Item IV.

2
Living Wage Memorandum
Page 1 of 10

MEMORANDUM
TO:

Members of the Metropolitan Airports Commission

FROM:

Greg Failor, Labor Relations Manager (612-726-8175)

SUBJECT:

Background Information on Living Wage

DATE:

April 13, 2015

In February 2014, staff identified six areas in which the commission could take action to address
labor concerns. These areas were:
1. Labor Peace
2. Worker Retention
3. Minimum Wage and/or Living Wage
4. Benefit/PTO Requirements
5. Employee Quality Standards (SFO worker qualification and training requirements coupled
minimum wage and benefits levels)
6. Transfer of passenger cart and wheel chair services from airline-provided to MAC-provided.
After considerable deliberation, the Commission voted to have further discussions with respect
to three of those areasworker retention; minimum and/or living wage; and paid time off. In
December 2014, after receiving public input, the Commission gave final approval to two labor
policiesworker retention and paid leave. These two policies are applicable to limited airside
service and limited commercial service providers at MSP International Airport with more than 21
employees.
The worker retention policy was designed to protect workers jobs when the company they work
for changes ownership or is replaced by another company and the successor company
performs substantially the same services as its predecessor. The paid leave policy provides that
workers will accrue a minimum of one hour of sick leave for every thirty hours of work up to a
maximum sick leave accrual of 72 hours. Sick leave may be carried over from year to year.
The MAC was among a very small number of large hub airports nationwide that took action on
these issues last year.
Discussion on the minimum/living wage issue was deferred to await the actions of the
Minnesota Legislature and potentially the cities of Minneapolis and St. Paul on adopting a
minimum wage that is higher than the federal standard of $7.25 per hour. As discussed below,
the statewide minimum wage was increased on August 1, 2014 to $8.00 per hour and will

Item IV.2
Living Wage Memorandum
Page 2 of 10
increase again this August to $9.00 per hour. Minneapolis and St. Paul have yet to take action
on adopting a higher minimum for employers in their respective jurisdictions and it appears
unlikely that the two cities will do so. There has been substantial interest both nationally and
locally of having local jurisdictions adopt minimum wage or living wage standards that are higher
than the federal minimum wage.
This memorandum provides further background information on the final issue the commission
desired to discussthe concept of a living wage.
I.

Overview of the Twin Cities Labor Market

The following table provides information on the wage distribution of the Twin Cities workforce
and the median wage rate of certain occupational groups.
Total Employment Twin Cities Metropolitan Area

1,791,390

10% of Twin Cities workforce (179,130 workers) earn less than $9.16 per hour.

25% of Twin Cities workforce (447,848 workers) earn less than $12.51 per hour.

Median wage rate for the Twin Cities is $19.59 per hour.

Average wage rate for the Twin Cities is $24.79 per hour.

Occupation

Number of Employees

Median Hourly Rate

Janitor/Cleaner
Waiter/Waitress
Bartender
Personal Care Aide
Baggage Porter/Bellhop
Cashier
Retail Sales Person
Taxi Driver
Parking Lot Attendant
TSA Screener

26,900
31,540
8,860
36,480
250
32,600
58,120
1,860
1,450
680

$11.42
$ 8.72
$ 8.89
$11.04
$ 8.70
$ 9.31
$ 9.81
$12.27
$10.20
$18.17

Source:

Minnesota Department of Employment and Economic Development

Occupation Employment Statistics Data, First Quarter 2014.

Note: According to the March 2013 MSP International Airport Economic Impact Study, 19,800
direct jobs in the region are related to MSP airport operations both on and off airport
property---17,200 of which are located at the airport. 89% of these jobs are full time. The
average annual salary for jobs connected to the airport is $66,270 or $31.86 per hour.

Item IV.2
Living Wage Memorandum
Page 3 of 10
II.

