the cashiers have to work twice as hard to reach across every other order. The cashier I spoke to explained how sore her arms were at the end of the day, and how she was not getting paid any more for the extra work she was doing. When I brought this to the attention of the shop steward and asked how he would go about fixing the situation, he dismissed her concern as illegitimate. He explained that she just does not like change. He said that at least the cashiers get to sit down; he has to stand and cook all day. As a shop steward, you really have to pick your battles.

The union is a very tricky matter. Not everyone in Bon Appetit is involved with the union, or even aware of its prescence. There also appears to be trust issues among the workers; some workers are afraid of reporting situations to the shop stewards or to the union. Difficulties in the union makes for difficulties in implementing minimum wage law.

In conlcusion, Bon Appetit does not pay its workers a living wage. The wage, $11.61, is paid to only 60% of the workers. A living wage should apply to 100% of the workers. Bon Appetit and the University are falsing advertising every time they claim that all workers get paid a living wage. However, Bon Appetit is not technically in contract violation.

The contract between Bon Appetit and Santa Clara University specifically reads that Bon Appetit must be in line with the living wage guidelines of San Jose. These guidelines contain a very large loophole. In wage bargaining, unions may decide to supersede the living wage, and bargain for other benefits, such as health benefits, in the case of the workers of Bon Appetit union, SEIU 715. Therefore, Bon Appetit is following the San Jose, and therefore the Univeristy's, guidelines by allowing union bargaining.

However, this raises very important questions about the integrity of Santa Clara's living wage policy. Should we base our living wage policy off of a law with an enormous loophole? In effect, the loophole is forcing the workers to choose between union representation with healthcare, and a higher living wage. Should the workers be forced to make this choice, an essential lose-lose situation?

I do not believe that Bon Appetit could financially handle to pay thier employees excellent healthcare AND a living wage without raising the price drastically of the already overpriced food in Benson. Should students really have to bear the brunt of these rising costs?

Really, this raises a large issue of universal healthcare. It is not fair that we as consumers expect employers to provide healthcare, while these employers have to compete with international companies that do not have to provide healthcare. Many of these international companies have healthcare provided by the country. Why doesn't the United States have universal healthcare? The question of a living wage, really, is not just a question of labor justice, but of human dignity. In order to change the system, we must all recognize each other as human beings, accepting the responsibility that this realization entails. Healthcare, labor, human rights, and any social issue will not change until we can shift our sense of social consciousness, embracing our humanity in community.

Review of the Literature

Since the living wage is a relatively new concept (the first ordinances began to appear in the late 1990s) the amount of empirical evidence on the economic effects of a living wage is difficult to determine. However, there is much ethical and spiritual literature available in support of a living wage.

The city of San Jose first enacted a living wage in 1998 both because the legislature felt that the government should pay its employees with justice, because the government represents justice [2]. Much of the the rhetoric and philosophy in this resolution dealt with bringing families over the poverty line. The poverty information collected by the U.S. Census is calculated according to the federal poverty line. However, Quigley attacks the definition of federal poverty. He contends that the poverty line is under calculated, because it underestimates the cost of living, and does not account for the income taken out of taxes [5]. Nevertheless, the city San Jose continues to use the federal poverty line to recalculate the living wage annually. This year, it was $11.61 [1].

Both Quigley and Pollin & Luce support a living wage purely on moral grounds. Both books believe that every citizen in this country deserves not only the right to work, but the right to live on the wages this work provides [5,6]. Quigley especially outlines the impossibility of "making it" on the minimum wage. He sites its stagnant nature as one of the primary reasons. The minimum wage does not take inflation into account, but a living wage does [5]. Quigley also supports the existence of unions, especially in context with the catholic church. However, the power and support that unions have in terms of numbers of members has been weaking over the past 20 years, even if the philosophical arguments for its existence has not [4].

It is difficult to find emperical evidence on the living wage, due to its realtively new nature. However, I decided to use the model of increases in the minimum wage and its economic effects to reflect on possible problems that may reside with living wage legislation. All research cited a study done by Card and Kruger of Princeton University, which literally flies in the face of economic theory [5,6,7,8]. Theoretically, a living wage would not be beneficial, because it this artificial price floor would cause both inflation and unemployment [7]. However, this study shows that an increase in minimum wage does not cause unemployment to rise. In fact, worker productivity increases to offset problems of inflation as well [8].

The santa clara campus is not affected by the same market forces that affect the national economy. However, the same principles apply. The cost of the wage must be passed on to someone, in our case, consumers. Most of the research applying to this campus was found through personal interview. The nature of living wage on this campus is very well supported morally, but has not been put into practice.