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HomeMy WebLinkAboutConstituent Letter - Mail Packet - 5/23/2023 - Correspondence From City Clerk's Office Re: Information Provided During May 16 City Council Regular MeetingRE:Minimum Wage at the May 16°’,2023 Council Meeting Attached is a packet addressing many of the questions asked by council during the April 11th work session,with additional information provided: •Fort Collins minimum wage options —the options presented by staff as (tables also provided). This also includes using Denver’s wages,adjusted to Fort Collins cost-of-living. •Fort Collins is increasingly importing more workers from farther distances —Fort Collins has a net inflow of —1 OK workers each day (more workers commute into the city than out of the city).Additionally, workers are commuting farther distances to work than they used to. •Fort Collins commuters primarily travel within Larimer and Weld Counties —90%of the top 20 cities that Fort Collins workers commute to/from are in Larimer and Weld.None of the cities in the Boulder County Consortium are in the top 20,meaning we do have a substantial exchange of workers with these locations. •Minimum wage workers are all ages, and more frequently women —similar to data collected by the city,using national data,we see that only a small fraction of workers are under 24 years of age.Additionally,women are more frequently minimum wage workers more than men. •Equity indicators:women and POC have worse economic opportunity —using Fort Collins Equity indicators,women and people of color consistently have worse economic outcomes. •Majority of workers are employed by businesses with +50 employees —using data from the city,we see that most workers are employed by larger businesses,and that only a quarter of workers are employed by businesses with fewer than 10 employees •Wages make up only ‘-22%of business receipts —Fort Collins businesses,regardless of size, consistently pay an average of 22%of receipts (operating revenue excluding taxes)on payroll. We provide a hypothetical scenario;if a business with fewer than 20 employees increased all wages by $2/hr,payroll relative to receipts would increase less than 3%(to —24%of receipts). Raising wages has a small impact on total business receipts. •Economic recovery funds overwhelmingly supported businesses —businesses received substantial financial assistance during COVID (both locally and federally).78%of the city’s ARPA money towards Economic Recovery projects went towards businesses (22%to workers). Additionally,Fort Collins businesses received a total of $517M PPP funds (98.7%were forgiven). •Community outreach to low wage workers —while the city struggled with outreach on this topic,a wealth of community engagement and outreach data already exists within the city.We provide quotes and examples from the city’s Resilient Recovery Plan which conducted extensive and thorough outreach to the community and impacted residents. •Known benefits of increasing local minimum wages —as provided previously,a list of known benefits of increases wages as presented at previous work sessions and meetings. Council and staff have discussed considering increasing the local minimum wage for +2 years.Through extensive literature reviews by Economic &Planning Systems,Inc,community surveys,comparisons to other cities,etc.the data are still clear.Raising local minimum wages has a substantial positive impact on thousands of workers,and a negligible negative impact on businesses. Minimum wage workers often don’t have the time to be engaged in city politics,and we need to ensure their voice is heard.We hope city council can advocate for them. Thank you, Emily Gallichotte May 18, 2023 TO: Mayor & City Council FROM: City Clerk's Office RE: Information provided during May 16 City Council regular meeting Fort Collins minimum wage options Options discussed at the April 11th work session: •Option 1 —$18.50 by 2026 (based on council feedback) •Option 2—$16.65 by 2026 (based on business feedback) •Option 3—$17.29 by 2026 (provided by a resident) Options for May 16th council meeting: •Option A—$16.65 by 2026 (based on business feedback)(originally ‘option 2) •Option B —$17.29 by 2026 (provided by a resident)(originally ‘option 3’) •third option of $18.50 by 2026 was not included as an option