USF Libraries
USF Digital Collections

Economic impact of a living wage ordinance on Hillsborough County's economy

MISSING IMAGE

Material Information

Title:
Economic impact of a living wage ordinance on Hillsborough County's economy
Physical Description:
1 online resource (v, 26 p.) : ;
Language:
English
Creator:
University of South Florida -- Center for Economic Development Research
Hillsborough County (Fla.) -- Health & Social Services Dept
Publisher:
Center for Economic Development Research
Place of Publication:
Tampa, Fla
Publication Date:

Subjects

Subjects / Keywords:
Wages -- Florida -- Hillsborough County   ( lcsh )
Living wage movement -- Florida -- Hillsborough County   ( lcsh )
Economic conditions -- Hillsborough County (Fla.)   ( lcsh )
Genre:
bibliography   ( marcgt )
non-fiction   ( marcgt )

Notes

Bibliography:
Includes bibliographical references.
Statement of Responsibility:
prepared for Hillsborough County Department of Health and Social Services by Center for Economic Development Research, College of Business Administration, University of South Florida.
General Note:
Title from PDF of cover (viewed Sept. 22, 2009).
General Note:
"March 2004."

Record Information

Source Institution:
University of South Florida Library
Holding Location:
University of South Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 002029776
oclc - 437430415
usfldc doi - C63-00051
usfldc handle - c63.51
System ID:
SFS0000327:00001


This item is only available as the following downloads:


Full Text

PAGE 1

Economic Impact of a Living Wage Ordinance on Hillsborough County’s Economy Prepared for Hillsborough County Department of Health and Social Services by CENTER FOR ECONOMIC DEVELOPMENT RESEARCH College of Business Administration 1101 Channelside Dr., 2nd Floor N., Tampa, Florida 33602 Office: (813) 905-5854 or Fax: (813) 905-5856 March 2004

PAGE 2

i Table of Contents Preface ………………………………………………………………………. ii Executive Summary ………………………………………………………… iii Introduction ………………………………………………………………….. 1 Applicable REMI Policy Variables ………………………….………………. 2 Other Considerations ………………………………………………………… 3 Impact on Companies Receiving Tax Abatements ………………………….. 5 Employees of County Government and Government-sponsored Agencies .… 6 Employees of Establishments that Contract with Hillsborough County Government ………………………………………………….….. 7 Findings ………………………………………………………………….…... 8 Conclusions …………………………………………………………………. 14 Appendix A – Core Variables ………………………………………………. 18 Appendix B – Living Wage Model (Scenarios) …………………………….. 19 Appendix C – Email from Professor Eric A. Schutz ………………………... 21 Appendix D – Hillsborough County Management & Budget Department’s Analysis of Costs ………………………………….. 23

PAGE 3

ii Preface In order to study the impacts of a potential “living wage” ordinance, the Hillsborough County Department of Health and Social Services initially commissioned the Center for Economic Development Research (CEDR) to perform three tasks. After completion of the first task, a fourth task was added. The four tasks are: (1) quantitatively summarize findings from available post-enactment studies of living wage ordinances and policies, (2) review available pre-enactment studies of living wage ordinances and policies for methodologies that might usefully supplement REMI Policy Insight economic modeling software, (3) estimate, by industry code, the number of Hillsborough County’s contracted workers that would be affected by a potential living wage ordinance, and (4) use the REMI Policy Insight economic model to estimate the economic impacts of the potential living wage ordinance in terms of jobs, wage and salary disbursements, and output (sales) on the Hillsborough County economy. The first task was completed on December 12, 2003 when CEDR delivered its report to the Hillsborough County Department of Health and Social Services. The report, “Summary of Selected Post-Enactment Living Wage Studies,” December 2003 is available for download from CEDR’s Internet site at http://cedr.coba.usf.edu The second task was completed on January 8, 2004 and the report, “Review of Selected PreEnactment Living Wage Studies,” January 2004 is also available from CEDR’s Internet site. We completed the third task on February 13, 2004. The report, “Estimate of Contract Workers Affected by Hillsborough County’s Potential Living Wage Ordinance,” February 2004 is available for download from CEDR’s Internet site. This report is in fulfillment of the fourth task. The Center for Economic Development Research initiates and conducts innovative research on economic development. The Center’s education programs are designed to cultivate excellence in regional development. Our information system serves to enhance development efforts at the University of South Florida, its College of Business, and throughout the Tampa Bay region. Robert Anderson, Dean, College of Business Administration (COBA), USF Dennis Colie, Director, Center for Economic Development Research (CEDR), COBA, USF, Economist and Principal Investigator

PAGE 4

iii Executive Summary The purpose of this research is to estimate the economic impact of a “living wage” ordinance on Hillsborough County’s economy. We employ the REMITM Policy Insight economic model to perform the estimates. The Hillsborough County Living Wage Task Force is the motivation for this research. On October 15, 2003, the Board of County Commissioners (BOCC) authorized the creation of a task force to study the impact of adopting a “living wage” ordinance in the County. The task force created five scenarios, shown in Appendix B, for economic analysis by CEDR. We measure economic impact by employment, output, and wage and salary disbursements. These are three interrelated measurements of the same economy, like mass, volume, and density are three interrelated measurements of a solid. We measure all impacts as differences from the REMI model’s 2003 Hillsborough County economic baseline. The baseline is 762,000 jobs, output (sales) of $70.2 billion, and wage and salary disbursements of $23.4 billion. For each of the five “living wage” scenarios, we first assume that the government wage bill increase is accommodated by economizing in other areas of government operations so that there is no overall increase in expenditures. Then, we run the model again assuming that the government wage bill increase is paid by increased tax revenue. While we always model government workers as having health benefits, we could not determine the number of private-sector affected workers with or without health benefits. Therefore, for each scenario, we run the model first assuming that all private-sector affected workers have health benefits and we run it again assuming that no private-sector affected worker has health benefits. This procedure allows us to estimate ranges of economic impacts and results in four iterations within each scenario or a total of twenty REMI model runs. The table on the next page shows the scenario designations, our model specification for the source of County funds, and our findings of economic impacts. For the source of County funds, “reprogram” means that we modeled the subscenario as if County government funded its cost increase associated with a “living wage” by cutting spending elsewhere. But “tax” means that we modeled the subscenario as if County government funded its cost increase associated with a “living wage” ordinance by imposing a tax increase. All of the percent changes from the baseline are extremely small reflecting the estimated $70.2 billion of economic activity in Hillsborough County during 2003.

