A Proposal for Implementing a Living Wage Policy at Harvard University

This document is one example of how a successful living wage policy can be implemented at Harvard University. We outline the key provisions of such a policy, the workers and positions the policy should affect, and the manner in which Harvard can ensure compliance. Moreover, we delineate the governance structures essential to ensure a fair and speedy implementation of a university-wide living wage. Finally, we project the cost of such an implementation plan. We believe that the moral basis of a living wage is unquestionable. By charting a road map for implementation, we aim to put to rest the only lingering doubt about its viability.

Outline of Implementation Report

  1. WAGES AND BENEFITS : DEFINITION OF A LIVING WAGE AND LIST OF BENEFITS HARVARD MUST PROVIDE
  2. WHO IS ELIGIBLE FOR A LIVING WAGE PLUS BENEFITS?
  3. HOW WILL IT BE ADMINISTERED? WHO WILL ACTUALLY IMPLEMENT THE LIVING WAGE POLICY?
  4. HOW WILL WORKERS BE INFORMED ABOUT WAIVABLE BENEFITS SUCH AS HEALTH CARE?
  5. WHAT IF HARVARD FAILS TO COMPLY WITH THE LIVING WAGE AGREEMENT?
  6. INDEPENDENT MONITORING AND GRIEVANCES
  7. MODIFICATIONS TO THE LIVING WAGE AGREEMENT
  8. COST ASSESSMENT AND FINANCING

Implementation Report

I. WAGES AND BENEFITS: DEFINITION OF A LIVING WAGE AND LIST OF BENEFITS HARVARD MUST PROVIDE

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  1. WAGES: The living wage will be $10.25 per hour indexed to the Boston branch of the Bureau of Labor Statistics measure of consumer price inflation for all urban consumers. The living wage floor will be adjusted annually, each September 1st, to match the percentage increase in prices from the previous August.

  2. HEALTH INSURANCE: The University will provide the same range of HMO health benefits packages available to full university professors for all qualifying Harvard workers. The benefits packages will be offered at the same cost as those offered to full university professors. Benefits packages will include dental care, which is currently unavailable to many of those who qualify for the HMO plans to which Harvard subscribes. In addition, Harvard will be required to offer health care packages with coverage comparable to and no higher cost than the average health care package offered to full-time, tenured professors at Boston University, MIT, Tufts, Boston College, and the University of Massachusetts at Boston.

  3. OTHER BENEFITS: In addition, Harvard will provide the following benefits: (1.) access to free childcare at Harvard, (2.) two paid sick days for every forty-five worked days,(3.) two paid vacation days for every forty-five worked days, (4.) a formal grievance board, and (5.) paid parental leave of two months.

II. WHO IS ELIGIBLE FOR A LIVING WAGE PLUS BENEFITS?

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All Harvard workers must be paid a living wage and all Harvard workers who work at Harvard more than twenty hours in a particular month must be eligible for health insurance during that month. This includes students working in any capacity at Harvard, excepting research assistants. Childcare, parental leave, neutrality in organizing, job protection, and access to grievance procedures shall be available to all Harvard workers at all times. Minimum paid sick leave and paid vacation time shall accrue as described in part I above. A Harvard worker is defined as :

  1. A direct employee of Harvard University, or

  2. An employee of a "Harvard contractor," that is, a company which provides Harvard with labor services and has contracts with Harvard (or any of its subsidiaries) with an aggregate value of $10,000 or greater in any twelve-month period. The term "labor services" refers to work performed "on campus" and will be defined precisely by the Harvard Living Wage Governing Board; it includes (but is not limited to) such operations as dining, cleaning, window-washing, construction, security, maintenance and clerical services. The ultimate authority to determine whether a type of work falls under the definition of "labor services," and whether the policy applies to employees who are two or more degrees removed from Harvard as an employer (i.e. workers who are subcontracted, sub-sub contracted, etc.), will reside in the hands of the Living Wage Governing Board described in section VI.

III. HOW WILL IT BE ADMINISTERED? WHO WILL ACTUALLY IMPLEMENT THE LIVING WAGE?

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  1. Administering the Wage Component for Direct Harvard Employees: All direct employees of Harvard University must qualify for a living wage regardless of number of hours they work. For non-unionized workers, this adjustment is automatic. For unionized workers, Harvard must offer unions the option of immediately accepting the Living Wage agreement as a clause in existing contracts at all future contract negotiations.

