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University expands living wage plan to include contracted employees

Providers like Aramark will begin paying their workers $15 an hour starting Jan. 1

<p>University President Jim Ryan said that offering a living wage to both contracted and non-contracted employees is one of the most important initiatives the University can pursue to improve its relationship with the broader community.&nbsp;</p>

University President Jim Ryan said that offering a living wage to both contracted and non-contracted employees is one of the most important initiatives the University can pursue to improve its relationship with the broader community. 

The University announced Thursday that its living wage plan first described last March has been adjusted to include most of its contracted employees. The minimum wage for more than 800 University-contracted, full-time employees will be raised to $15 an hour starting Jan.1.

This change will affect the University’s food service providers Aramark and Morrison, as well as other companies such as child care providers KinderCare and Bright Horizons, mail services provider Exela, custodial services provider BMS, environmental services provider Crothall and valet services provider Towne Park. Aramark currently pays its workers an hourly wage of $10.65.

Adjusting wages so that approximately 1,239 University employees are brought to $15 an hour will cost around $1.8 million this fiscal year — when including the cost of fringe benefits and compression adjustments for the workers who currently earn between $15 and $16.25 an hour.

While nearly 90 percent of the University’s full-time contracted employees who work on Grounds regularly will be covered by this plan, contracted workers whose employers only provide episodic services to the University will not experience an increase in wages. When factoring in the previously-announced raises, the total amount of the University’s full-time and full-time contracted employees who will receive at least $15 an hour this January reaches 96 percent. This plan does not include student workers. 

In an interview with The Cavalier Daily, University President Jim Ryan said that offering a living wage to both contracted and non-contracted employees is one of the most important initiatives the University can pursue to improve its relationship with the broader community. 

“If we didn’t tackle this issue, our other efforts around our relationship with community members in the greater Charlottesville region would be really difficult,” Ryan said. “I also think that it’s both the right and the smart thing to do. It’s a way for us to be attractive to talented people in Charlottesville who are looking for employment, and a way for us to retain the employees that we already have.”

Ryan has been aware of the living wage issue since he was a faculty member at the University’s School of Law, adding, “when I came back, it still seemed clear to me that this was an issue that we really needed to address.”

When the original living wage plan was announced last semester, Ryan had promised to work further to extend the wage increase to contracted workers. He had said in a previous interview with The Cavalier Daily that legal issues and the potential cost of the plan were elements that needed to be addressed before introducing a more comprehensive plan. Through extensive research and collaboration with its contractors, the University believes it has created a plan that works.

A non-binding legal opinion that then-Virginia Attorney General Jerry Kilgore made in 2002 said localities could not force their contractors to pay their employees any set wage under the Virginia Public Procurement Act. This opinion has been repeated by later Virginia Attorney Generals like Ken Cuccinelli, who issued a statement on the subject in 2012.

Colette Sheehy, the University’s senior vice president for operations, said that on the issue of legality, nothing has changed — she said that state agencies like the University cannot require certain wages in the contracts they write.

“What has changed is the priority placed on getting this accomplished, and what we’ve done is we have worked together with our contractors to develop a path to a $15 an hour wage for their employees,” Sheehy said. “We’ve done some modifications in the contracts, and they have been willing to do that and we have been willing to do that in order to achieve the objective.”

As for the financial considerations, Sheehy said that re-negotiating the University’s contracts with the providers and finding efficiencies helped address the cost of the plan. Sheehy also noted that Aramark’s participation in the plan will not affect the price of meal plans for students. Aramark currently has 15 years left in its 20-year contract with the University. 

Kelley Stuck, vice president and chief human resources officer, said that the expanded plan was able to come together because Ryan made offering a living wage to contracted employees a priority. 

“When it comes down to finding efficiencies in an organization that’s $3.8 billion, you look for those everyday, and it’s just a continual part of doing business,” Stuck said. “It’s just a matter of priority — where are you going to use the money gained from those efficiencies?”

Stuck also mentioned that the possibility of higher employee retention encouraged the University to move forward with this goal — a factor which could even help offset the cost of the plan when it’s implemented.

“If you can pay a wage that helps to retain employees then that alone reduces your cost, you don’t have the turnover and recruitment and that sort of thing,” Stuck said. “There are some efficiencies inherent in the fact that we’re raising the wage and will be able to better retain employees.”

When the University announced the phase of its living wage plan applicable to non-contracted workers, the Living Wage Campaign issued a statement calling the plan a victory. They added, however, that there was still work for the University to do to match its living wage to the wage MIT defined in its living wage calculator — $17.16 for a family of two working parents and two children.

“There’s a lot of disagreement about what exactly constitutes a living wage,” Ryan said. “I think the thing to understand is that there’s no one single figure because it depends on the demographics of your family. So what’s a living wage for a single adult is going to be different than two adults, one of them working with three kids.”

However, based on his understanding of the demographics of the University’s employees, he said this new plan should cover the majority of them.

The University said it is prepared to continue discussions with its contractors — both those that have decided to participate now and those who have not yet done so — and plans to re-evaluate wages down the line when necessary. 

“Every year, we take a look at salaries and make adjustments.” Ryan added. “And we will continue to do that.”