PAGE 5

iv PercentPercentPercent Source ofDifferenceChangeDifferenceChangeDifferenceChange Countyininininin Moneyin Money ScenarioFundsEmploymentEmploymentOutputOutputWagesWages 1a(1)reprogram-0.73-0.00010%$98,0470.00014%$761,0320.00326% 1a(2)tax-0.43-0.00006%$73,5360.00010%$772,4760.00330% 1b(1)reprogram0.000.00002%$506,5510.00072%$3,044,1280.01299% 1b(2)tax0.550.00007%$473,8880.00067%$3,057,4800.01305% 2a(1)reprogram-25.21-0.00331%-$16,341-0.00002%$4,400,2530.01877% 2a(2)tax-15.08-0.00198%-$719,024-0.00102%$4,768,3720.02035% 2b(1)reprogram-22.58-0.00296%$808,8860.00115%$8,934,0210.03812% 2b(2)tax-12.15-0.00159%$98,0440.00014%$9,311,6760.03973% 3a(1)reprogram-24.72-0.00324%$24,5120.00003%$4,333,4960.01486% 3a(2)tax-14.40-0.00189%-$678,158-0.00097%$4,703,5220.02007% 3b(1)reprogram-20.94-0.00275%$882,4220.00126%$8,815,7650.03762% 3b(2)tax-10.68-0.00140%$179,7530.00026%$9,185,7910.03919% 4a(1)reprogram-23.56-0.00309%$81,7060.00012%$4,213,3330.01446% 4a(2)tax-13.37-0.00175%-$620,963-0.00088%$4,581,4510.01955% 4b(1)reprogram-19.04-0.00250%$972,2980.00138%$8,568,0000.03656% 4b(2)tax-8.79-0.00115%$285,9700.00041%$8,939,7430.03814% 5a(1)reprogram-1.10-0.00014%$73,5360.00010%$782,0130.00334% 5a(2)tax-0.73-0.00010%$57,1940.00008%$793,4570.00339% 5b(1)reprogram-0.73-0.00010%$449,3820.00064%$3,131,8660.01336% 5b(2)tax-0.31-0.00004%$416,6990.00059%$3,147,1250.01343% For all scenarios, we find that an Employment impact is not a significant factor. Scenarios 1 and 5 have a relatively low “living wage” compared to the other scenarios. For these scenarios the “living wage” rate is $7.33 for County government and government-sponsored workers and $7.33 ($9.33 without health benefits) for contractors’ workers. We estimate that for a “living wage” ordinance like that represented by Scenarios 1 and 5, the impact on Hillsborough County’s Output would be positive. Subscenarios for which we assume that government reprograms funds from existing activities to support the increased cost of a “living wage” ordinance, yield higher estimates of a gain in Output than subscenarios for which we assume increased taxes are used to pay for the increased cost. This is because higher taxes reduce disposable personal income and have a dampening effect on Output. Scenarios 2, 3 and 4 have a relatively high “living wage” compared to Scenarios 1 and 5. For Scenarios 2, 3 and 4 the “living wage” rate is $9.97 for County government and government-sponsored workers and $9.97 ($11.97 without health benefits) for contractors’ workers. For Scenario 2, the minimum contract amount prescribed is $25,000 and this amount increases to $50,000 for Scenario 3 and $100,000 for Scenario 4. Hence, more contractors’ workers will be affected by a “living wage” ordinance like Scenario 2 and fewer workers will be affected by an ordinance like Scenario 4. Scenarios 2, 3 and 4 each have one subscenario for which we estimate that the difference in Output would be negative. Those subscenarios are 2a(2), 3a(2) and 4a(2),

PAGE 6

v for which we assume contractors’ workers have health benefits, thus are paid $9.97 per hour and we assume increased cost to County government is paid by a tax increase. Output is negative in these cases because the increased taxes remove more spending power from Hillsborough County’s economy than is added to the economy by the increased money wages of workers affected by the ordinance. All other subscenarios within Scenarios 2, 3 and 4, except 2a(1), have positive estimates for a change in Output. The highest value for change in Output occurs in subscenarios 2b(1), 3b(1) and 4b(1), for which we assume that government reprograms funds from existing activities to support the increased cost of a “living wage” ordinance and contractors pay a higher money wage ($11.97 instead of $9.97) in lieu of providing health benefits. The difference in money wages, i.e. wage and salary disbursements, is primarily driven by the “living wage” rate and the minimum contract value. Obviously, the higher the wage rate and the lower the minimum contract value, the greater will be the wage bill increases for government and private contractors. The wage bill increases drive our estimates of the differences in money wages. Therefore, Scenario 2, uniformly across all subscenario specifications, has the largest changes in money wages. However, we must keep in mind that money wages are estimated by place of residence. So there will be some leakage (not specifically reported herein) of the increased wage bills out of Hillsborough County’s economy to neighboring counties. The leakage is due to workers residing in the neighboring counties, but commuting to work in Hillsborough County. We conclude that a “living wage” ordinance patterned after Scenario 1 or Scenario 5 would have negligible impact on Employment and increase Output. An ordinance patterned after Scenarios 2, 3 or 4 would also have a negligible impact on Employment, but could lead to decreased Output if taxes were raised in order to pay for the County’s increased costs due the ordinance. Of course, with all scenarios aggregate Wages go up.

PAGE 7

1 Introduction The purpose of this research is to estimate the impact of a “living wage” ordinance on Hillsborough County’s economy. We employ the REMITM Policy Insight economic model to perform the estimates. The REMI model is a long-run, general equilibrium regional economic model. The conceptual foundation of the model is an understanding that a change in one variable, such as wage rates, in the economy begets additional changes throughout the economy until a new equilibrium is achieved. As such, the model consists of thousands of simultaneous equations that integrate input-output, computable general equilibrium, econometric, and economic geography methodologies. In 1980, Regional Economic Models, Inc. (REMI) was founded to build, maintain, and advise on the use of its regional economic model. Since then the model has been widely accepted as an effective economic planning and forecasting tool. Users in Florida include the Governor’s office and the Agency for Workforce Innovation, Labor Market Statistics; the Tampa Bay Regional Planning Council; Florida State University; and the University of South Florida. The Hillsborough County Living Wage Task Force is the motivation for this research. On October 15, 2003, the Board of County Commissioners (BOCC) authorized creation of the task force to study the impact of adopting a “living wage” ordinance in the County. The task force identified “core variables” for a potential ordinance. The task force’s “core variables” are reproduced in Appendix A. The task force also created five scenarios, shown in Appendix B, for economic analysis by CEDR. Some of the scenarios’ provisions are the same in all scenarios. For example, all scenarios include “Companies that receive tax abatements.” However, the key provisions, which vary from scenario to scenario, are as follows. Key Provisions of the Scenarios In the following sections of the report we will (1) explain the applicable REMI policy variables, (2) address other considerations beyond the REMI modeling, and (3) comment on the economic impact of a “living wage” ordinance on companies receiving tax abatements. Then, we will present data about the number of affected employees and the potential wage bill increases in the sections titled: (4) Employees of County Government and Government-sponsored Agencies and (5) Employees of Establishments that Contract with Hillsborough County Government. Lastly, we will report our (6) findings of economic impact for each scenario and (7) conclusion. Wage RateWage Rate Scenario #with health benefitsw/o health benefits 1$7.33$9.33$100,000or more 2$9.97$11.97$25,000or more 3$9.97$11.97$50,000or more 4$9.97$11.97$100,000or more 5$7.33$9.33$50,000or more Value of Contract