    Checks to ensure compliance must be incorporated into the operations and software of the Payroll Department. This would allow for the centralized institution of a university-wide living wage. Consequently, departmental wage rates need not be set at the living wage. For example, departmental wage rates could be set at levels comparable to those provided by MIT, Tufts University, Boston University, the University of Massachusetts at Boston and Boston College. If those wages fall short of the living wage requirement, they can be automatically subsidized by the central Harvard University Payroll Department to comply with the standard. The university may utilize one of several viable alternative methods for setting wages in which the administration could distribute labor costs between the University and departmental budgets at its own discretion, as long as the workers receive a living wage. Departmental wage adjustments would also occur once a year for all the pay periods beginning on or after September 1st of the year.

  2. Administering Benefits to Harvard Employees: All Harvard Workers will be notified of their eligibility for benefits (see section (IV) below on notification) upon having worked over twenty hours in any given month at Harvard. Some benefits such as paid parental leave will be automatically available to Harvard employees. However, some benefits such as health care will only be provided for Harvard employees who request to activate those benefits.

  3. Administering Wage and Benefits Policy for Harvards Contract Employees: All contracts of over $10,000, which provide labor services or whose operations are located on the physical property of Harvard University will be analyzed by the Office of Procurement for qualification with the Living Wage Agreement. To be approved by the procurement office, all contracts must include provisions for a living wage policy. All contracts with labor service providers will stipulate the following: (1.) that the contractor pay a living wage to all employees for hours worked at Harvard; (2.) that any contracted workers who have worked at Harvard for more than 20 hours in a particular month will qualify for benefits at Harvard during that month; (3) that the contractor must disclose information regarding its employees, wages, hours, and benefits it offers to employees, as well as any other information necessary for monitoring and implementing the Living Wage Agreement.

  4. Administering the Job Protection Provision: This provision will protect workers providing labor services during a "change in contracting environment." A change in the contracting environment includes : a switch in employer from direct university employment to a Harvard contractor (as defined in Section II) or vice-versa, or a switch in employer from one Harvard contractor to another. The Job Protection Provision affects all workers providing "labor service," as defined in section II. The purpose of this condition is to is to protect employees who have a continued work relationship with Harvard. Therefore, it only applies to those contracts which provide for service over an extended period of time. For instance, we do not expect Harvard to require a new painting contractor to hire the same workers used for the previous paint job over a year ago. However, we do expect the university to require new custodial or security agencies to re-hire workers. To this end, we clarify the working definition for the "change in contracting environment" in the following way: (1) Either the previous or current provision of the service involves a "Harvard contractor" as defined in section II; AND (2a) The service in question was procured (internally or externally) for at least three months out of the twelve months preceding the contracting switch; OR (2b) The service is new, but it is expected that it will be procured for at least six months out of the next year. The final determination of whether a particular move represents a true "change in contracting environment" is also left to the Living Wage Governing Board (see section VI). During any such change in contracting environment, the provisions below must be fulfilled for all contracts over the three years following the date of change in contracting environment.

  5. Retention of qualified workers, as defined in section I, must be followed during any "change in the contracting environment" for the provision of labor services. Any new contract with a Harvard contractor (as defined in Section II) must stipulate that the contractor must hire back all the employees working at the site(s) falling under the contract at no fewer than original hours worked. If any Harvard contract does not contain such a provision, it will be rejected by the Office of Procurement.

  6. Regarding wage stabilization, the following provisions must be contractually specified or administratively enacted during any change in the contracting environment when a Harvard contractor (as defined in section II) is involved: (1) that wages do not decrease relative to those paid to direct employees with the same job description when the outsourcing involves moving in-house services to an outside contractor; (2) Wages do not decrease relative those paid to workers with the same job description employed by the previous contractor when the outsourcing involves switching contractors; (3) that wages do not decrease in nominal terms during the length of the contract; and (4) that wages do not fall below industry standard as defined by prevailing wages used in Federal or State contracting. For positions which exist in both the Federal and State governments, the higher of the two prevailing wages will constitute the floor. Furthermore, grievances regarding lack of compliance with the Job Protection provision may be brought to the Governing Board (see section VI).

  7. Free Child Care: Harvard University should fully assume the cost of child-care, including costs associated with building space, compensation for care-givers, and materials.

