According to a Memorandum signed by the City of San Jose earlier this month, living wage rates for direct service contracts and City job classifications entered into after July 2018 in San Jose will be increased by $1.16 per hour, or 5.64%, when compared to current living wage rates.
This means that affected employees who are not provided with health insurance benefits will be paid a wage of no less than $21.73 per hour, while those affected who are provided with health insurance benefits will earn no less than $22.98 per hour.
The City’s current living wage rates for employees with health benefits is no less than $20.57 per hour, while employees without health benefits are paid a minimum of $21.82 per hour.
As per Council Policy 3-3, also known as the Living Wage Policy, San Jose’s Office of Equality Assurance (OEA) has determined that the City’s living wage rate must be adjusted for 2018. The new living wage rates have been calculated using the following formula:
|2018 Federal Poverty Income Standard for Family of 3||X||Geographic Adjustment Factor||=||San Jose Living Wage Rate|
The Memorandum further explains that the 2018 geographic adjustment factor for a family of three increased to 117.5, which means, “it costs 117.5% more to live in San Jose than the national average for a family of three making $20,780 per year.” The rise in apartment rental rates in San Jose is cited as the reasoning behind the increased geographic adjustment factor.
Interestingly, the Memorandum also explains that the average increase for living wage rates since 2011 has been roughly 6.74% annually, while the Municipal Employees’ Federation general wage increase was much lower, averaging just 0.28% higher each year.
Because living wage increases have surpassed general wage increases so dramatically, hourly wages have been impacted for many classifications, as the Policy applies to City employees. The Memorandum states, “In some situations, salary compaction has occurred where unbenefited, entry-level staff have received hourly rates of close to, or in some cases more than benefited staff in higher classifications.” As a result, some departments have chosen not to use certain classifications, and the City will continually be monitoring salary compaction issues over time.