Definitions

Minimum Wage
The minimum wage is set by the federal government, the various states and some cities and
counties as an absolute wage floor that no employer that is subject to the law is allowed to pay
below.
Federal Minimum Wage
The current federal minimum wage is set at $7.25 per hour. The federal minimum wage was last
increased in July 2009. It is not indexed to inflation. Federal law also authorizes the payment of
subminimum wages to certain types of employees such as tipped employees. President Obama
has proposed increasing the federal minimum wage to $10.10 per hour and has signed an
executive order increasing the minimum wage on new federal service contracts to $10.10 per
hour. Twenty-nine (29) states and the District of Columbia now have a minimum wage higher
than the wage level set by the federal government. The state of Washington currently has the
highest state minimum wage at $9.47 per hour.
Minnesota Minimum Wage
The State of Minnesotas current minimum wage is $8.00 per hour. Under current law,
Minnesotas minimum wage is set to increase to $9.00 per hour on August 1, 2015 and to $9.50
per hour on August 1, 2016. Starting on January 1, 2018, the states minimum wage will be
indexed for inflation.
Local Minimum Wage Laws
Nationally, according to a recent survey by the National Employment Law Project (NELP),
twenty (20) cities or counties have adopted higher minimum wage standards than the state in
which the city or county is located. None have done so in Minnesota. These city/county
minimum wages range from $8.50 per hour (Bernalillo County, NM) to $15.00 per hour in
Seattle by 2017 for large businesses and 2021 for small businesses and $15.00 per hour in San
Francisco by 2018.
Prevailing Wage
In 1931, the federal government enacted the Davis-Bacon Act to prevent local wage rates and
local labor standards from being undercut by low bidders that imported cheap labor on federally
funded construction projects. The State of Minnesota enacted the little Davis-Bacon Act in
1973 for state funded construction projects. The MAC has a long standing practice of requiring
prevailing wages on MAC construction projects. The prevailing wage rate includes the hourly
wage rate, usual benefits and overtime for the majority of workers by job class in a particular
geographic area. The prevailing wage rate in Minnesota is set by the state Department of Labor
and Industry for each job classification in the construction industry. The departments prevailing
wage division surveys employers throughout the state and determines the prevailing wage for
each trade or occupation in a geographical area and publishes this information in the State
Register. The department survey covers 290 jobs in the construction industry. Minnesota law
requires each wage rate be based on the actual wage rates paid to the largest number of
workers within each labor classification reported in the statewide survey. An administrative law
judge has determined that the calculation to be used to determine the prevailing wage for any
given job is the mode or most frequently occurring wage rate for that job.

Item IV.2
Living Wage Memorandum
Page 4 of 10
Hennepin County and Ramsey County have extended their prevailing wage mandate to include
certain service contracts in addition to construction contracts. Both Ramsey and Hennepin
Counties requires the payment of prevailing wages on janitorial and security officer service
contracts. Ramsey County also requires that the prevailing wage be paid on towing services
contracts. The current prevailing wage under the Hennepin County policy for full-time janitor is
$17.69 per hour ($14.27 wage rate plus $3.42 fringe rate). For a part-time janitor working less
than 30 hours per week the current prevailing wage under the Hennepin County policy is $12.35
per hour ($11.80 wage rate plus $0.55 fringe rate). The prevailing wage rate for security officers
under the Hennepin County prevailing wage policy is $18.57 per hour ($15.13 wage rate and
$3.44 fringe rate).
Living Wage
A living wage is generally defined as the minimum wage rate necessary for a worker who
works forty (40) hours per week to meet basic needs such as food, housing, utilities, health
care, transport, day care, etc. Living wage laws adopted by elected officials in the United States
often set the living wage rate on an ad hoc basis at a politically acceptable level that may or
may not be adjusted annually for inflation. Some cities peg the living wage rate to the federal
definition of poverty which is adjusted annually. For example, the Minneapolis and St. Paul
Living Wage Ordinances both define the living wage rate to be 130% of the federal poverty level
for a family of four if no health insurance benefits are offered by the employer. If health
insurance benefits are offered, the living wage rate is defined as 110% of the federal poverty
level for a family of four. In 2015, the living wage rates under the Minneapolis and St. Paul
ordinances are:
130% of Federal Poverty Guideline (No Health Insurance)

$15.16 per hour

110% of Federal Poverty Guideline (Health Insurance Provided)

$12.82 per hour

For 2015, the federal poverty guideline for the 48 Contiguous States is:
Family Size

Poverty Guideline

1
2
3
4
5
6

$11,770
$15,930
$20,090
$24,250
$28,410
$32,570

Item IV.2
Living Wage Memorandum
Page 5 of 10
III.

Living Wage Laws or Ordinances in the United States

The National Employment Law Project (NELP) estimates that since the early 1990s
approximately 125 governmental jurisdictions in the United States have adopted some form of a
living wage requirement. The coverage under these laws generally falls into the following four
categories:
1.

The jurisdictions own employees.

Note: the lowest paid full-time employees at the MAC are Facilities Assistants (union
Teamsters) at $17.21 per hour and Passenger Service Assistants (non-union) at $17.47
per hour. Seasonal snow shovelers make $15.25 per hour.

2.

