Cleveland Should Move Quickly to Fix the City’s Fair Wage Ordinance that Covers Employers with City Contracts or Receiving Financial Incentives
Background
In 2000 the City of Cleveland became an early leader in demanding living wages for working people with the adoption of the Fair Employment Wage Law, Chapter 189 of the municipal code. Elected and community leaders understood that a deeply unequal society is not just morally repugnant but fails to deliver a sustainable economy or a healthy democracy.
An important step remains despite Cleveland City Council enhancing their Fair Employment Wage Law with the passage of a wage theft and payroll fraud prevention policy: Establishing what a fair wage is. Unfortunately, the City’s Fair Employment Wage Law was neutered with a 2006, amendment (Ord. No. 1589-06. Pass 9-25-06, eff. 10-2-06) that stripped the inflation index for setting the wage.
Specifically, the anti-worker ordinance reads in relevant part:
The Fair Employment Wage shall be calculated on an hourly basis and shall be at least eight dollars and twenty cents ($8.20) per hour beginning January 1, 2001; eight dollars and seventy cents ($8.70) beginning October 1, 2001; and nine dollars and twenty cents ($9.20) beginning October 1, 2002. Thereafter, the Fair Employment Wage shall be adjusted by the City of Cleveland on an annual basis, beginning October 1, 2003 and each year thereafter in proportion to the Consumer Price Index for Northeast Ohio, as published by the Bureau of Labor Statistics, U.S. Department of Labor. As of October 1, 2006, the annual adjustment shall be suspended at the rate in effect on September 30, 2006, until further action is taken by Council.
The Problem
Since 2006 Cleveland’s living wage has failed to keep pace with inflation. On January 1, 2023, Ohio’s minimum wage surpassed Cleveland’s living wage. Ohio’s minimum wage increased to $10.10 an hour from $9.30 in January while Cleveland’s living wage is stuck at $10.00 for employees. Quickly addressing this problem is imperative in a city where poverty is widespread and inflation bites low-wage workers most severely.
The Policy Solution
There is a simple policy solution. In January 2023, Cleveland should once again tether the living wage to the inflation to Consumer Price Index (CPI) for Northeast Ohio, as published by the Bureau of Labor Statistics, U.S. Department of Labor.
To set the initial wage rate, Cleveland should look to the Massachusetts Institute of Technology Living Wage Calculator which finds that $15.30 is a living wage for an individual in the Cleveland MSA (while an adult with one child is $31.80 – more than double). The Guardians for Fair Work coalition is calling on Cleveland to add back the CPI inflation index and peg the starting wage at the MIT single person living wage to start – $15.30. Moreover, as demonstrated in the chart below, the MIT single person living wage is a modest starting point when considering the true living wage needed to support a family in the City of Cleveland.
The following amendment to the Fair Employment Wage Law would accomplish this policy end by adopting the following language:The Fair Employment Wage shall be calculated on an hourly basis and shall be at least eight dollars and twenty cents ($8.20) per hour beginning January 1, 2001; eight dollars and seventy cents ($8.70) beginning October 1, 2001; and nine dollars and twenty cents ($9.20) beginning October 1, 2002. As of March, 1, 2023, the annual Fair Employment Wage shall be at least fifteen dollars and thirty cents ($15.30). Thereafter, the Fair Employment Wage shall be adjusted by the City of Cleveland on an annual basis, beginning October 1, 2003 and each year thereafter in proportion to the Consumer Price Index for Northeast Ohio, as published by the Bureau of Labor Statistics, U.S. Department of Labor. As of October 1, 2006, the annual adjustment shall be suspended at the rate in effect on September 30, 2006, until further action is taken by Council.