PAGE 8

2 Applicable REMI Policy Variables We introduce changes to the applicable policy variables of the REMI model to assess the impact, if such changes were actually to occur. The applicable policy variables are (1) Wage Rate (share), (2) Government Spending (amount), and (3) Personal Taxes (amount). The Wage Rate (share) policy variable changes the average nominal wage rate within an industry or governmental jurisdiction (i.e. local, state, federal) by a specified proportion. We measure the proportion as the amount of the total “living wage” increase with respect to an industry’s or government’s wage bill prior to the increase. The effect is to increase the wage bill in the amount of the total “living wage” increase and it is upon this new, higher wage bill that the model finds a new equilibrium. Within the model, a change in the Wage Rate (share) affects the Optimal Capital Stock, Labor Intensity, Real Disposable Income, and the Relative Real Wage Rate. In addition, for industries, a change in the Wage Rate (share) affects the model’s Relative Production Costs structure. For example, an increase in the wage rate increases: Optimal Capital Stock – the most effective amount of capital required to produce the County’s output. The increase in Optimal Capital Stock tends to increase investment in capital goods and decrease employment in the County. Real Disposable Income – amount of inflation-adjusted dollars available to persons for consumption and saving. The increase in Real Disposable Income increases the purchasing power of the County’s residents. In the REMI model, the increase in Real Disposable Income increases personal consumption through a low income response on Housing, Non-Durable Manufactured Goods and Health Care expenditures, but a high income response on all other commodities. Relative Production Costs – costs of producing goods or a service for an industry in the County relative to the rest of the United States. The increase in Relative Production Costs tends to decrease the market share for output produced in the County. Relative Real Wage Rate – cost-of-living-adjusted wages paid by industries and governments in the County relative to the rest of the United States. The increase in the Relative Real Wage Rate tends to increase economic in-migration, thereby accelerating population growth in the County. The REMI model endogenously supports a change in the wage rate for privatesector businesses through change to the Optimal Capital Stock and Relative Production Costs, but we must “balance government’s budget” by means of an offsetting input. That is, if government’s wage bill goes up, we specify the source of money to support the increase. We use the Government Spending (amount) policy variable and / or the Personal Taxes (amount) variable to “balance government’s budget.” The Government Spending (amount) Local policy variable converts a change in local government spending into a change in industry demands. A decrease in local

PAGE 9

3 government spending decreases output and employment in the County to the extent (as determined by the model’s regional purchase coefficients) that the reduced spending was for goods and services previously purchased locally. We use this policy variable in simulations for which we assume that all or a part of local government’s increased “living wage” bill is offset by reductions in other local government spending. The Personal Taxes (amount) policy variable changes total personal taxes in the County by the dollar amount entered into the model. We use this variable to simulate a change in real disposable personal income when we assume that all or a part of local government’s increased “living wage” bill is funded through a tax on the County’s residents. An increase in Personal Taxes decreases real disposable income that, in turn, decreases personal consumption spending for goods and services. A decrease in personal consumption spending decreases output and employment in the County to the extent (as determined by the model’s regional purchase coefficients) that the reduced spending was for goods and services previously purchased locally. Other Considerations Professor Eric A. Schutz, Department of Economics, Rollins College, Winter Park, Florida, suggests “Points to consider in the REMI model.” See Professor Schutz’s email in Appendix C. He suggests four economic issues, which succinctly described are 1) wage-income distribution, 2) efficiency effects of the wage, 3) taxpayer savings, and 4) “other less easily measurable savings.” Regarding the first issue, Professor Schutz points out that in his study of a “living wage” for Orange County, Florida, he estimated that the “sales increase amounted to 14% of the total direct cost of the LW in increased wages – after accounting for the consumer spending reduction that would simultaneously occur due to the tax increase presumably necessary to cover a LW.”1 This is so, because a “living wage” increase goes to lowwage earners who have a greater propensity to locally consume than an average wage earner. While we might argue that propensity-to-consume is a function of household income rather than an individual’s income, the REMI model estimates local sales (output) as a function of the County’s aggregate real disposable income. As explained in the previous section of our report, in the model an increase in Real Disposal Income increases personal consumption through a low income response on Housing, NonDurable Manufactured Goods and Health Care, but a high income response on all other commodities. We believe that the model’s response to a change in real disposable income is adequate, particularly because individual changes in disposable income as a result of a “living wage” ordinance are not strictly limited to low-wage earners. For example, relatively high-wage employers may experience a simultaneous decrease in real disposable income when relatively low-wage earners experience an increase in real disposable income. 1 See “Review of Selected Pre-Enactment Living Wage Studies,” by Center for Economic Development Research, College of Business Administration, USF, January 2004 in which we review “A Living Wage in Orange County: Arguments and Research” by Eric A. Schutz, Susan Orr and Sherry Ambrose of Orange County Living Wage Coalition, undated.

PAGE 10

4 On the second point, Professor Schutz estimates “labor cost savings would amount to about 63% of the total direct cost of the LW” in Orange County. He bases his estimate on Bruce Nissen’s findings for Miami.2 In his report on a “living wage” ordinance for Miami-Dade County, Professor Nissen states that “… one can somewhat confidently predict that the wage increases and the newly offered health care benefits will result in a higher caliber of worker and measurable increases in efficiency.” In his report, Professor Nissen cites the book by Card and Krueger (1995) to support his viewpoint that “… economists are finding – contrary to previous belief – that increases in the minimum wage law do not produce discernible employment losses or declines in efficiency.”3 In their book (beginning on page 318), Card and Krueger present the neoclassical (traditional) economic model of a competitive price-taking, wage-taking firm. A firm’s output is an increasing function of the amount of labor the firm employs and the firm’s profit equals selling price times output minus the wage times the amount of labor employed. The firm chooses the amount of labor to maximize its profit. An implication of this neoclassical model is that an increase in the minimum wage reduces the profit of the firm in proportion to the ratio of payroll costs to profits. Card and Krueger conclude that “The greater the scope for substituting capital or skilled labor for minimum-wage labor …, the less the minimum-wage increase will eat into profit.” However, Card and Krueger offer an “alternative model” which they believe more realistically explains their empirical findings on minimum wage policy. In the alternative model, the firm is a price-taker, but sets the wage above the market-wage “as part of a strategy to keep vacancies low, reduce turnover, improve morale, or for other reasons …” The alternative model forms the crux of Professor Schutz’s economic issue of the efficiency effects of the wage. Under the alternative model, the firm chooses the amount of labor and the wage to maximize its profit. An implication of the alternative model is that the firm pays a wage so that its marginal revenue increase obtained by paying a slightly higher wage equals the amount of labor that is paid the higher wage. Thus, the change in profit with respect to a change in the wage is zero. According to Card and Krueger, “The intuitive explanation for this result is that if a minimum-wage increase forces the firm to pay slightly more than its optimally-selected wage, then the firm will offset virtually all of this extra cost by savings from being able to fill vacancies more rapidly, having lower turnover, improved morale, etc.” Important to our discussion of Professor Schutz’s “Points to consider in the REMI model” is Card and Krueger’s conclusion about the alternative model. They say, “There is some anecdotal support for this kind of a model.” They go on to give an example from 2 See “Review of Selected Pre-Enactment Living Wage Studies,” by Center for Economic Development Research, College of business Administration, USF, January 2004 in which we review “The Impact of a Living Wage Ordinance on Miami-Dade County” by Bruce Nissen of FIU Center for Labor Research and Studies, October 1998. 3 Reference “Myth and Measurement THE NEW ECONOMICS OF THE MINIMIM WAGE,” David Card and Alan B. Krueger, Princeton University Press, Princeton, New Jersey, 1995.

