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Virginia: Livable Wages: Contract Workers
The Cavalier Daily
Matthew Denton-Edmundson

November 9, 2010
View the Original Article


The push for higher entry-level wages raises significant questions about the University’s system for contracted workers

Although the University pays one of the highest entry-level wages in Charlottesville, living wage campaign organizers have said the administration is not doing its part to halt the United States’ steadily worsening class inequality. As evidence, they point to the University’s relationship with private contracting companies that provide workers for construction projects and services such as dining and cleaning at wages as low as the federal minimum. But because these workers are not directly employed by the University, it becomes difficult to scrutinize whether the University can do much to affect their wages.

Why contract
The issue of contracted workers is central to the living wage movement, campaign organizer Greg Casar said. Many contracted workers often are not offered benefits and are paid significantly less than the University’s $10.14 per hour entry salary — which the administration points to as proof of its concern for workers’ well-being.

But University spokesperson Carol Wood said the University prefers to hire its workers directly and only goes to a contractor when it needs temporary workers or a service that requires a company that specializes in a certain area of work.

“Unless we’re in the middle of a big construction project, we don’t need more employees than we have on our Facilities Management staff,” she said.

Construction and dining services account for half of all contracts that the University makes, Wood said, adding that dining hall workers are all hired indirectly by a third-party company, Aramark, because it provides a service that falls outside of the University’s operations as an educational institution.

Aramark advertises itself as a socially- and environmentally-conscious business but does not pay its workers a living wage. Supporters of the living wage have said many dining hall workers are paid $9 per hour or less without benefits. The administration was unable to verify this number, though, because it does not have access to wage statistics for companies it holds contracts with, and Aramark does not make its wage statistics public.

Nevertheless, at the rally two weeks ago, campaign organizers read a statement by an anonymous worker who said she is employed both directly by the University and by a contracting company to do the same cleaning work, during her day-time hours receiving the University’s entry-level pay and at night receiving $8 per hour. Her testimony indicates that the University uses contracting companies not only for short-term projects and specialty services but also as a source of cheap labor, Casar said.

Contract accounting
The partnership between private business and state institutions has long been part of the U.S. political scene, championed for stimulating business while creating public infrastructure. Tre Davis, intern for the City of Charlottesville Dialogue on Race, offered the city as an example, explaining that it uses taxpayer money to hire private companies to build roads, parks and buildings. And because companies are able to profit by these projects, they often compete with one another for these contracts.

“Whoever can do the job well with the least expenditure is going to get the contract,” Davis said. In other words, the lowest bidder wins.

It also is not uncommon for companies to increase the likelihood of getting a contract by cutting the cost of a job through squeezing their workforce, Economics Prof. Ariell Reshef said. This means that contract workers might be paid less than they would be for the same work if employed directly for the job.

The Virginia Public Procurement Act, which dictates the relationship between state entities and private contractors, requires that companies be considered by certain criteria before they can be awarded a contract, including their professional reputation and locality.

According to a statement made by Gov. Bob McDonnell when he was Virginia’s attorney general in 2006, the Procurement Act disallows a public institution such as the University from requiring contractors to pay their workers a living wage or addressing issues of social justice through contract negotiations. Instead, he said the University had to use taxpayer money wisely by finding contracting companies that would provide the “best value” — quality work at the lowest possible price.

“[T]he ‘living wage’ issue clearly is a matter of social, political or economic policy,” McDonnell’s statement read. “It is not related to the goods or services sought to be procured and therefore is not subject to ‘best value’ consideration.”

Living wage campaign organizers have argued that the Public Procurement Act does not specifically disallow public entities from dictating wages to private contractors, but Law Prof. Rip Verkerke said given the current political and economic atmosphere, it would be extremely difficult for the Board of Visitors to implement a living wage that included the University’s indirect employees.

“The campaign is centered on important issues of social justice, but as it stands now, the law doesn’t allow the University to make contracts that pursue solutions to social ills,” he said.

He continued, however, that the act does leave open the possibility of implementing a living wage to further the “best value” of a given contract.

“It’s a question of connecting wages to the service given, which is a legitimate concern of the University, rather than to the internal organization of a company,” he said.

The argument, Reshef explained, is that companies offering a higher wage will attract more competent workers, who are likely to work hard to keep the higher-paying job. Some economists have cautioned that a living wage could result in loss of jobs for lower-income workers because more competitive job-seekers might be attracted by the better pay. But when Los Angeles attempted instituting a living wage in 1997, studies showed that the wage would benefit as many as 20,000 workers.

Still, Davis said convincing the University that a living wage was an efficient economic move would not be easy, especially during a tough financial period; there is no absolute assurance of long-term gain but there is a likelihood of short-term loss. He added that it is tough to exclude moral arguments in a debate that is centered on inequality and poverty.

Yet, “the bottom line will always be how much money is in whose bank account,” he said.

This article is the second in a series about the living wage campaign. Next Monday’s installment will address labor laws in Virginia more broadly.