IV. HOW WILL WORKERS BE INFORMED ABOUT WAIVABLE BENEFITS SUCH AS HEALTH CARE?

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  1. DIRECT EMPLOYEES: At the initiation of any new job, the employee must receive from the university an information packet in the language of their choice documenting (1.) the living wage they should be paid, (2.) the benefits they are due, (3.) the benefits they have rights to waive they must sign a document in their language of choice in order to waive benefits such as health care, (4.) the grievance procedures to which they have access, including both the Living Wage Board Grievance Procedures and any existing, union Grievance Procedures, and contact information for the initiation of grievance procedures, (5.) the names and contact information of their union officials including shop stewards if they are to be union members, and (6.) information about the Harvard Workers Center authored by the Harvard Workers Center. This procedure should be followed for any individual who is hired for a job in which he or she expects to work at least twenty hours in a given month. If the worker is expected to work fewer than twenty hours in any particular month, then the worker must receive this information before he or she works his or her twentieth hour in a given month.

    Furthermore, a new packet is to be provided to workers on the first day of September each year, noting the new living wage adjusted for cost-of-living increases and any possible changes to the Living Wage Agreement. If the worker does not receive the information packet on September first, he or she must receive the information packet when before he or she works his or her twentieth hour in a given month.

  2. SUBCONTRACTED WORKERS: Any contract which subject to the conditions of the Living Wage Agreement (see section II) shall mandate that all subcontracted workers who are eligible for benefits (see section II for eligibility requirements) receive the same information packet. Regulations about when information packets must be distributed to directly-hired Harvard workers apply to subcontracted Harvard workers (as defined in section II) as well.

V. WHAT IF HARVARD FAILS TO COMPLY WITH THE LIVING WAGE AGREEMENT?

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  1. Inadequate compensation of a directly-hired Harvard employee: If Harvard fails to pay an employee a living wage, then Harvard should pay the employee twice the difference in wages for the period during which he or she was inadequately compensated, plus interest accrued.

  2. Inadequate compensation of a Harvard Subcontracted Worker: If a contractor fails to pay a living wage, then Harvard should either ensure the that the contractor or Harvard pays the employee of the subcontracted firm twice the difference in wages for the period during which he or she was inadequately compensated, plus interest accrued. If the same contractor commits the violation three or more times, all contracts between Harvard University and the contractor should be terminated.

  3. Failure to provide benefits to directly-hired Harvard employees: Since failure to provide of medical benefits is an extremely serious issue, Harvard will agree to pay triple the market valuation of the foregone medical benefits for the period during which it failed to disclose the availability of benefits to all eligible workers. All other benefits will be recompensed at double the amount owed. Lack of a signed waiver combined with lack of payment of benefits to the worker will be sufficient (though not necessary) for the establishment of non-compliance. If an employee waives benefits, he or she employee will receive the monetary savings to Harvard from his or her non-participation in the voluntary benefit program.

  4. Failure to provide benefits to subcontracted Harvard employees: Either Harvard University or the violating contractor must pay any eligible workers who have been denied medical benefits triple the market valuation of the foregone medical benefits for the period during which the contractor failed to disclose the availability of benefits to all eligible workers. All other benefits will be recompensed at double the amount owed. Since subcontracted Harvard workers will be eligible for Harvard benefits, a waiver of benefits must also be signed in order for those workers to fail to receive Harvard benefits.

VI. INDEPENDENT MONITORING AND GRIEVANCES

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A governing board will be created to ensure compliance with the Living Wage Agreement and to potentially modify the Agreement and to clarify unresolved issues. The board will consist of one appointed university administrator, two professors elected through the Faculty Senate, three union members elected by unions, and two students from the Harvard Living Wage Campaign. The right to elect workers will rotate annually among the eight Harvard unions. Appointments and elections will be annual. The Harvard Living Wage Board will be given formal rights to resolve grievances, monitor Harvards compliance, interpret the Living Wage Agreement, and make suggestions on future modifications to the Agreement.

  1. Resolving Grievances: Any worker labeled as a Harvard worker has formal rights to grievance for non-compliance with the Living Wage Agreement. This means that the Board will have the right to decide upon grievance cases and the decision of the board will be legally binding. The Board may investigate cases based upon a grievance filed by a worker, a complaint filed by a union of the Living Wage Campaign, or its own initiative. Penalties for non-compliance are as specified in the Harvard Living Wage Agreement (see Section V). The worker will be required to fill out a simple form stating the grievance. The forms will be available in English, Spanish, Creole, French, Portuguese, Vietnamese, Hindi, Chinese, and any other languages which the Board feels are required. The Board will meet at least once a month to resolve grievances. Materials must be filed at least one week before the meeting of the Board.