PAGE 11

5 Dollar General Corporation’s 1992 annual report. Thus, we emphasize that the idea of efficiency gains accruing to a minimum-wage increase does not seem to be a widely accepted principle by economists. The REMI model is designed according to traditional economic principles that households seek to maximize utility and firms seek to maximize profits (and minimize costs). In REMI, the substitution between labor, capital, and fuel is based on a CobbDouglas production function, which implies constant factor shares. When relative (to the rest of the U.S.) labor costs increase in an industry, workers per unit of output decrease for that industry in the region. To restore a labor demand – labor supply equilibrium at the new wage, firms either substitute out of labor or leave the region. In either case, the affect is a decrease of employment in the region. Professor Schutz’s third point is that “measurable taxpayer savings would accrue for County, state and Federal taxpayers in the form of reductions in income supplements of various kinds for low-income people …” The income supplements to which he refers are part of Personal Income and generally called Transfer Payments. By definition, transfer payments are income to persons for which they do not render current services. These payments include, but are not limited to, social security, pension plan payouts, welfare and unemployment insurance payments. The source of transfer payments may be public or private funds. In the REMI model, Transfer Payments are affected by changes in employment, population, the net residence adjustment (which considers commuting patterns from neighboring counties), and total labor and proprietors’ income. The model’s calculation separately recognizes 1) transfer payments for over 65 age group and under 65 age group, but not working, and 2) all others receiving transfer payments. Unfortunately, the REMI model does not provide results of changes in transfer payments by category, e.g. welfare. Thus, we cannot directly address Professor Schutz’s hypothesis that a “living wage” would reduce taxpayer-funded income supplements. In several trials, however, with the model we note that the trend is when there are job losses due to a policy decision, aggregate transfer payments, which are paid to a county’s residents, increase. Apparently, unemployment insurance payments outweigh reductions in welfare payments, at least in the short-run. Lastly, Professor Schutz notes that “there are other less easily measurable savings following from a LW as well, in the form of things like improved health care and reduced crime …” Such items are not included in the REMI model’s structure and, therefore, will not affect our findings. Impact on Companies Receiving Tax Abatements Each of the five scenarios (See Appendix B.) includes “Companies that receive tax abatements.” Item 8 on the Core Variables list (See Appendix A.) further defines tax abatements as “financial incentives for jobs created.”

PAGE 12

6 The Hillsborough County Economic Development Department (HCEDD) provided information about tax abatement projects to the Living Wage Task Force. The HCEDD reported that in 2001 five companies enjoyed financial incentives for 2,495 new jobs. The Task Force’s staff “decided on 2001 because it was a complete year with the most accurate information.” As a requirement to receive tax abatement the average wage for the new jobs must exceed the countywide average wage. In January 2002, the average wage in Hillsborough County was $33,895 per annum or over $16 per hour. The $16 per hour well exceeds the “living wage” in any of the five scenarios. Hence, based on this available information, it is our judgement that application of the “living wage” to companies receiving tax abatements will have practically no impact on the aggregate Hillsborough County economy. Nevertheless, we acknowledge that the distribution of wages paid by a company receiving a tax abatement could be skewed by a few jobs paying at the high end of the wage scale and many low paying jobs at the bottom end of the scale. And, the skewed distribution could result in an above-average wage as required for tax abatement. For the purpose of this analysis of economic impacts, we do not have sufficient information to determine if a skewed distribution of wages exists for a given company. But a skewed distribution seems to be in conflict with the purpose of the tax incentives for job creation, and could be better addressed as a part of the tax incentive program rather than as a part of a “living wage” ordinance. Employees of County Government and Government-sponsored Agencies4 County staff estimated the number of employees who would be affected by the “living wage” scenario and the added costs in wages and benefits to the employer. Temporary employees are not included. The estimates are based on 2003 employment levels. We assume that all employees of County government and government-sponsored agencies receive health benefits, thus only the “living wage” rates with benefits apply to this part of our analysis. The applicable hourly “living wage” rates are $7.33 and $9.97. Based on data provided by Hillsborough County Human Resources Department, the County’s Management & Budget Department proceeded to estimate the total increase in the wage bill at each “living wage” rate to be $34,452.10 and $1,332,464.88, respectively. See Appendix D for the Department’s worksheets. Furthermore, in each of the five scenarios we assume that only employees whose current wage rate is below the “living wage” rate are affected. That is, there is no ripple effect whereby employees currently paid more than the “living wage” would also receive a pay increase in order to maintain current pay differentials. 4 County government-sponsored agencies means agencies that do not come under the BOCC budget authority, but historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. See Appendix A, Core Variables, for a list of these agencies.

PAGE 13

7 Employees of Establishments that Contract with Hillsborough County Government Previously, we estimated the number of contractors’ workers affected and the wage bill increases due to a potential “living wage” ordinance.5 We reprint the summary table of scenarios and estimates from the previous work on the below. Summary of Scenarios and Estimates Scenario Minimum Contract Hourly Wage % of Workers with Health Care Benefits Total Annualized Value of Contracts Worker Equivalents Affected Workers as Expressed by Worker Equivalents Total Wage Bill Increase Due to Contracts 1a$100,000$7.33100%$251,719,960 2,844.76 357.17 $762,097 1b$100,000$9.330%$251,719,9602,844.76 718.24 $3,035,226 2a$25,000$9.97100%$259,697,9902,985.22 889.10 $4,333,780 2b$25,000$11.970%$259,697,9902,985.22 1,235.29 $8,855,322 3a$50,000$9.97100%$256,811,8872,936.53 872.21 $4,247,909 3b$50,000$11.970%$256,811,8872,936.53 1,212.38 $8,685,003 4a$100,000$9.97100%$251,719,9602,844.76 841.03 $4,089,490 4b$100,000$11.970%$251,719,9602,844.76 1,170.10 $8,370,517 5a$50,000$7.33100%$256,811,8872,936.53 371.12 $792,967 5b$50,000$9.330%$256,811,8872,936.53 745.74 $3,154,030 CEDR calculated the estimates of the number of contractors’ workers affected and the wage bill increases based on the U.S. Census Bureau’s 5-Percent Public Use Microdata Sample (PUMS) database for Hillsborough County. The Census Bureau collected the PUMS data during the 2000 census and the wage rates in the sample refer to 1999 wages. A key assumption that underlies CEDR’s estimates is that the left-hand tail of the wage rate distribution in 2003 is unchanged from the left-hand tail of the wage rate distribution found in 1999. The left-hand tail of the distribution encompasses wage rates at or below a target “living wage” and the Federal minimum wage ($5.15 per hour) at which point the distribution is truncated. This key assumption is consistent with the notion that there continues to be workers earning at or near the bottom of the wage scale even though average wages for all workers have inflated between 1999 and 2003. In the REMI model, we input wage bill increases as a proportion of 2003 aggregate wage bills for major industry groups in Hillsborough County. We also input wage bill increases for government workers in Hillsborough County as a proportion of the 2003 aggregate wage bill for government. Most of the government wage bill increase is for employees of County government and government-sponsored agencies, as mentioned above. However, some of the contracts with Hillsborough County, which are included in the Summary of Scenarios and Estimates above, are with other government entities, i.e. two contracts with the City of Tampa and five contracts with the State of Florida. For these government-to-government contracts, we subtracted the wage bill increases from the private-sector amounts and added them to the government wage bill increase before entering the amounts into the REMI model. 5 Reference “Estimate of Contract Workers Affected by Hillsborough County’s Pr oposed Living Wage Ordinance,” February 2004, prepared for Hillsboro ugh County Dept. of Health and Social Services by CEDR, College of Business Administration, USF.

