What’s Living Wage? New study offers updated pay needs for Tompkins County residents

By Rob Montana

Tompkins Weekly

Photo by Rob Montana / Tompkins Weekly
Alternatives Federal Credit Union releases a new living wage study every two years; it has been doing so since 1994.

More than 20 years ago, Alternatives began a study that determined what wage is the right one for people living in Tompkins County. Last week marked the release of the most recent study, with number showing a slight increase in the last two years.

In the new study, the hourly living wage rate for a person with employer-provided insurance in the new study is $13.90 per hour, an increase of $0.13 – or 0.09 percent – from the last study’s figure of $13.77 per hour. For those purchasing insurance from the marketplace, the new Living Wage is $15.11 per hour, an increase of $0.77 – or 5.4 percent – $14.34 per hour.

“The wage has gone up every two years,” said Karl Graham, director of Community Programs and Outreach for Alternatives Federal Credit Union. “This year it was a pretty small increase, which was a little unexpected.

“I remember over the last few years, when it was budget time, there was anxiety here and I’m sure many other places about insurance going up 20-23 percent,” he added. “Over the past couple of studies, this one and the last one, insurance increases have been modest, with only a 6 percent increase in health insurance. My guess is it’s because of the Affordable Care Act.”

Graham said the financial institution has kept the study consistent since it began in 1994.

“Back in 1994, we had a staff person who was a teller and said to her supervisor, Leni Hochman, ‘I cannot live on what you pay me,’” he said. “That made us think more about what would be the wage we could pay someone so they could afford to live here.”

Connecting with interns from the ILR School at Cornell University, Alternatives looked into what a “Living Wage” would be for someone living in Tompkins County. The study compiled information on county costs for housing, food, transportation, communication, healthcare, recreation, savings, miscellaneous expenses and taxes. Once the studay was completed, the results shaped how Alternatives approached paying its employees.

“Management went to the board and said that the wage the study came up with was way above the minimum wage, and that they would like to make that the starting wage,” Graham said.

The board agreed with the recommendation, and then it was suggested the report be made to the public, so county residents would be aware of the information. Since then, the study and report to the community have been taking place every two years.

The study breaks down the expenses for one person living in Tompkins County; the following are the results, broken down by category, from the latest research.

Rent: Efficiency apartments cost, on average, $817; one-bedroom apartments ($937/month), two bedrooms ($1,084), three bedrooms ($1,406) and four bedrooms ($1,607).

Food: An average cost of 222.75 per month; for men, ages 19-50, the average cost is $238 per month, for women in the same age bracket, the average cost is $206.70.

Transportation: The average cost per person (averaging the expenses for those who drive alone, carpool, take public transportation, ride their bike, walk to work or work from home) is $182.97 per month.

Communication: For a basic internet contract and a low cost, pre-paid mobile phone, the average monthly cost is $76.74.

Healthcare: With employer-provided health insurance, the average cost is $214.09 per month; the average cost was modeled on the Alternatives health insurance figures. For insurance purchased on the New York State Health Insurance Exchange/Marketplace, the Living Wage figure rises to $15.11 per hour.

Recreation: $111.74 per month

Savings: $66.57 per month

Miscellaneous: This category includes housekeeping supplies, apparel, footwear, apparent products and services, and personal care and services; the average monthly cost is $134.46.

Taxes: Estimated at $462.98 per month; this includes deductions for federal and New York state income taxes, as well as payroll taxes for Medicare and Social Security.

Although it is not included in the determination of a Living Wage, childcare expenses also were determined in the study. For an infant, the cost is $1,201.06 per month, while the monthly childcare costs for a toddler ($1,130 per month) and pre-school ($1,074/month) are slightly less.

This year’s study, while using the same sources for data, had a new wrinkle: It was requested as a project for Northern Lights Learning Center homeschool students.

“They did all the work,” Graham said of the homeschool students, adding that the same as every year, Alternatives staff doublechecked the work in the report. “We had the ILR intern take all the data from the first study until now and put it in graph form, so we could see the rise in wage and categories over the years.”

The Impact

The Tompkins County Workers Center has advocated for better wages for employees in Tompkins County since its inception. Among its initiatives include starting the first Living Wage Employer Certification program in the country in 2006 and creating a successful campaign around all Tompkins County-contracted workers be paid a Living Wage.

“With the many different campaigns related to living wages over the years, more recently we have been working to create a countywide minimum wage that is a living wage,” said Pete Meyers, executive director for the Workers Center. “About a month ago, we introduced our intention formally to the Tompkins County Health and Human Services Committee as well as to the County’s Workforce Diversity and Inclusion Committee.”