Councilmember Canonico requested staff look at the Fort Collins cost-of-living (COL)relative to Denver’s cost-of-living,specifically mentioning the COL numbers 127 (Denver)and 116 (Fort Collins) (BestPlaces .Using these numbers,Fort Collins has an 8.7%lower COL relative to Denver.These numbers were used to calculate wages for Fort Collins relative to Denver,which almost perfectly overlaps with Option B. $1729 Standard Wages 21 19 a,17 0)cc E 15 -z -I-Colorado 13-Denver Option A (based on business feedback) 11 -Option B (provided by resident) FC CCL relative to Denver Previous Option 1 (based on Council feedback) 9~I I I I I I I I 19- 17- b4 a,15- 2 13- D -—Colorado 11-Denver Option A (based on business feedback) 9-Option B (provided by resident) FC COL relative to Denver Previous Option 1 (based on Council feedback) Tipppd Wages ($3.02 less) 4 -~ -a Year Tables of the options shown in the graphs on the previous page Standard Wages Previous OptionOptionA(based Option B I (based on year Colorado Denver on business (provided by Council feedback)resident)feedback) $13.65 $17.29 $13.65 $13.65 $15.79 $14.33 $17.81 $14.65 $14.86 $16.26 $14.76 $18.34 $15.65 $16.07 $16.75 $15.21 $18.89 $16.65 $17.29 $17.25 $15.66 $19.46 $17.15 $17.81 $17.77 $16.13 $20.04 $17.66 $18.34 $18.30 2029 $16.62 $20.65 $18.19 $18.89 $18.85 $17.11 $21.26 $18.74 $19.46 $19.412030 Tipped Wages ($3.02 less) Option A (based Option B year Colorado Denver on business (provided by feedback)resident) $10.63 $14.27 $10.63 $10.63 $10.63 $11.31 $1419 $12.13 $11.63 $11.84 2025 $11.74 $15.32 $13.88 $12.63 $13.05 2026 $12.19 $15.87 $15.48 $13.63 $14.27 .2027.$12.64 $16.44 $16.04 $14.13 $14.79 $13.11 $17.02 $16.61 $14.64 $15.32 $13.60 $17.63 $17.20 $15.17 $15.87 2030 $14.09 $18.24 $17.80 $15.72 $16.44 $13.65 $1515 $1690 $18.50 $1906 $1963 $20 22 $20.82 Previous Option 1 (based on Council feedback) $1303 $1350 $1399 $14.49 $1501 $15 54 $1609 $1666 2023 2024 2025 2026 .2027 2028 2023 2024 •2028 2029 Fort Collins is increasingly importing more workers from farther distances The physical and virtual commuting of workers deeply impacts local area work force dynamics and is foundational to the economic integration of larger regions”REDI Report The cost of living in Fort Collins continues to increase at an unprecedented rate.As a result,many workers live outside of Fort Collins and commute into Fort Collins for work (inflow,green),whereas a smaller number live in Fort Collins and work outside of Fort Collins (oufflow,red).There is an increasing net inflow of workers,meaning Fort Collins is a net importer of labor,and therefore an exporter of wages and salaries. Additionally,the average distance travelled to work by commuters working in Fort Collins has increased from 15.8 miles in 2002 to 19.2 miles in 2019 (RED!Report).As Fort Collins struggles to identify ways to reduce greenhouse gas emissions 80%below 2005 baseline levels by 2030,workers are increasingly contributing greater amounts of GHG via commuting into the city for work. 90,000 80,000 Fort Collins Increase in Net Inflow of Commuters 70,000 60,000 \4t L20) D E E0C-) 50,000 15000 10,000 5,000 0 Inflow Outflc,w --Net flow <~~<~‘ Year All commuter data from the Regional Economic Development Institute at Colorado State University https 1/redi colostate edu/ Fort Collins commuters primarily travel within LarimerlWeld Counties Many workers commute into,or out of Fort Collins each day To compare these values,REDI uses an Employment Interchange Measure (ElM): The Employment Interchange Measure (ElM)is a scaled,gross flow measure2 of labor/workforce interconnection.The scaling eases comparisons of localities with vastly different population sizes,while the gross flow element means that nearly equivalent inflows/outflows do not hide otherwise strong commuting ties (e.g.,the Fort Collins-Loveland connection) The cities of the Boulder County Consortium (City of Boulder,Town of Erie,City of Lafayette,City of Longmont,City of Louisville,Town of Lyons,Town of Netherland,Town of Superior,and Town of Broomfield)are highlighted in the graph below.The towns of Jamestown (pop.254)and Ward (pop.130) are not shown on the graph due to no/low commuter information. When comparing the top 102 cities that Fort Collins workers commute to/from,none of the cities in the Boulder County Consortium are in the top 20 (Longmont is number 30). Fort Collins Commuter Flows 0.4 Boulder County Consortium Cities 0.3 ~Superior ~j 0.2 Longmont Boulder LyonsErieBroomfield Louisville Nederland0.1 \/LarnYefte 0.0 Comparatively,90%of the top 20 Fort Collins ElM cities are in Larimer or Weld County.The two remaining top 20 cities are Cheyenne and Denver. 