PAGE 14

8 Findings We measure economic impact by employment, output, and wage and salary disbursements. These are three interrelated measurements of the same economy, like mass, volume, and density are three interrelated measurements of a solid. Employment is the number of full-time and part-time workers, including the selfemployed, based on place of work (not place of residence). A worker may have more than one job and, therefore be counted more than once. Output is the amount of production in dollars, including intermediate goods as well as final goods and services. Technically, the output of a region is equal to sales in the region plus or minus an inventory adjustment. Wage and salary disbursement is monetary remuneration, including commissions, tips, and bonuses, based on place of residence (not place of work). We measure all impacts as differences from the REMI model’s 2003 Hillsborough County economic baseline. The baseline is 762,000 jobs, output (sales) of $70.2 billion, and wage and salary disbursements of $23.4 billion. For each of the five “living wage” scenarios, we first assume that the government wage bill increase is accommodated by economizing in other areas of government operations so that there is no overall increase in expenditures. Then, we run the model again assuming that the government wage bill increase is paid by increased tax revenue. While we always model government workers as having health benefits, we could not determine the number of private-sector affected workers with or without health benefits. Therefore, for each scenario, we run the model first assuming that all privatesector affected workers have health benefits and we run it again assuming that no privatesector affected worker has health benefits. This procedure allows us to estimate ranges of economic impacts and results in four iterations within each scenario or a total of twenty REMI model runs. Findings Scenario 1 The scenario’s specifications are: Living Wage to be calculated at $7.33/hour for employees that have health benefits and at $9.33 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $100, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. For Scenario 1a, we assume all private-sector contract workers have health benefits and, for Scenario 1b we assume no private-sector contract worker has health benefits. In

PAGE 15

9 Scenarios 1a(1) and 1b(1), we assume economies in other government operations so there is no increase in government spending, but in Scenarios 1a(2) and 1b(2) we assume that increased taxes offset increased government expenditures. Measure A mountPercent Employment-0.7324-0.00010% Output$98,0470.00014% Wage and Salary Disbursements$761,0320.00326% Economic Impact of Scenario 1a(1) Differences from Baseline Measure A mountPercent Employment-0.4272-0.00006% Output$73,5360.00010% Wage and Salary Disbursements$772,4760.00330% Economic Impact of Scenario 1a(2) Differences from Baseline Measure A mountPercent Employment0.18310.00002% Output$506,5510.00072% Wage and Salary Disbursements$3,044,1280.01299% Economic Impact of Scenario 1b(1) Differences from Baseline Measure A mountPercent Employment0.54930.00007% Output$473,8880.00067% Wage and Salary Disbursements$3,057,4800.01305% Economic Impact of Scenario 1b(2) Differences from Baseline Scenario 1 is the most conservative of the five scenarios in that it prescribes the lowest “living wage” rate and the highest dollar amount for inclusion of contract workers. We find that for all iterations of Scenario 1 the Employment impact is negligible. Estimates of the increase in Output range from $73,536 for Scenario 1a(2) to $506,551 for Scenario 1b(1). Estimates of the increased Wage and Salary Disbursements range from $761,032 for Scenario 1a(1) to $3,057,480 for Scenario 1b(2). Findings Scenario 2 The scenario’s specifications are: Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action.

PAGE 16

10 Companies with County service or construction contracts of $25,000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. For Scenario 2a, we assume all private-sector contract workers have health benefits and, for Scenario 2b we assume no private-sector contract worker has health benefits. In Scenarios 2a(1) and 2b(1), we assume economies in other government operations so there is no increase in government spending, but in Scenarios 2a(2) and 2b(2) we assume that increased taxes offset increased government expenditures. Measure A mountPercent Employment-25.21-0.00331% Output-$16,341-0.00002% Wage and Salary Disbursements$4,400,2530.01877% Economic Impact of Scenario 2a(1) Differences from Baseline Measure A mountPercent Employment-15.08-0.00198% Output-$719,024-0.00102% Wage and Salary Disbursements$4,768,3720.02035% Economic Impact of Scenario 2a(2) Differences from Baseline Measure A mountPercent Employment-22.58-0.00296% Output$808,8860.00115% Wage and Salary Disbursements$8,934,0210.03812% Economic Impact of Scenario 2b(1) Differences from Baseline Measure A mountPercent Employment-12.15-0.00159% Output$98,0440.00014% Wage and Salary Disbursements$9,311,6760.03973% Economic Impact of Scenario 2b(2) Differences from Baseline Scenario 2 is the least conservative of the five scenarios in that it prescribes the highest “living wage” rate and the lowest dollar amount for inclusion of contract workers. We find that for all iterations of Scenario 2 the Employment impact is very small, although in a negative direction. Estimates of the difference in Output range from a loss of $719,024 for Scenario 2a(2) to a gain of $808,886 for Scenario 2b(1). Scenario 2a(2) is a relatively high “living wage” and tax increase subscenario. Scenario 2b(1) is also a relatively high “living wage” subscenario, but it assumes costs to government are offset by reductions in other areas of government operations, thus no tax increase. Estimates of the increase Wage and Salary Disbursements range from $4,400,253 for Scenario 2a(1) to $9,311,676 for Scenario 2b(2).

PAGE 17

11 Findings Scenario 3 The scenario’s specifications are: Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $50, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. For Scenario 3a, we assume all private-sector contract workers have health benefits and, for Scenario 3b we assume no private-sector contract worker has health benefits. In Scenarios 3a(1) and 3b(1), we assume economies in other government operations so there is no increase in government spending, but in Scenarios 3a(2) and 3b(2) we assume that increased taxes offset increased government expenditures. Measure A mountPercent Employment-24.72-0.00324% Output$24,5120.00003% Wage and Salary Disbursements$4,333,4960.01486% Economic Impact of Scenario 3a(1) Differences from Baseline Measure A mountPercent Employment-14.40-0.00189% Output-$678,158-0.00097% Wage and Salary Disbursements$4,703,5220.02007% Economic Impact of Scenario 3a(2) Differences from Baseline Measure A mountPercent Employment-20.94-0.00275% Output$882,4220.00126% Wage and Salary Disbursements$8,815,7650.03762% Economic Impact of Scenario 3b(1) Differences from Baseline Measure A mountPercent Employment-10.68-0.00140% Output$179,7530.00026% Wage and Salary Disbursements$9,185,7910.03919% Economic Impact of Scenario 3b(2) Differences from Baseline

