How entry-level wages are now determined.  This involves two issues because local living wage activists target both University employees (described as "direct" employees) and employees of contractors who work here under the conditions stipulated in the Virginia Public Procurement Act. The specific groups of classified ("direct") employees whose wages are under discussion are classified salaried and classified wage employees in the academic division (including UVaTEMPS) and Medical Center employees. Contractors' employees work for entities that supply services to the University and also to other purchasers here and elsewhere. Contractors' employees may work both here and in places other than the University.  

Within limits (including a maximum in-grade increase of 10% in one year), the University can determine some practices that apply to classified employees who work here. The State has never funded in-band adjustments for these employees. The State's general entry-level wage is $6.83* per hour. To keep pace with market rates, we have chosen over time to increase our entry-level wage rate, which stands currently at $9.37** per hour, plus benefits of $3.29 per hour. (Under actions taken previously, fringe benefits will be increased to $3.45 per hour on July 1, raising total per-hour compensation for entry-level classified employees to $12.82.) Unlike faculty members, classified employees are direct employees of the State, not of the University. Regulations set by the State and imposed on the University govern classified compensation and job categories. For this purpose, the State Code places the Rector and Visitors, the corporate entity of the University, under the direct "control" of the General Assembly. On this matter, see the Attorney General's citation of the Code language in footnote 4 on page 2 of the letter that appears on the web at www.virginia.edu/president/spch/06/attorneygeneral060321.pdf. 

Concerning contractors' employees, the Procurement Act and other sections of the Code govern contracts with state agencies, and the law permits only authorities specifically enumerated in the Code. Thus the University cannot control wages paid by contractors. In addition, the contracts themselves are public documents, and nothing in law requires contractors to disclose wage rates. The Attorney General's letter, linked above, explains this issue and cites the relevant sections of the Code. The local living wage group is the only source known to me for information about wages paid by contractors, but this group has cited no verifiable source for its information. 

Competitive compensation. This is a controversy about how to compute a wage rather than about what the wage should be. State agencies in Virginia use methodologies that are well known and easily tested. To simplify, they survey wages paid by job and level in the surrounding wage market and apply adjustments for such variables as turnover rates (ours are among the lowest in American higher education), the scarcity or availability of qualified job applicants (this region has one of the lowest, if not the lowest, unemployment rates in Virginia, and the University pays one of the highest wages among all State agencies), and (in our case, although with no State support for it) the differential cost of living that standard indices compute for the Charlottesville/Albemarle area. 

The living wage methodologies, apparently developed for the AFL-CIO by supported consulting groups that research wage issues for unions engaged in collective bargaining, do not consider the factors mentioned above. Instead, addressing only the lowest wage levels, they adduce a cost of living in a specified region for a theoretical family of four living on one wage-earner's salary. This methodology, if shown reliable, may add value to the methods described above. It may even displace them for this one wage group. As used by the local living wage group, however, the methodology and computations embody fatal flaws, which the group who occupied Madison Hall acknowledged and offered to correct in the future as a "concession" during the discussions last weekend.

The living wage methodology. As used by our local living wage group, the methodology generates a lower hourly wage than standard methodology does for entry-level workers in this region. The City of Charlottesville's "living wage" rate is $9.36, with a less substantial benefits package than we provide. Ours is $9.37**, plus better benefits (health insurance and others) that cost the University $3.29 per hour, a total value to the employee of $12.66. To reach the proposed figure of $10.72 per hour, our local living wage group counted the cost of health insurance twice-once in the base wage rate and again in the employer-paid health insurance benefit. That benefit costs $1.44 per hour, which our living wage group wants not to count but which the tiny number of localities that have adopted the living wage methodology and living wage advocates elsewhere do count. If one corrects by adding the base rate to the employer-paid cost of health insurance, the current value paid is $10.81 per hour, which is more than the rate sought by last week's protesters. Alternatively, one could subtract the employer-paid health insurance cost from the base rate sought by the living wage group in order to eliminate the double count, but the result would still be a lower rate than we now pay. One can understand wanting to have it both ways, but the immediate problem here is that one does not get it both ways when dealing with public employment in this state. 