  2. Monitoring Harvards Compliance: Harvard will be required to issue quarterly reports enumerating all hours worked and wages and benefits paid during the quarter. Harvard will be required to list these statistics by job classification and by employer. These reports will include information not only about direct employees, but also about workers employed by Harvard contractors as specified by the contractual disclosure requirements (see section V). These reports will be made public and the Harvard Living Wage Board will have rights to independently monitor the employment situation within Harvard or one of its contractors. The board will also generate yearly reports documenting the status of implementation, the extent to which workers buy into health care plans, statistics about hours and wages of service employees, and turnover rates by job category and contractor and site.

  3. Interpreting/Modifying the Harvard Living Wage Agreement: See Section VII.

VII. MODIFICATIONS TO THE LIVING WAGE AGREEMENT

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  1. Reasons for which modifications of the Living Wage Agreement may be necessary: Economic environments change over time and new issues arise, which we currently can not foresee. For instance, a living wage policy is in large part a response to the widespread use of outsourcing a relatively recent phenomenon. For this reason, it is important to specify the rules that will govern any future change to such a policy.

  2. Procedure for Interpretation and Modification of the Living Wage Agreement: When a dispute arises between the University and a worker, group of workers, or union over the interpretation of the Living Wage Agreement, the Harvard Living Wage Board will resolve the dispute. By taking a majority-rule vote, the Harvard Living Wage Board will decide whether or not the dispute is covered by the Living Wage Agreement. If the Board finds that it has jurisdiction within the existing Living Wage Agreement to settle the dispute, then it will do so as it sees fit. If the Living Wage Board does not find that the current Living Wage Agreement covers the circumstances of the situation, it may recommend to the university modifications to the Living Wage Agreement. Amendments to the Living Wage Agreement must be proposed by the Living Wage Board and a majority of workers, students, and faculty who qualify as Harvard affiliates (where workers who qualify as Harvard affiliates include all those who qualify as Harvard Workers).

VIII. COST ASSESSMENT AND FINANCING

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  1. WAGE COSTS We assume that 1300 full time workers will receive an additional $2 per hour for forty hours per week, fifty-two weeks per year. Thus, total wage costs would amount to $5,408,000.

  2. BENEFITS COSTS This calculation errs significantly on the side of higher costs. We assume that 2000 workers per month will be affected by the change, each of whom will receive a $150 per month subsidy for health care. Harvard would assume a total implementation cost of $3,600,000. Other benefits costs will include assuming the compensation of thirty-five full time child-care workers compensated at $15 per hour which would cost the university approximately $1,050,000 per year. Increased parental leave costs will reflect the equivalent of five full time employees per year at $20 per hour for a total of $250,000. Increased sick time and vacation time for workers of an average of eight working days per year will reflect 1,500 workers at $20 per hour per worker for a total cost of $1,920,000. The total annual cost to Harvard of all these benefits amounts to $6,820,000.

  3. ADMINISTRATIVE COSTS Our estimates of the actual administrative costs cannot be very precise without further information. However, the rather liberal estimates below demonstrate that the total expenditure necessary to set up a living wage policy is rather modest.
    1. New Staffing Costs :: Three full time staff people to be added to the Office of Procurement in order to monitoring of outsourced employment and compliance. Each staff person will be compensated at $60,000 per year including benefits for a total of $180,000. In addition, three new staff members will be hired to work at the Payroll Office. All six of these workers will be under the direct authority of the Governing Board to avoid any conflict of interest. One of these staff members will monitor compliance with the living wage agreement. The other two employees will ensure that information about the living wage agreement is disseminated to workers. The total cost of these six new employees will not exceed $360,000 per year. (This is a fairly high estimate for such costs. In comparison, the city of Boston requires only two staff members to manage its living wage ordinance implementation, and Los Angeles--a much larger city--needs six.)

    2. Restructuring Costs :: These are one time costs associated with the increased centralization of Harvards administration required to implement the living wage successfully. They will include four full-time programmers for one year to incorporate living wage checks into the computer system both for subcontracted labor and for directly hired employees. This will cost the university $100,000 per employee for a total cost of $400,000.

    3. Legal Costs :: These are one-time costs associated with drawing up the legal agreements necessary to implement the living wage total estimated costs :: five lawyers at $200/hour for 400 hours (two and a half months) each for a total cost of $4,000,000.

    Final Summary of Costs
    One Time Costs $4,400,000
    Annual Costs $12,588,000