PAGE 18

12 Scenario 3 prescribes the same “living wage” rate as Scenario 2, but increases the minimum amount for a contract to be included to $50,000 from the $25,000 minimum of Scenario 2. Our findings for Scenario 3 are much like the findings for Scenario 2. We find that for all iterations of Scenario 3 the Employment impact is very small, although in a negative direction. Estimates of the difference in Output range from a loss of $678,158 for Scenario 3a(2) to a gain of $882,422 for Scenario 3b(1). Scenario 3a(2) is a relatively high “living wage” and tax increase subscenario. Scenario 3b(1) is also a relatively high “living wage” subscenario, but it assumes costs to government are offset by reductions in other areas of government operations, thus no tax increase. Estimates of the increase in Wage and Salary Disbursements range from $4,333,496 for Scenario 3a(1) to $9,185,791 for Scenario 3b(2). Findings Scenario 4 The scenario’s specifications are: Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $100, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. For Scenario 4a, we assume all private-sector contract workers have health benefits and, for Scenario 4b we assume no private-sector contract worker has health benefits. In Scenarios 4a(1) and 4b(1), we assume economies in other government operations so there is no increase in government spending, but in Scenarios 4a(2) and 4b(2) we assume that increased taxes offset increased government expenditures. Measure A mountPercent Employment-23.56-0.00309% Output$81,7060.00012% Wage and Salary Disbursements$4,213,3330.01446% Economic Impact of Scenario 4a(1) Differences from Baseline Measure A mountPercent Employment-13.37-0.00175% Output-$620,963-0.00088% Wage and Salary Disbursements$4,581,4510.01955% Economic Impact of Scenario 4a(2) Differences from Baseline

PAGE 19

13 Measure A mountPercent Employment-19.04-0.00250% Output$972,2980.00138% Wage and Salary Disbursements$8,568,0000.03656% Economic Impact of Scenario 4b(1) Differences from Baseline Measure A mountPercent Employment-8.789-0.00115% Output$285,9700.00041% Wage and Salary Disbursements$8,939,7430.03814% Economic Impact of Scenario 4b(2) Differences from Baseline Scenario 4 prescribes the same “living wage” rate as Scenario 3, but increases the minimum amount for a contract to be included to $100,000 from the $50,000 minimum of Scenario 3. Our findings for Scenario 4 are much like the findings for Scenario 3. We find that for all iterations of Scenario 4 the Employment impact is very small, although in a negative direction. Estimates of the difference in Output range from a loss of $620,963 for Scenario 4a(2) to a gain of $972,298 for Scenario 4b(1). Scenario 4a(2) is a relatively high “living wage” and tax increase subscenario. Scenario 4b(1) is also a relatively high “living wage” subscenario, but it assumes costs to government are offset by reductions in other areas of government operations, thus no tax increase. Estimates of the increase in Wage and Salary Disbursements range from $4,213,333 for Scenario 4a(1) to $8,939,743 for Scenario 4b(2). Findings Scenario 5 The scenario’s specifications are: Living Wage to be calculated at $7.33/hour for employees that have health benefits and at $9.33 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $50, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. For Scenario 5a, we assume all private-sector contract workers have health benefits and, for Scenario 5b we assume no private-sector contract worker has health benefits. In Scenarios 5a(1) and 5b(1), we assume economies in other government operations so there is no increase in government spending, but in Scenarios 5a(2) and 5b(2) we assume that increased taxes offset increased government expenditures.

PAGE 20

14 Measure A mountPercent Employment-1.099-0.00014% Output$73,5360.00010% Wage and Salary Disbursements$782,0130.00334% Economic Impact of Scenario 5a(1) Differences from Baseline Measure A mountPercent Employment-0.7324-0.00010% Output$57,1940.00008% Wage and Salary Disbursements$793,4570.00339% Economic Impact of Scenario 5a(2) Differences from Baseline Measure A mountPercent Employment-0.7324-0.00010% Output$449,3820.00064% Wage and Salary Disbursements$3,131,8660.01336% Economic Impact of Scenario 5b(1) Differences from Baseline Measure A mountPercent Employment-0.3052-0.00004% Output$416,6990.00059% Wage and Salary Disbursements$3,147,1250.01343% Economic Impact of Scenario 5b(2) Differences from Baseline Scenario 5 prescribes the same “living wage” rate as Scenario 1, but decreases the minimum amount for a contract to be included to $50,000 from the $100,000 minimum of Scenario 1. Our findings for Scenario 5 are much like the findings for Scenario 1. We find that for all iterations of Scenario 5 the Employment impact is negligible. Estimates of the difference in Output range from a gain of $57,194 for Scenario 5a(2) to a gain of $449,382 for Scenario 5b(1). Estimates of the increase in Wage and Salary Disbursements range from $782,013 for Scenario 5a(1) to $3,147,125 for Scenario 5b(2). Conclusions The following tables summarize our findings. Panel A (next page), Scenario Specifications & Estimated Wage Bill Increases, shows the scenario designations in column 1 and the specifications in columns 2 through 7. Columns 8 and 9 contain our previous estimates of the number of contractors’ (equivalent) workers affected and the wage bill increase for these workers according to a scenario’s specifications.6 6 See footnote 5 for the reference to the previous report.

PAGE 21

15 (1)(2)(3)(4)(5)(6)(7)(8)(9) LivingCountyContractLivingContractor WageCountyWage andWorkers'WageContractMoney CountyWorkersBenefitsMinimumHealthContractWorkersWage Bill ScenarioWorkersAffectedIncreaseContractBenefitsWorkersAffectedIncrease 1a(1)$7.3347$34,452$100,000yes$7.33357.17$762,097 1a(2)$7.3347$34,452$100,000yes$7.33357.17$762,097 1b(1)$7.3347$34,452$100,000no$9.33718.24$3,035,226 1b(2)$7.3347$34,452$100,000no$9.33718.24$3,035,226 2a(1)$9.97535$1,332,465$25,000yes$9.97889.10$4,333,780 2a(2)$9.97535$1,332,465$25,000yes$9.97889.10$4,333,780 2b(1)$9.97535$1,332,465$25,000no$11.971235.29$8,855,322 2b(2)$9.97535$1,332,465$25,000no$11.971235.29$8,855,322 3a(1)$9.97535$1,332,465$50,000yes$9.97872.21$4,247,909 3a(2)$9.97535$1,332,465$50,000yes$9.97872.21$4,247,909 3b(1)$9.97535$1,332,465$50,000no$11.971212.38$8,685,003 3b(2)$9.97535$1,332,465$50,000no$11.971212.38$8,685,003 4a(1)$9.97535$1,332,465$100,000yes$9.97841.03$4,089,490 4a(2)$9.97535$1,332,465$100,000yes$9.97841.03$4,089,490 4b(1)$9.97535$1,332,465$100,000no$11.971170.10$8,370,517 4b(2)$9.97535$1,332,465$100,000no$11.971170.10$8,370,517 5a(1)$7.3347$34,452$50,000yes$7.33371.12$792,967 5a(2)$7.3347$34,452$50,000yes$7.33371.12$792,967 5b(1)$7.3347$34,452$50,000no$9.33745.74$3,154,030 5b(2)$7.3347$34,452$50,000no$9.33745.74$3,154,030 Panel A Scenario Specifications & Estimated Wage Bill Increases Panel B (next page), Scenario Specifications & Economic Impacts, shows the scenario designations in column 1, our model specification for the source of County funds in column 10, and our findings of economic impacts in columns 11 through 16. In column 10, “reprogram” means that we modeled the subscenario as if County government funded its cost increase associated with a “living wage” by cutting spending elsewhere. But “tax” means that we modeled the subscenario as if County government funded its cost increase associated with a “living wage” ordinance by imposing a tax increase. Columns 11, 13 and 15 show the resulting differences, i.e. economic impacts, measured by Employment, Output and Wages, respectively. Columns 12, 14 and 16 show the percent change in these measurements from the Hillsborough County economy baseline. The baseline is 762,000 jobs, output (sales) of $70.2 billion, and wage and salary disbursements of $23.4 billion. All of the percentage changes are extremely small with respect to the baseline economy.