1535 193 Fort Collins Commuter Flows 256 258 0.4 -1279 65 inflow into Fort Collins6924outflowoutofFortcollins 6164 745 2961 netflow 0.3 -760 0 1380~705 -1581 13 129 5~29 687 16605 281 336 3217W02-10 ~11 649 8178 50 155 2274 8 1842 605 41 -18 -38 -8427 -231 -181 -5 13 ~5 163 92 01 244 5 1903 -442 -2 31 00 O4~~çOt0;c~t~~~• ‘~e C? While it is promising that the consortium has hosted a webinar regarding increasing the minimum wage, it is not clear that there is meaningful interest or direction from city councils to pursue these increases, nor are any of these communities meaningfully relevant to the Fort Collins workforce. All commuter data from the Regional Economic Development Institute at Colorado State University httns.//red,colostate edul Minimum wage workers are all ages and more frequently women As noted by city staff,it is challenging to collect data on the demographics of minimum wage workers in Fort Collins.We can,however,use national data from the US Bureau of Labor Statistics (2020)to examine who is earning the federal minimum wage of $7.25/hour. Less than a quarter (19.2%)of federal minimum wage earners are under 24 years old,and one third of minimum wage earners are between 45-64 years of age.Overall,only 1%of male workers in the US are minimum wage employees,whereas 2%of female workers are minimum wage employees.This trend holds true for White,Black or African American,and Hispanic or Latino workers,where a larger percentage of women workers are federal minimum wage workers as compared to men. Minimum Wage Earners by Age Age range: 16-24 o 25-34 o 35-44 45.54 55.54 —>65 Minimum Wage by Race and Sex Men —Women 2 or 1 0 All White Black or African American Asian Hispanic or Latino All data from the United States Bureau of Labor Statistics hugs //www bis Qov/OQub/reyortslminimum-wage/2020/home htm Eciuitv Indicators:women and POC have worse economic opportunity “Our analysis indicated that racial and ethnic disparities permeate numerous measures within this domain, with people of color more likely to experience a wide range of negative outcomes fmm living in poverty to unemployment to lower rates of business ownership compared to people overall in Fort Collins...For example,women were less likely to own businesses,single mothers and those with less than a high school education more likely to live in poverty,and individuals with disabilities eamed less than those without a disability,particularly among women “—Fort Collins Equity Indicators report According to Fort Collins Equity Indicators report,women have worse outcomes for nearly ever metric studied.Regarding economic opportunity,compared to men,women had lower personal earnings,lower high wage occupations,and lower representation among business owners (among other metrics not shown). Similarly,non-white racial and ethnic groups substantially higher poverty rates,and lower metrics show these same trends. consistently have worse economic outcomes,including representation in high wage occupations.Many other Sex differences in: Personal earnings $6,000 $3,000 High wage occupations 4% B 0 S $0 V0 C~$-3,000 $-6,000 Representation among business owners 2% 20% 0% 10% 0% -2% Ma e Female -10% -4% -20% Male Female -30% Male Female Racialiethnic differences in: 4% Poverty rates B 0% S High wage occupations — O -12% ~bite Hispanic Asian Black Native Other /Latinx American W,ite Hispanic Asian Black Other /Latinx All data from the Fort Collins Equity Indicators Report,httys.