May 1, 2006 – University of Virginia President John T. Casteen III continued to address competitive compensation issues for both University entry-level employees and employees of contractors who work at U.Va when he met on Friday, April 28, with the Faculty Senate.
In recent weeks, the compensation issues have become the focus of student rallies and a four-day sit-in in Madison Hall, the University’s central administration building, which ended in the arrest of 17 students.
During his report to the senate, Casteen distributed copies of an official opinion from the State Attorney General, which had been received earlier that day. The letter reiterates an earlier informal opinion stating that the University has no authority to determine the wages paid to employees of contractors.
At the same time, Casteen called “alarming” the disparity between classified entry-level wages set by the state at $6.83* an hour and those set by the University at $9.37** an hour, or $12.66 an hour with benefits. (The Federal Minimum Wage is $5.15 an hour.) This difference, he added, has a substantial impact that can be felt across the commonwealth.
In the letter, which the University requested to clarify its authority to determine contract employees’ wages, Attorney General Robert F. McDonnell wrote that neither the University nor its Board of Visitors has been granted such authority. He also wrote that the Virginia Public Procurement Act also “cannot authorize the requirement of a living wage in the public procurement process,” and included new language that denies the University the authority to require a “living wage” of its vendors once Higher Education Restructuring has been enacted.
Casteen said he hoped that McDonnell's letter would adequately respond to the contention by the student “living wage” group that the University could disobey the law and ignore the Attorney General’s opinion.
He said next steps for the student group might include working within the system to persuade the General Assembly to change the law or formulating litigation to change it, strategies that he has suggested, and that he has indicated he would be willing to assist with, in both meetings and written proposals.
He said also that he hoped the students might focus on the broader, statewide disparity issue, as well as work to clarify the validity of different methodologies used to determine “living wage” versus “market wage.”
Casteen distributed charts illustrating that at the state classified system’s minimum hiring rate of $6.83* an hour, an employee’s annual salary would be $14,206 (without benefits) and $18,468 annually (with the state’s benefit rate of 30 percent included). At the University of Virginia, that same employee earning a minimum hiring rate of $9.37** an hour would make an annual salary of $19,490 (without the University’s 35.1 percent benefits added) and $26,330 total annual compensation with fringe benefits. In July, the University is increasing its benefits rate to 36.8 percent, which will raise the total annual compensation of an entry-level employee making $9.37** an hour to $26,662.
The students have continued to demand that the University pay entry-level employees at a rate of $10.72 an hour, a figure that includes health benefits and translates to $22,298 a year.
Casteen has expressed his concern that the student group does not give the University credit for benefits, although it includes health benefits in its own calculations. With the addition of health benefits, the University’s minimum hiring rate is $10.81 an hour; with the addition of health and retirement benefits, $12.66 an hour.
During his report to the Faculty Senate, Casteen also delved into the finer points of the calculations, pointing out the problems with the generalizations that the “living wage” group has used to make its arguments. For instance, their calculations are based on the wages of one person supporting a family of four.
But University analysis of the 212 employees currently earning $9.37** per hour shows that 163 individuals — or 77 percent — report being single, while 41 report being married, and eight declined to report their status. Of the 163 singles, 115 opted for employee-only health coverage and 13 for employee-plus-child. Of the 41 married employees, 10 opted for family coverage and one for employee-plus-child.
Casteen has said numerous times over the past several weeks, most recently in his April 20 letter to the community, that salary compensation and living wage arguments “deserve to be improved, heard, analyzed and debated, and that they deserve to be presented to state officials when the computations have been made credible.”
He noted that University administrators had received a slightly revised proposal from the student "living wage" group on Friday morning and that a response to the proposal would be forthcoming in due course. In addition, Casteen indicated that administrators had begun meeting with a student "market wage" group, which has challenged the "living wage" group both on its methodology and on the potential impact on low-skilled workers who might be placed out of the wage market based on qualifications if wages were raised.
* As of November 25, 2006 the state minimum wage was raised to $7.11 per hour.
** As of November 25, 2006 the university minimum wage was raised to $9.75 per hour.