PAGE 22

16 (1)(10)(11)(12)(13)(14)(15)(16) PercentPercentPercent Source ofDifferenceChangeDifferenceChangeDifferenceChange Countyininininin Moneyin Money ScenarioFundsEmploymentEmploymentOutputOutputWagesWages 1a(1)reprogram-0.73-0.00010%$98,0470.00014%$761,0320.00326% 1a(2)tax-0.43-0.00006%$73,5360.00010%$772,4760.00330% 1b(1)reprogram0.000.00002%$506,5510.00072%$3,044,1280.01299% 1b(2)tax0.550.00007%$473,8880.00067%$3,057,4800.01305% 2a(1)reprogram-25.21-0.00331%-$16,341-0.00002%$4,400,2530.01877% 2a(2)tax-15.08-0.00198%-$719,024-0.00102%$4,768,3720.02035% 2b(1)reprogram-22.58-0.00296%$808,8860.00115%$8,934,0210.03812% 2b(2)tax-12.15-0.00159%$98,0440.00014%$9,311,6760.03973% 3a(1)reprogram-24.72-0.00324%$24,5120.00003%$4,333,4960.01486% 3a(2)tax-14.40-0.00189%-$678,158-0.00097%$4,703,5220.02007% 3b(1)reprogram-20.94-0.00275%$882,4220.00126%$8,815,7650.03762% 3b(2)tax-10.68-0.00140%$179,7530.00026%$9,185,7910.03919% 4a(1)reprogram-23.56-0.00309%$81,7060.00012%$4,213,3330.01446% 4a(2)tax-13.37-0.00175%-$620,963-0.00088%$4,581,4510.01955% 4b(1)reprogram-19.04-0.00250%$972,2980.00138%$8,568,0000.03656% 4b(2)tax-8.79-0.00115%$285,9700.00041%$8,939,7430.03814% 5a(1)reprogram-1.10-0.00014%$73,5360.00010%$782,0130.00334% 5a(2)tax-0.73-0.00010%$57,1940.00008%$793,4570.00339% 5b(1)reprogram-0.73-0.00010%$449,3820.00064%$3,131,8660.01336% 5b(2)tax-0.31-0.00004%$416,6990.00059%$3,147,1250.01343% Panel B Scenario Specifications & Economic Impacts For all scenarios, we find that an Employment impact is not a significant factor. Scenarios 1 and 5 have a relatively low “living wage” compared to the other scenarios. For these scenarios the “living wage” rate is $7.33 per hour for County government and government-sponsored workers and $7.33 per hour ($9.33 without health benefits) for contractors’ workers. We estimate that for a “living wage” ordinance like that represented by Scenarios 1 and 5, the impact on Hillsborough County’s Output (sales) would be positive. Subscenarios, for which we assume that government reprograms funds from existing activities to support the increased cost of a “living wage” ordinance, yield higher estimates of a gain in Output than subscenarios for which we assume increased taxes are used to pay for the increased cost. This is because higher taxes reduce disposable personal income and have a dampening effect on Output. Scenarios 2, 3 and 4 have a relatively high “living wage” compared to Scenarios 1 and 5. For Scenarios 2, 3 and 4 the “living wage” rate is $9.97 per hour for County government and government-sponsored workers and $9.97 per hour ($11.97 without health benefits) for contractors’ workers. For Scenario 2, the minimum contract amount prescribed is $25,000 and this amount increases to $50,000 for Scenario 3 and $100,000 for Scenario 4. Hence, more contractors’ workers will be affected by a “living wage” ordinance like Scenario 2 and fewer workers will be affected by an ordinance like Scenario 4.

PAGE 23

17 Scenarios 2, 3 and 4 each have one subscenario for which we estimate that the difference in Output would be negative. Those subscenarios are 2a(2), 3a(2) and 4a(2), for which we assume contractors’ workers have health benefits, thus are paid $9.97 per hour and we assume increased cost to County government is paid by a tax increase. Output is negative in these cases, because the increased taxes remove more spending power from Hillsborough County’s economy than is added to the economy by the increased money wages of workers affected by the ordinance. All other subscenarios within Scenarios 2, 3 and 4, except 2a(1), have positive estimates for a change in Output. The highest value for change in Output occurs in subscenarios 2b(1), 3b(1) and 4b(1), for which we assume that government reprograms funds from existing activities to support the increased cost of a “living wage” ordinance and contractors pay a higher money wage ($11.97 per hour instead of $9.97 per hour) in lieu of providing health benefits. The difference in money wages, i.e. wage and salary disbursements, is primarily driven by the “living wage” rate and the minimum contract value. Obviously, the higher the wage rate and the lower the minimum contract value, the greater will be the wage bill increases for government and private contractors. The wage bill increases drive our estimates of the differences in money wages. Therefore, Scenario 2, uniformly across all subscenario specifications, has the largest changes in money wages. However, we must keep in mind that money wages are estimated by place of residence. So there will be some leakage (not specifically reported herein) of the increased wage bills out of Hillsborough County’s economy to neighboring counties. The leakage is due to workers residing in the neighboring counties, but commuting to work in Hillsborough County. We conclude that a “living wage” ordinance patterned after Scenario 1 or Scenario 5 would have negligible impact on Employment and an increase in Output. An ordinance patterned after Scenarios 2, 3 or 4 would also have a negligible impact on Employment, but could lead to decreased Output if taxes were raised in order to pay for the County’s increased costs due the ordinance. Of course, with all scenarios aggregate Wages go up.