//www fcqov corn/equity/equity-indicators Majority of workers are emnloyed by businesses with +50 employees Small,local businesses are a critical component of the Fort Collins’community.Importantly,the city’s current definition of ‘small business”is ‘fewer than 100 employees,with less than $500K annual revenue”. The following graphs use data from 2020 Q3 —the most recent that was provided. Over 75%of businesses in Fort Collins have fewer than 10 employees,with ‘solopreneur’businesses making up over 25%of all Fort Collins businesses.Importantly,over 50%of workers are employed by businesses with >51 employees,and one third of workers are employed by businesses with >250 employees. Fort Collins Total Businesses Fort Collins Total Employees Business size (number of employees) o 2-5 o 6-10 2 1-50 —51-100 101-250 +250 All data provided by City of Fort Collins Economic Health Office httys //www fcQov com/businessleconomic-health-office Waaes make up only —22%of business receipts It is recommended that 15-30%of a business’receipts go towards payroll.Receipts is defined by the United States Census Bureau as following: Receipts (net of taxes collected from customers or clients)are defined as operating revenue for goods produced or distributed,or for sei’vices provided.Receipts excludes local,state,and federal sales and other taxes collected from customers or clients and paid directly to a tax agency.” Using data from Statistics of US Businesses from the United States Census Bureau for the Fort Collins Metro Area,we see that as businesses increase in number of employees,their total payroll and receipts increases as well.For all business sizes however,—22%of receipts go towards payroll. Fort Collins payroll and receipts Fort Collins payroll 16,000 ®40 .,.~ Annual Payroll relaLIve LO receip Annual Receipts212,000 ~30 E 8,000 20 4,000 ~II 0 ———0 a Number of employees Number of employees Using these data,we can calculate the impact of increasing wages on total payroll,relative to receipts. As an example,for businesses with fewer than 20 employees,the average annual payroll per employee is $37,832.If wages were increased $2/hour (an 11%increase in pay),annual payroll per employee would increase to $41,992 (an increase of $4,160).Assuming annual receipts were not changed,this would increase the percent of receipts going to payroll from 21.46%,to 23.82%(2.36%increase). Assuming even with this generous hypothetical pay increase (a larger pay jump than the state even allows),businesses do not raise their prices,by increasing pay of all employees by $2 an hour, businesses would see only a <3%increase in their payroll relative to receipts. All data from Statistics of US Businesses from the United States Census Bureau httys,//www.census gov pro grams surve ys/susbid eta/tables.html Economic recovery funding overwhelmingly supported businesses The COVID-19 pandemic laid bare many structural and systemic inequities and barriers that exist in our society.The city received federal American Rescue Plan Act (ARPA)State and Local Fiscal Recovery Funds (SLFRF)(hereon referred to as ARPA funds),some of which went towards economic recovery projects: “Economic impacts from the pandemic on businesses,employers and employees are still being felt throughout the community.In order to have robust economic recovery,both individuals and businesses must be supported.“—Fort Collins Resilient Recover,’Dashboard Of the $2 6M of ARPA funds allocated towards Economic Recovery Projects,78%($2.04M)went to programs supporting businesses,whereas only 22%($O.57M)went to programs supporting workers. ARPA funding towards Economic Recovery Expanded Chlldcare Technical Workers Support Assistance System for Small Businesses Multicultural Businesses Small Business Grants ~ center 0 500,000 1,000 000 1 500 000 2 000 000 Allocated ($) All ARPA data pulled from the Fort Collins Resilient Recovery Dashboard https./flortcollsns.clea,po,ntstrategy com/recovery/ Federal Funding and Paycheck Protection Program (PPP) Additionally,Fort Collins businesses received a total of $517M PPP funds,with a median amount of $20,833.Of these funds,98.7%share of approved funds were forgiven All PPA data pulled from Smartest Dollar h s.//smartestdollar corn/research/cities-that-took-the-most--mone Community outreach to low wage workers Staff faced challenges reaching low wage workers.Luckily,the city has previously done intensive and thorough outreach to the community as part of the development and engagement of the city’s Resilient Recovery Plan. The pandemic revealed and elevated systemic inequities in Fort Collins,and many parts of the community are still struggling.Work remains around healing,inclusion and resilience to move Fort Collins toward a vibrant future.This plan seeks to leverage this historic opportunity to make bold,long-term investments to achieve recoveiy.