Employees of direct contractors or subcontractors of direct contractors that provide

services to the jurisdiction under a contractual arrangement.
Note: In this category of direct service contracts the MAC consistently has established
wage and fringe expectations in bid documents based on the market for wages and
benefits for each job class expected to perform the work under the contract. Types of
services the MAC directly contracts for include: cleaning and janitorial services, porter
services, loading dock services, parking management, security services, etc.
A good example is MACs 2013 Porter Service RFP which contained the following
language:
A competitive market driven wage/benefit package which is
adequate to attract and retain qualified staff should be
provided. MACs analysis of current market wages indicates
that, at a minimum, the successful proposer should be paying
the MSP Porter Service Attendant position between $10.50
and $17.00 per hour plus a competitive benefits package.
Other fairly recent examples of similar language added to other RFPs include MACs
Janitorial/Cleaning RFP with wages at $11.50/hour to $15.10/hour plus benefits, the
Loading Dock RFP at $11.50/hour to $17.00/hour plus benefits, and General
Maintenance of the FAA building between $13.00/hour and $20.00/hour plus benefits.

3.

Employees of organizations that have received some form of financial assistance or

economic subsidies from the jurisdiction.

4.

The law/ordinance acts as a local minimum wage covering all employees that work in
the jurisdiction. According to the National Employment Law Project December 2014
report, twenty (20) cities have adopted a higher minimum wage than set by either its
state or federal law.

Note: According to the NELP survey the only jurisdictions in Minnesota that have adopted a
living wage ordinance are the cities of Duluth, Minneapolis and St. Paul. The Metropolitan
Council does not have a living wage ordinance or requirement.

Item IV.2
Living Wage Memorandum
Page 6 of 10
IV.

The Minneapolis and St. Paul Living Wage Ordinances

As noted above, both the Minneapolis and St. Paul living wage ordinances set the living wage at
an hourly rate sufficient to allow a full-time worker to earn an income equal to 130% of the
federal poverty level for a family of four. In 2015, this wage rate is $15.16 per hour. Employers
can pay a lower wage rate if they provide basic health insurance coverage. An insurance plan
qualifies under both ordinances if it pays 75% (St. Paul) or 80% (Minneapolis) of the premium
for basic individual coverage plus 50 percent of the premium for basic family coverage. The plan
must also not have in-network deductibles that exceed 25% for office visits, urgent care, and inpatient and out-patient treatment. Out of pocket maximums cannot exceed $1,500 per year for
an individual and $3,000 for family in-network care and $2,000/$4,000 for out-of-network care. If
insurance coverage is provided that meets this minimum standard, the employer may pay a
living wage of 110 percent of the federal poverty level for a family of four. In 2015 this wage rate
is $12.82 per hour.
The living wage requirement generally applies to city contracts or city subcontracts that exceed
$100,000 or to a recipient of a city business subsidy such as a direct grant; contribution of real
or personal property; or a reduction/deferral of a tax or fee in excess of $100,000.
The major exclusions under the ordinances include:

For-profit entity that qualifies as a small business under Minn. Stat. 645.455. A small
business under Minnesota law is defined as a business with less than 20 employees; or
less than $1,000,000 in annual gross revenues ($2.5 million if a technical or professional
services firm) and is not a business affiliated with or a subsidiary of a business dominant
in its field of operation.
501(c) non-profit entity that qualifies under the small business definition noted above.
A recipient of a job readiness and training services contract.
A recipient bound by a collective bargaining agreement.
An intermediary such as a community development corporation, community investment
group or community bank who serves as a pass through agency for assistance.
501(c) entities that are a sole source provider of a product or service.

An entity may also seek an exemption for the following classifications of employees:

Temporary internships (less than 12 months) intending to provide career exposure for
new entrants to the workplace.
Individuals placed as a result of a job training or job readiness program.
Seasonal, part-time or temporary employees provided that no more than 10% of such
employees may be exempted and use of such employees is not intended to circumvent
the requirements of the ordinance.

Employers are required to provide employees written notice to employees of the living wage
requirements of the ordinance. The ordinance prohibits employers from taking actions against
employees who seek to enforce the living wage requirement. The ordinances are enforced by
city staff who can request wage records to verify compliance with the ordinance. In the event of
non-compliance with the ordinance, employers may face various penalties including ineligibility
for future contracts with the city, withholding contract/subsidy payments to the extent of the

Item IV.2
Living Wage Memorandum
Page 7 of 10
underpayment of wages and costs related to investigating or enforcing the requirements of the
ordinance including attorneys fees and the cost of conducting the investigation.
V.