PAGE 24

18 Appendix A Core Variables Revised 12/15/03 1. Living Wage to be calculated at $7.33/hour for employees that have health benefits and at $9.33 for employees that do not have health benefits. 2. Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. 3. Fulland part-time employees of agencies that come under the BOCC budget authority. 4. Fulland part-time employees of agencies that do not come under the BOCC budget authority but historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action and the pressures associated with competing for similar applicants/employees. 5. Fulland part-time employees of companies with County service and construction contracts of $25,000 or more, and only for the hours that they are performing work on these contracts. 6. Fulland part-time employees of companies with County service and construction contracts of $50, 000 or more, and only for the hours that they are performing work on these contracts. 7. Fulland part-time employees of companies with County service and construction contracts of $100, 000 or more, and only for the hours that they are performing work on these contracts. 8. Companies that receive tax abatements (e.g., financial incentives for jobs created.) Notes: a. Temporary employees are not included. b. Agencies under the BOCC budget authority are: County Administrator, County Attorney’s Office, Clerk of Circuit Court, Supervisor of Elections, Property Appraiser, Tax Collector, Sheriff, Environmental Protection Agency, Planning Commission, Law Library, Legislative Delegation, Soil and Water Conservation District, Civil Service Board, Victim Assistance. c. Agencies that do not come under the BOCC budget but historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action and the pressures associated with competing for similar applicants/employees are: Public Transportation Commission, Expressway Authority, Sports Authority, Children’s Board, Arts Council, Aviation Authority, and Port Authority.

PAGE 25

19 Appendix B Living Wage Model (Revised 12/15/03) Scenario 1 Living Wage to be calculated at $7.33/hour for employees that have health benefits and at $9.33 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $100, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. Scenario 2 Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $25,000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. Scenario 3 Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $50, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. Scenario 4 Living Wage to be calculated at $9.97/hour for employees that have health benefits and at $11.97 for employees that do not have health benefits. This scenario to include fulland part-time employees of:

PAGE 26

20 Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $100, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements. Scenario 5 Living Wage to be calculated at $7.33/hour for employees that have health benefits and at $9.33 for employees that do not have health benefits. This scenario to include fulland part-time employees of: Agencies that come under the BOCC budget authority. Agencies that do not come under the BOCC budget authority but that historically have followed the BOCC salary schedule or are likely to be indirectly impacted by BOCC action. Companies with County service or construction contracts of $50, 000 or more, and only for the hours that they are performing work on these contracts. Companies that receive tax abatements.

PAGE 27

21 Appendix C Email from Professor Eric A. Schutz Colie, Dennis From: Eric A. Schutz [Eric.A.Schutz@Rollins.edu] Sent: Monday, December 01, 2003 5:17 PM To: Colie, Dennis Cc: Sobush, David; adelsonv@hillsboroughcounty.org; flowjo@earthlink.net Subject: Points to consider in the REMI model Dennis -I'm still waiting on the "demo" from the REMI website! -our network connection is really slow today -they must be working on it or something. Anyway, let me list briefly the specific things I wanted to highlight for consideration re the living wage (LW) impact. These are the sort of "fine points" for which I suspect the REMI model does not account in its estimations of the employment, sales and wage & salary impact on Hillsborough County (along with whatever other impacts it computes), yet which are probably quite significant in the case of a change at the bottom of the wage-income distribution enough so that their inclusion, were it possible, would lead to dramatically different estimates. All of these items are on the "benefits" side of the impact; the "costs" side (i.e., the fiscal portion of it) is clear enough, but these benefits effects are likely to be extremely difficult to estimate even though probably critically important for a reasonable assessment of the impact. (These things are discussed in my Briefing #8 on the Orange County Living Wage Coalition website .) First, to get a reasonable estimate of the aggregate County consumer spending effects of a LW, you need those effects broken down along lines of the wageincome distribution between low-wage and "average wage" employees This is so because a given total wage increase, say, $10-million in the County, will have a different impact on consumer spending, hence business sales, depending on whether it's an across-the-board increase or one given only to low-wage consumers -in the latter case the impact is certain to be, dollar-for-dollar, significantly greater since low-wage consumers have a much greater "propensity to consume (locally)". In my study of Orange Co., that spending or sales increase amounted to 14% of the total direct cost of the LW in increased wages -after accounting for the consumer spending reduction that would simultaneously occur due to the a tax increase presumably necessary to cover a LW.

PAGE 28

22 Second, efficiency wage effects: a LW would reduce work-force turnover and the associated personnel management costs, and improve workforce "morale" and the associated labor productivity. My own estimates, based on Bruce Nissen's findings for Miami concluded that such labor cost savings would amount to about 63% of the total direct cost of the LW. That may sound high, but arguably it may be quite conservative: the segment of the workforce that is affected here presumably has a very high personnel-management-cost to wage-cost ratio. Third, measurable taxpayer savings would accrue for County, state and Federal taxpayers in the form of reductions in income supplements of various kinds for low-income people: Medicaid & other government health supplements, food stamps and the EITC, in particular, are fairly easy to measure. These altogether I estimated, again using Nissen's work, at around 35% of the total direct cost of the LW. Fourth, there are other less easily measurable savings following from a LW as well, in the form of things like improved health and reduced crime that follow upon the reduction in poverty that would occur. My study gives some extremely suggestive numbers on the impact of these on expenditures such as for education and police enforcement (based on various studies elsewhere), but of course I was not able to offer a "serious" estimate of the dollar benefits of these effects. You can see why these things matter so much: in principle, they may well totally offset the direct costs of a LW in increased County and contractors' wages. Thus, for example, REMI may conclude that Hillsborough County aggregate sales may rise by $1-million/year, while an estimate taking account of my first point would have it at $2-million. If total contractors' labor costs go up by only 37% of the amount of their direct wage cost increase (as in my second point), then the disemployment effects of a LW that (I presume) REMI would find must be in fact considerably smaller (by about 2/3). Whatever fiscal costs REMI may conclude for a LW similarly would be overstated if it doesn't account for the directed impact of a LW on the poverty population specifically. And so on. Hope this helps some. Cheers -Eric cc David Sobush; Vicki Adelson; Sharon Streater

PAGE 29

23 Appendix D Hillsborough County Management & Budget Department’s Analyses of Costs

PAGE 30

24 Appendix D (continued )

PAGE 31

25 Appendix D (continued)

PAGE 32

26 Appendix D (continued)


xml version 1.0 encoding UTF-8 standalone no
record xmlns http:www.loc.govMARC21slim xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.loc.govstandardsmarcxmlschemaMARC21slim.xsd
leader nam 2200313Ia 4500
controlfield tag 001 002029776
005 20090928181344.0
006 m d
007 cr bn|||||||||
008 090922s2004 flu sb 000 0 eng d
datafield ind1 7 ind2 024
subfield code a C63-00051
035
(OCoLC)437430415
040
FHM
c FHM
043
n-us-fl
049
FHMM
090
HD4976.F6 (ONLINE)
0 245
Economic impact of a living wage ordinance on Hillsborough County's economy
h [electronic resource] /
prepared for Hillsborough County Department of Health and Social Services by Center for Economic Development Research, College of Business Administration, University of South Florida.
260
Tampa, Fla. :
b Center for Economic Development Research,
2004.
300
1 online resource (v, 26 p.)
500
Title from PDF of cover (viewed Sept. 22, 2009).
"March 2004."
504
Includes bibliographical references.
650
Wages
z Florida
Hillsborough County.
Living wage movement
Florida
Hillsborough County.
651
Hillsborough County (Fla.)
x Economic conditions.
2 710
University of South Florida.
Center for Economic Development Research.
1
Hillsborough County (Fla.).
Health & Social Services Dept.
8 773
t Center for Economic Development Research (CEDR) Collection
4 856
u http://digital.lib.usf.edu/?c63.51