Thursday, February 25, 2010

County Contractors Ask for Relief from Living Wage Law

At least three Montgomery County janitorial contractors are asking the county to waive its living wage law so that they can reduce employee wages. Otherwise, they are predicting that county budget cuts could put 150 janitors out of work.

On January 28, three janitorial contractors wrote the following letter to the County Executive stating that they have been informed by the county that the remaining billable hours in their contracts will be cut by about 75% as of February 1. They predict this would be “disastrous for health and safety reasons” since their workers stock restrooms and empty trash. If the cuts take effect, the companies claim they would have to lay off 150 workers who currently clean 125 buildings. To prevent this, one of the contractors wrote:

Our proposal is simple. We propose reducing the cost to the County for our services so that jobs will be saved and the level of cleaning maintained for the good of the County, County employees and County facilities.

The savings would be achieved by reducing the wage paid to our employees and our company’s margin and overhead. This would reduce our billing rate from $17.25 to $14.15, saving an average of $31,000.00 per month (based on 10,000 hours worked per month) for our company alone. Similar cost reductions for the other contractor, if they were to adopt the same plan, would push the savings to about $550,000.00 annually.

We have polled our employees and they are overwhelmingly in favor of the proposal we are making. A copy of the employee agreement and waiver is attached.

The county’s living wage law was the product of a long struggle waged between 1999 and 2002, with Council Members Phil Andrews and Blair Ewing along with labor in support and parts of the business and non-profit communities opposed. The living wage is currently set at $12.95 per hour, but the law has a big loophole: it does not apply to non-profits. Since the law does not contain a provision allowing the Executive Branch to waive its requirements by itself, we believe action by the County Council will be necessary to suspend or otherwise modify it.

On its face, the contractors’ proposal creates some questions. If the workers’ wages will be cut, are the company executives willing to cut their own compensation by an equal amount? How can the county be sure that any wage concessions will not just go to the companies’ bottom line rather than solely back to the county in savings? Can the companies’ characterization of their workers’ views be trusted? (Your author knows through long experience that workers who lack union representation can be easy to scare when times are tough.) Most importantly, under what circumstances – if any - should the county be willing to relax labor protections that were won with great effort?

In their letter, the contractors claim that Director of Procurement David Dise “was in favor of the plan and was willing to take it up the chain of command for consideration.” Dise is one of the Executive Branch’s most respected managers, but this is not a done deal. We hear that the Executive has not yet established a hard and fast position on this issue. The administration has been reaching out to County Council Members for at least a week, but no consensus has emerged. We do not expect the county’s labor movement to support the proposal, especially since they had to fight for four years to get living wage passed. So anything could happen.

Do we really need yet another budget-related item to fight about?