Living Wage Requirements at Select United States Airports

Chicago
Mayor Rahm Emanuel signed an executive order in September 2014 increasing
the citys living wage requirement from $11.93 to $13.00 per hour. Beginning on July 1, 2015 the
hourly living wage will be increased annually each July by the increase in inflation. The
executive order, for the first time, extended the citys living wage requirement to concessionaires
at Midway and OHare airports that are under the jurisdiction of the city of Chicago. Chicago
also adopted a city-wide minimum wage of $10.00 per hour effective July 1, 2015. The citys
minimum wage will increase in several steps until it reaches $13.00 per hour in July 2019.
Starting in July 2020 the city-wide minimum wage will be indexed to inflation.
Boston
The Massachusetts Port Authority acted in October 2014 to accelerate, by one
year, the increase in the states minimum wage for nearly 1,500 workers at Logan International
Airport that are not covered by a collective bargaining agreement. Among the employees
covered are non-union wheelchair assistance workers, cart drivers, skycaps, ticket agents,
baggage handlers, aircraft cleaning personnel, ramp agents, janitorial staff and warehouse
agents. The states minimum wage will rise to $10.00 per hour in 2016 and $11.00 hour in 2017.
The port authority board adopted a resolution requiring airport contractors to implement the
increase in the states minimum wage one year earlier than required by the state. Under
Massports policy, tipped employees would receive a $3.35 per hour minimum wage.
Port Authority of New York and New Jersey Last year the port authority took action to establish
a living wage of $10.10 per hour for workers at JFK, LaGuardia and Newark Liberty International
airports, including security, passenger service, cleaning, restaurant, food service and
concession employees. Starting on February 1, 2016, the $10.10 per hour living wage will be
indexed to inflation.
Metropolitan Washington Airports Authority Covering Dulles and Reagan National Airports, the
MWAA has had a narrow living wage requirement since 2002 for custodial, ground
maintenance, security guard and window washing services that the authority directly contracts
for. The current living wage is calculated by averaging the living wages specified by the city of
Alexandria and Montgomery County for their contracts. The current living wage required by the
MWAA for these service contracts noted above ranges from $13.17 per hour to $13.54 per hour.
Philadelphia The city of Philadelphias 21st Century Minimum Wage and Benefits Standard
Ordinance is applicable to the city owned and operated airport. The current living wage rate is
$12.00 per hour. The ordinance applies to every contract, lease, concession agreement,
franchise agreement or agreement for financial aid. In addition, there is a benefits requirement
for full-time employees mandating health insurance for full-time employees equal to the least
valuable plan offered by the employer to its full time employees.
Seattle
The voters of the city of SeaTac approved a $15.00 minimum wage intending to
cover employees at Seattle-Tacoma International Airport. In December, 2013 a King County
Superior Court judge ruled that the city of SeaTac does not have authority to set wage rate
standards for the Seattle-Tacoma International Airport as the airport is under the exclusive
jurisdiction of the Port of Seattle. That ruling was appealed to the state Supreme Court which

Item IV.2
Living Wage Memorandum
Page 8 of 10
heard the case in June 2014. No decision from the state supreme court as of this writing.
Observers expect the court to address the issue of whether the Port of Seattle has the authority
to set its own minimum wage standard for employees that work at the airport.
In July of 2014, the Port of Seattle Commission approved a living wage policy covering airfield
support workers (nearly 3,500 workers) at Seattle International Airport. Under the policy,
effective January 1, 2015, airfield support workers will earn a minimum wage of $11.22 per hour
and hourly minimum compensation of $13.72 (includes tips, healthcare and other benefits).
Effective January 1, 2017, these figures will increase to $13.00 per hour and $15.50 per hour
respectively. Beginning in January 2018 these figures will be indexed to the rate of inflation.
Paid leave of one hour per forty (40) hours worked was also part of this new policy.
St. Louis
The City St. Louis has had a living wage ordinance covering the airport since
2002. The ordinance covers any party (except the airlines) that has a written agreement such as
a lease, concession agreement, franchise or easement agreement with the St. Louis Airport
Commission. The wage rate is set at 130% of the federal poverty guidelines for a family of three
(3) adjusted every April 1. The 2015 wage rate is $12.56 per hour if health benefits are provided
to the employee. Where health benefits are not provided to the employee, the living wage rate is
$16.58 per hour.
San Jose
Mineta San Jose International Airport is covered by the city of San Joses living
wage ordinance. The ordinance covers any person, corporation, partnership, etc. that conducts
commercial activity at the airport under a contract or permit issued by the city, including
subcontractors of any contractor. Ground transportation providers, construction contractors and
state or federal agencies are excluded from the ordinance. The current living wage rate under
the ordinance is $14.13 per hour if health benefits are provided to the employee. If health
benefits are not provided to the employee, the living wage rate is $15.38 per hour. The living
wage rate is adjusted for inflation annually.
Los Angeles The city of Los Angeles has had a living wage ordinance since 1997. In 2009 the
citys ordinance was extended to LAX. Airport employers are required to comply with the living
wage ordinance. A covered employer includes city financial assistance recipients, contractors,
subcontractors and companies that operate under a public lease or license. This would include
the airlines that operate under an Air Carrier Operating Permit or master lease agreement. The
living wage rate effective July 1, 2014 is $11.03 per hour if health benefits are offered and
$15.84 per hour without health benefits.
San Francisco The city of San Francisco has a living wage ordinance called the Minimum
Compensation Ordinance that is applicable to SFO International Airport. The current living
wage rate effective January 1, 2015 is $13.02 per hour. Employees covered by SFOs Quality
Standards Program receive an additional fifty (50) cents per hour. Employees covered by SFOs
Quality Standards Program are generally those employees that have access to the Airfield
Operations Area (AOA) or are involved in passenger or facility security. The requirements of the
city ordinance apply to any written agreement (including without limitation, any lease,
concession, franchise or easement agreement) for the exclusive use of real property under the
jurisdiction of the San Francisco Airport Commission. The ordinance also applies to any
sublease and agreements between airport tenants and subtenants and any other person or
entity that performs services on airport property.