“—Fort Collins Resilient Recovery Plan These data and responses should be integrated into the discussion for increasing the minimum wage as these data already exist and were thoroughly collected as part of a robust and comprehensive community engagement plan,specifically targeted to reach community members. The statements and quotes are pulled directly from the Resilient Recovery Plan. •The pandemic has amplified existing systemic inequities in income and poverty;socioeconomic inequities in education,skills and wages;as well as intergenerational inequities;with particular impacts on children,seniors,families with children,young adults,and small businesses. •Numerous studies and reports have shown that COVID-19 has had disparate impacts on different socioeconomic and demographic groups,including workers in low-wage positions,caregivers, seniors and people of color. •Many responses highlighted the need for community mental health services,affordable housing, higher wages,and access to childcare. •The COVID-19 pandemic has not only impacted public health,but also the community’s economic health.Lost jobs,wider gaps between wages,increased cost of goods and services,supply chain shortages,reduced revenueslincomes and overall economic disruption are all prevalent,impacting both employers and employees. •Many participants recognized low wages and high cost-of-living as a significant barrier to financial resilience. •Participants recognized that not everyone was affected equally by the pandemic,and prioritized support for hard-hit groups,including youth,immigrants,people experiencing homelessness,low- wage workers,small business owners,freelancers,and people working in the arts industry. •Even more frequently,low wages were identified as a barrier to resilience and stability. Participants mentioned the high cost of living and noted that wages,even for many full-time jobs, were not keeping pace. •Responses in Spanish,which were received later in 2021,also mentioned the impact of inflation on the cost of living,and the need for increased wages to keep up with increasing costs. •Community Priority for Recovery:Potential Actions:Explore policies to increase wages All data from the Fort Collins Resilient Recovery Plan hugs //www fcgov com/recoverviresilient -recovery-plan Known benefits of increasing local minimum wages Comments from July 12th Packet of “Consideration of a Local Minimum Wage” Existing research indicates that a higher local minimum wage generally does not lead to job losses or higher prices,but it does increase worker earnings and employee retention (page 30) Approximately one-quarter of the Fort Collins workforce would benefit from a 15/hour minimum wage (page 30) These jobs are primarily concentrated in the service sector —food service,retail,accommodations, personal care (page 30) Evidence points to increases of a local minimum wage having a minimal impact on employment levels (page 34) Overall,increases have a minor but positive effect on worker earnings (page 34) Research indicates that increases to minimum wage do not drive higher prices in most sectors,including grocery,gas,retail chains,drugstores (page 34) Research generally finds that a higher local minimum wage reduces employee turnover and increases employee retention (page 35) Leads to improvements in job quality and worker attachment (page 35) Comments from SeDtember 6k”Packet of “Consideration of a Local Minimum Wage” Economic &Planning Systems,Inc Report (begins on page 66) The research on local minimum wage policies shows that increasing the minimum wage generally does not have a negative impact on employment and does not lead to overall job loss (page 67). The research studies reviewed indicate that a higher minimum wage will translate to an increase in total net earnings (page 68). The studies reviewed indicate that raising the local minimum wage does not increase overall prices in most sectors,including grocery,gas,general retail and drugstores,but does not lead to increased prices as restaurants (page 69). The studies reviewed indicate a higher minimum wage leads to reduced rates of employee turnover and greater employee retention,benefitting both employees,who see increased job stability,and businesses who incur reduced costs associated with employee turnover (page 70).