Spokespersons for the local living wage group and the professional activists who supply information and tactical advice for them have said that our entry-level hourly wage rate is a poverty wage. This concept is important because it can be a persuasive argument for change if demonstrated and then presented in convincing ways to legislators and others whose actions determine what we are funded to pay and allowed under relevant laws to pay. The burden of proof, however, belongs to those who make the assertion. Proof in the form of citations of authoritative national and local data, for example, has not been offered. The term "poverty" has been repeated often in this discussion. Many perhaps accept it as proved. The standard reference on this matter appears to be at http://aspe.hhs.gov/poverty/faq.shtml#What.  This site is maintained by HHS. 

The Attorney General's response. The Attorney General's letter linked above finds, first, that the University lacks authority to determine the wages paid to employees of contractors. Second, it distinguishes the powers vested by law in the Rector and Visitors from my own capacities, thus rejecting frontally the core claim that I personally can do what has been proposed. The author of the section of the Code cited in this regard was Thomas Jefferson. Third, it rejects the argument that controlling salaries paid by contractors is a "best value" practice, and it cites specific and relevant Code language on this matter. Fourth, it rejects the assertion that powers claimed by the Virginia localities that have adopted "living wage" methodologies for determining wages belong also to the University, and it further finds that these localities have acted beyond their lawful powers.

Chronology.  On April 15, at around 1 a.m., I met with the student protesters in Madison Hall to discuss a proposal crafted at their request and sent to them shortly before midnight. As this meeting ended, I asked the students whether or not they needed food. They had earlier said that they had ample supplies. Some answered that they did not need food, and others said that they did. So I asked police officers to sort through food left on the steps by protest supporters, and to give the best of it to the students.

At the conclusion of this meeting, I asked the students to respond to my proposal by 2 p.m. on Saturday. At 3 p.m. on Saturday, I met with them again, and they presented a draft, partial counter-proposal. I responded to each point in this proposal--some workable and some not, and identified matters that are within the University's legal scope and matters that are not. I offered to work further with them on a proposal that might be credibly presented to legislators and to the general public. At the conclusion of our meeting, I asked the students to respond to my previous proposal. They said that my proposal did not merit a response. Recognizing the impasse implicit in this situation, I urged the students to prepare for further discussions, but in the meantime to leave the building soon, and I wished them well in their endeavors.

At 7 p.m. on April 15, U.Va. administrators notified the protesters that they would have to leave Madison Hall or face arrest for criminal trespass. No one left. Shortly afterward, the protesters were arrested and taken to the Albemarle-Charlottesville Regional Jail. All were charged with criminal trespassing. One was also charged with resisting arrest, and another, with vandalism. These charges are pending now.

A full timeline of these and related events appears at www.virginia.edu/wages.

Moving forward. I believe that the living wage arguments deserve to be improved, heard, analyzed, and debated, that they deserve to be presented to State officials when the computations have been made credible, and that it is entirely possible that State officials may listen receptively despite this protest. As the students who talked with me on Saturday did, I think that the methodology can be improved. I am willing to solicit the assistance of economists qualified to take on this work as a voluntary commitment to the discussion. 

In the end, this issue matters to all of us and to all Virginians because it is a matter of Virginia law and public policy. It affects state employees in every region of the state. Laws change in two fundamental ways: legislative action and judicial action. That is, either living wage advocates can persuade the General Assembly to change laws they dislike, or they can find constitutional grounds for litigation, and then sue, thus letting the courts determine what is lawful and what is not. 

The former course of action makes best sense to me. Occupying buildings strikes me as an improbable way to change laws. Yet working together, we may be able to persuade legislators that underfunding of the public payroll for classified workers in Virginia denies these workers fair wages, and perhaps even that an improved living wage methodology has a place in the system for determining entry-level wages. I am willing to try this approach, and I invite persons who favor the living wage methodology and who also believe in the rule of law to assume responsibility for advocating change to their elected representatives.

John T. Casteen III, President
University of Virginia

* 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.