In the current fiscal year, the minimum hourly (“Living Wage”) rate paid to covered employees of applicable City service contractors is $11.62 per hour, with health benefits of at least $1.69 per hour, or $13.31 per hour without health benefits.  These rates were last indexed by the City Commission on September 30, 2014 with an effective date of January 1, 2015.  No increases were approved for the following periods between January 1, 2016 – December 31, 2016 and January 1, 2017 – December 31, 2017.

Pursuant to Section 2-408(d) of the City of Miami Beach Code, the living wage rate may, by resolution of the City Commission, be indexed annually for inflation using the Consumer Price Index for all Urban Consumers (CPI-U) Miami/Ft. Lauderdale area, issued by the U.S. Department of Labor, Bureau of Labor Statistics.

According to the City Code, the City Commission may: 1) index the Living Wage rate annually; 2) index the Living Wage rate cumulatively to “catch up” for any prior year(s) where there was/were no increase(s); or 3) may elect to forego any increases if it determines it would not be fiscally sound to do so.

At its April 26, 2017 meeting, the City Commission, pursuant to Agenda Item C4-G, approved a referral to the Finance and City-Wide Projects Committee (the “Committee”) for a discussion on whether or not to change the current Living Wage hourly rate.  The discussion item was originally presented to the Committee at its May 19, 2017, meeting for indexing the living wage rate. At that time, representatives of the Service Employees International Union (SEIU) also presented recommendations to the Committee that it proposes for both the living wage rates and amendments to the language and requirements of the Living Wage Ordinance (the “Ordinance”). Following the discussion of the information presented by both the Administration and SEIU, the Committee deferred the discussion to its June 30, 2017, meeting and requested staff to meet with the representatives of SEIU to determine the fiscal impacts of the different rates proposed and to provide an analysis of the amendments to the City’s living wage ordinance proposed by SEIU.

At its June 30, 2017, meeting, the Committee considered the information requested, which included the proposed living wage rates, each rate’s potential fiscal impact as noted in the table below.

On June 30, 2017, the Committee directed staff to consider any circumstances that may reduce the fiscal impact of the living wage rate options noted above. In carrying out the direction of the Committee, staff considered two scenarios that may reduce the fiscal impact of any increase:

1. Are any contractor employees at or above any proposed rate and, therefore, not eligible for an increase? In this scenario, only the fiscal impact from reimbursing contractors for those employees that would actually receive the increase is considered in the Revised Potential Fiscal Impact.
2. Is the City considering reductions in the current level of service for any of the contracts to which the living wage rate currently applies? Since the City is, in fact, considering reductions in the current level of service for the contracts noted below in 2a-2c, the fiscal impact of the living wage rate increase may be reduced by the corresponding reduction in the level of service. The portion of Revised Potential Fiscal Impact indicated in the table below has been adjusted for the estimated reduction in the level of service in the following contracts:

a.     Security Guards. The Emergency Management Department is currently working on a plan to reduce a percentage of security guards deployed city wide.

b.     Temporary Labor Services. The Sanitation Division of the Public Works Department has been and is planning to continue to reduce the number of temporary workers it utilizes because it plans to continue filling the full-time positions already allocated in its budget.

c.     Tennis Management. Pursuant to Resolution 2017-29897 approved by the City Commission on June 7, 2017, the Parks and Recreation Department is implementing a reduction in the level of service for the tennis management contract.

d.     Other areas. The impact of any increase can be further mitigated by the reduction of service in other contracts that may be currently being considered. For example, the deployment of the gated revenue control system in the City parking garages may result in a reduction in the number of parking garage attendants required. The same is the case for the number of temporary office personnel contracted through one of the City’s temporary services (clerical and para-professional) contracts. However, the potential reduction in these areas is not yet known and the Revised Potential Fiscal Impact indicated in the table below has not been adjusted for any potential future reduction.

Based on the foregoing, the table below provides Revised Potential Fiscal Impacts for the options being considered by the Committee on July 10, 2017.  

¹There are no City employees whose hourly rates are below Options 1 and 2. A number of City employee hourly rates are below the rate in Option 3. These figures do not include any adjustments that may be required in the hourly rates of employees currently below the rate stipulated in Option 3. That figure is estimated at approximately $150,000.

On June 30, 2017, the Committee also requested options for staggering the implementation of rate increases to mitigate the impact on any given year. One approach for doing so is a phased-in option over three (3) years. The tables below shows some potential options for phasing in the rate increases for Options 2 and 3. A longer phase-in period (e.g., five years) is also an option at the Committee’s discretion, especially for Option 3.

After considering all options, the Committee recommended approval of the Option 2 Phase-in. This option consists of indexing current living wage rates by a 5.62% cumulatively increase in a “Phase-In” approach  to catch up with inflation from previous years when no living wage increases took place; and further to require that commencing on fiscal year 2019 and thereafter, any annual adjustment for inflation to the supplemental health care benefits hourly rate, as approved by the City Commission, be calculated using the Miami Consumer Price Index exclusively for “medical care” for all Urban consumers (CPI-U) in the Miami/Ft. Lauderdale area.

On September 25, 2017, after considering the Committee's recommendation during First Reading of this Ordinance, the Mayor and City Commission directed the City’s Administration to increase the health care benefit, by at least 50 cents per hour the first year, with a pathway to make the living wage rate without health care benefits at least $15.00 per hour using a “phase-in” approach.  The new pathway or "Phase-in" approach  will take effect as reflected in the revised Ordinance (attached).

The Mayor and City Commission directed the City Administration to increase the current health care benefit, by at least 50 cents per hour the first year, with a pathway to make the living wage rate without health care benefits at least $15.00 per hour using a "phase-in" approach.

Using a "phase-in" approach commencing on January 1, 2018 and ending on December 31, 2020, the new living wage rates, as approved by the Mayor and City Commission, will be as follows:

1. Effective January 1, 2018, covered employees must be paid a living wage rate of no less than $11.62 per hour with health care benefits of at least $2.26 per hour, or a living wage rate of no less than $13.88 per hour without health care benefits.
2. Effective January 1, 2019, covered employees must be paid a living wage rate of no less than $11.70 per hour with health care benefits of at least $2.74 per hour, or  a  living wage rate of no less than $14.44 per hour without health care benefits.
3. Effective January 1, 2020, covered employees must be paid a living wage rate of no less than $11.78 per hour with health care benefits of at least $3.22 per hour, or  a  living wage rate of no less than $15.00 without health care benefits.

Furthermore, commencing on January 1, 2021, and each year thereafter, any increase to the supplemental health care benefits rate, as approved by Commission, be calculated using the Miami Consumer Price Index exclusively for "Medical Care" for all Urban Consumers (CPI-U) in the Miami/Ft. Lauderdale area.