Item IV.2
Living Wage Memorandum
Page 9 of 10
VI.

Policy Considerations in Establishing a Living Wage Requirement

Determining the Initial Wage Rate and Future Increases

How will the initial wage rate be determined? For example, should it be set at a specific dollar
amount or at a specific percentage of an existing index or measure like the state minimum wage
or federal poverty rate? If the later, what percentage of the index or measure (e.g. 100%, 110%,
130%) is appropriate? Will the wage rate increase annually by indexing it to inflation or by
pegging it to a measure such as the state minimum wage or federal definition of poverty which
changes periodically? Should a lower wage rate be authorized if the employer provides basic
health insurance to its employees? If the program covers concession employees will a tip credit
against the living wage rate be allowed for employees that receive tips?

Coverage
How broad should the coverage be? In other words, what MAC written contracts, leases,
permits and other written instruments should a living wage requirement apply to? Should it
include all or some of the following?

Contracts for the purchase of services.

Concession agreements.
Lease agreements including subleases.
Licensing agreements such as the MACs Limited Airside License Agreements.
Airlines with valid operating permits or operating agreements including the airlines
subsidiaries and subcontractors.

Implementation
Should existing contracts, leases and license agreements be grandfathered so the wage
mandate applies only upon the renewal date of an existing contract, lease or license agreement
or to a new contract, lease, or license agreement? Should any wage requirement enacted by
the board apply to the current concession bidding process? If the current round of concession
bidding is excluded is it fair to include future concession bids from the living wage mandate? In
other words, is the disparate treatment of vendors with different contract expiration dates a
problem?
Exemptions
Should certain types of employers be exempt from the living wage requirement? Common
exemptions in other living wage ordinances include:

Contracts under a certain dollar amount. Minneapolis and St. Paul exclude contracts
under $100,000.
Small business exemption. The Minneapolis and St. Paul ordinances exclude small
businesses as defined by Minnesota law as noted previously in this memorandum.
Temporary and/or seasonal workers, interns and workers-in-training.
Businesses whose employees are covered by a collective bargaining agreement.
Ground transportation providers at airports.

Item IV.2
Living Wage Memorandum
Page 10 of 10

Construction contractors. (Note: These would typically be covered by prevailing wage

requirements).
Governmental entities.

Enforcement
How will the living wage ordinance be enforced? Most living wage ordinances have some kind
of posting and notice requirements to employees informing of their rights under the living wage
requirement. Will MAC staff enforce the living wage requirement? If so, what staffing and
funding levels are necessary to ensure compliance with the living wage requirement? Should a
private cause of action be granted to employees to pursue claims against employers? Should
the forum for a private cause of action be arbitration or court? Will employers be required to
produce wage records in order to periodically audit compliance with the requirement? Should
the ordinance bar retaliation against employees that file complaints with appropriate sanctions
for employers that retaliate against employees?
Penalties and Sanctions For Non-Compliance
What types of penalties or sanctions, if any, should be adopted to discourage employer
violations with the living wage requirement? For example, some living wage ordinances impose
fines for violations and ban employers who violate the law from bidding on contracts for a
certain period of time.
What types of remedies should employees have against an employer who violates the living
wage requirement? Possible remedies include back pay, with or without interest, and punitive
damages.

THIS IS AN INFORMATIONAL ITEM ONLY. NO ACTION IS REQUESTED AT THIS TIME.