According to Rob Brown, TCWC office manager, there are presently 107 Certified Living Wage Employers in the county.

“The living wage is the amount of money someone needs to earn, working full time, to afford the basic costs of living in our area while living frugally,” he said. “At its very root, each person who earns a living wage gains a more reasonable degree of self-sufficiency, for all that the living wage is certainly not the comfortable wage.”

Once the living wage is updated with each study, there is a re-certification process for the CLWE businesses.

“CLWE receive information about the new living wage and have one year from the date of the new living wage announcement to update their wage floors, if necessary,” said Brown, who works with the employers on the process. “A major component of the Living Wage is the cost of health care – $4,350-plus a year, after subsidies, currently – and to an extent that workers are spared insurance expense by employer benefits, this affects the wage floor in complex ways.

“Every time the living wage updates (and between the studies) some employers drop out of the program,” he added. “The reasons employer representatives give for this vary; it’s variable which argue that they ‘cannot’ versus ‘choose not to’ renew.”

Typically, CLWEs “describe a range of self-perceived benefits,” said Brown.

Deb Dietrich, executive director for Opportunities, Alternatives & Resources of Tompkins County, said her organization is a living wage employer because the work its employees undertake is hard.

“Our employees are helping people in crisis every day, and I believe when you work that hard, you deserve enough to live on,” she said. “And even living wage doesn’t allow for any luxuries.”

“There is a lot of support and interest in the community,” added Graham. “The primary reason we are paying a living wage remains the same: We are a certified community development institution with programs in place to build assets for low- and moderate-income people, which includes our employees. We see it as part of our mission.”

The benefits of being a living wage employer are clear to Dietrich.

“Generally, I found it just improve employee morale; it shows there is respect for the work they do,” she said. “We’ve had less turnover than when I came here.

“There is a lot of training that goes into this work and it saves our non-profit costs in training,” Dietrich added. “I think good employee morale increases the number of people we can serve. It’s basically a workers’ dignity issue for me; people are coming here every day to work and they deserve to not have to totally scramble to put food on the table.”

She did admit the payroll cost will increase for businesses and non-profits that make the decision to pay a living wage, but the savings down the road make up for it.

“It’s initially more expensive in any one budget year, but if you calculate in savings in training, I don’t see a drawback,” Dietrich said. “I think if people really examine where the other savings is, you realize that it pays off.”

She added that the organization has seen some wage compression – when the pay for front line employees versus supervisors does not have a very big gap – but that has also been part of a plan.

“We don’t have a very steep hierarchy there,” Dietrich said. “Those who are supervisors make more, but not as much more as you would see in the private sector or at other non-profits.

“We made a conscious decision to compress the wage scale, so there’s less spread between us,” she added. “There still obviously a scale, but it’s compressed and it was done purposefully.”

Earning a living wage helps employees “feel valued,” she said.

“Paying someone to do this kind of work at less than a living wage says this isn’t really important, which is bad for self esteem and how they feel about coming to work every day,” Dietrich said.

As for businesses who do not feel they can pay their employees a living wage, Graham said there is evidence it is possible for local businesses to do so.

“I would say there are businesses who current and have been paying a living wage,” he said. “You can go to the (Tompkins County) Workers Center website and see the list of businesses of all sizes, non-profits that pay a living wage. There are plenty of businesses that do so and survive.

“I understand why businesses say that (they cannot pay a living wage); wages are the biggest cost for most businesses and I understand the reluctance to increase that,” Graham added. “I would encourage them to reach out and talk to businesses that are paying a living wage and see what the impact is to them, to find out if it may benefit them.”

Graham was quick to note that Alternatives is not taking a “we’re more moral than you are stance” when it comes to living wage.

“The credit union understands the controversial nature of living wage, even minimum wage increases as Gov. Cuomo has mandated,” he said. “It’s not a position to take a moral stance, that’s not for us to do. For us, it works and we believe in a living wage.

“We feel like it’s something we should be doing and applaud other organizations and businesses that are doing it as well,” Graham added. “We feel it is of value to the employees and the businesses.”

And the Workers Center has gotten plenty of feedback about living wage impacts on local businesses.

“In any situation where an employer potentially could fill a job position for pay below the living wage, doing otherwise means greater payroll expenses, both wages and taxes. In for-profit business, this can factor into competitiveness,” said Brown. “CLWE retailers in particular have often said that competing on an un-level playing field with similar low wage businesses can be a challenge. In non-profits, fundraising to sustain socially responsible wage levels means raising more than might otherwise be the case.”

For more information about the Living Wage Study, visit Alternatives.org/Livable.html.