Greater Orlando Aviation Authority Board Meeting - Wednesday, January 15, 2020

Greater Orlando Aviation Authority
 Board Meeting
 Wednesday, January 15, 2020

Award

UPDATE ON LIVING WAGE

 January 15, 2020

TIMELINE
  August 2018 – meeting with SEIU

  September 2018 – SEIU submits report

  October 2018 – Discussion at board meeting
 with presentation from Dr. Sean Snaith

ACTION
  June 2019 – Survey sent out

  August 2019 – Survey response time extended

  January 2020 – Today’s presentation

PRESENTATION BY DR. SEAN SNAITH

GOAA Survey Regarding
Potential $15 Minimum Wage
Ordinance
Wednesday, January 15, 2020

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A Short Primer on Increasing the Minimum Wage

A Short Primer on Increasing the Minimum Wage
• Historically changes to the minimum wage have been modest

 • Research into estimating the wage elasticity of labor demand have yielded a range of estimates
 from a multitude of studies
 • These papers analyze different regions, time frames, and use different statistical techniques to
 account for the identification problem inherent in trying to analyze real world data surrounding
 wage changes.
 • Meta-analysis has been recently used to help account for the shortcomings of individual studies
 %∆ 
• ℎ = = -0.246
 %∆ 

 • Thus the elasticity estimate of -0.246 implies that for every 4% increase in wages, employment
 permanently declines by 1%.
 • Larger percentage wage increases would have correspondingly higher percentage declines in
 employment.
 • Larger elasticities for low skilled workers, female workers and worker in atypical jobs

A Short Primer on Increasing the Minimum Wage

• Recently a number of regions and individual companies have implemented a $15 minimum wage

 • New York City and Seattle have moved rapidly to $15

 • Studies analyzing the impacts tend to focus on different elements depending on the
 organization funding/conducting the study

 • Total employment vs worker’s income

 • Changes in non-wage benefits

 • Higher prices for consumers

Q1: Was your company aware that the GOAA is contemplating the possibility of
adopting a $15 minimum wage ordinance for all companies doing business with
GOAA?

Q2: Which certifications has you company met?

Characteristics of Businesses Working at GOAA

 • How many full-time employees work for your company at GOAA airports?

 • Average number of full-time employees: 44
 • Range 0-700
 • Average percent of full-time employees currently earning less than $15: 45%
 • Range 0-100%

 • How many part-time employees work for your company at GOAA airports?

 • Average number of part-time employees: 14
 • Range 0-290

 • Average percent of part-time employees currently earning less than $15: 67%
 • Range 0-100%

Q9: Is employee turnover a problem for your business at GOAA's
airports?
Answered: 100 Skipped: 7

Q10: Is employee turnover a problem with workers making less than $15
per hour?
Answered: 99 Skipped: 8

Q12: How is your company addressing the turnover problem with workers
making less than $15 per hour?
Answered: 99 Skipped: 8

Q12: How is your company addressing the turnover problem with workers
making less than $15 per hour?
Other:
• Base pay is under $15, but bonus bring pay up 30% or more
• Our company has internal promotional models that solely promote career advancement from within.
• Proactively conducting engagement surveys and actioning results
• Better Training
• Trying to find trained people worth paying $15.00 per hour or more
• Creating incentives
• increasing adverts internally
• This type of work - landscape - has a high turnover rate
• CBA
• It really doesn’t matter what I do as a business owner for my employee the work ethic and loyalty for new hires is the
 worst I have seen since I opened my business.
• Not about wages, they usually quit because of moving
• We typically do all of the above. It is so difficult, we WANT to pay more, but the economic reality is our customers
 wouldn't award us the contracts.
• create good and fun work environment
• Job fairs, referral and retention program/bonus, lowering hiring standards

Q26: After the $15 minimum wage was implemented how would your employment of
workers previously making less than $15 per hour change?
Answered: 80 Skipped: 27

Q27: After the $15 minimum wage was implemented how would you change the
number of hours worked by employees previously making less than $15 per hour?
Answered: 79 Skipped: 28

Q35: Would the $15 minimum wage affect your company's ability to do
business with GOAA?
Answered: 83 Skipped: 24

Q36: Would the $15 minimum wage impact the qualifications required for
employees you hire for positions that previously paid less the $15 per hour?
Answered: 80 Skipped: 27

Q37: How would the desired qualifications of these new hires differ under
a $15 minimum wage?
Answered: 73 Skipped: 34

Q38: Please feel free to enter any feedback/comments you wish to share with GOAA
as the $15 minimum wage ordinance is undergoing consideration.
 • We are a very small business and an Airline contractor who works with Airlines for a very low hourly rate.
 Increasing the minimum wage will have a very negative impact on our financial out look as we work on a very
 very low margin to begin with.
 • If this proposal is to go through then GOAA will need to offer some concessions as well as to lowering their fees
 and offer some sort of financial assistance to small business like ours.
 • I would support this initiative, if the Airlines are required to pay 100% to the Ground Handler. We have seen
 airlines unwilling to pay this, and put our for RFP all the existing contracts creating an unstainable Ground
 Handling Model.
 • Even though it is politically correct to increase minimum wage to $15, GOAA needs to look at the big picture.
 the worker that needs the jobs the most, will be the first to be replaced. In addition to the impact on worker,
 This would have a dramatic effect on the small business vendor at the airport.
 • However, the reality is that in order to offset the increased labor costs, rental car companies will be forced to
 substantially increase the daily rates it charges travelers to MCO. Consumers now have multiple, easily
 accessible alternative sources of transportation, including ride sharing services such as Uber and Lyft, which has
 greatly disrupted the rental car business in the past five years. If travelers choose to use these alternative
 sources of transportation in greater numbers as a result of the increased rates, the overall volume of rental car
 business and revenue generated at MCO will be greatly reduced. This will, in turn, force rental car companies
 to reduce staffing levels (hours and/or manpower) in order to account for this reduction in business. In sum,
 increasing the minimum wage rate would have multiple unintended consequences.

Q38: Please feel free to enter any feedback/comments you wish to share with GOAA
as the $15 minimum wage ordinance is undergoing consideration.
 • It would put a company in the position to continue providing business and employing staff to work at GOAA.
 There would be a consideration of lay-offs and closing off business at this location all together.

 • The impact of this policy change will ultimately be felt by our customers and GOAA core customers, AIRLINES.

 • Important to understand the business impact on the airlines' ability to continue to operate at GOAA airports as
 opposed to other airports.

 • 10.00 would be adequate to GOAA

 • $15 minimum wage is just too much. If everyone is implementing the same general standard starting rate, the
 turnover is going to increase even more. This is not beneficial for businesses doing business with GOAA. We pay
 enough in rent and fees as it is, now the labor, if this is passed, will hurt us even more making it very hard to be
 successful.

 • While we understand it makes sense given the cost of living in Orlando is increasing, the airline tenants will not
 want the cost passed on to them making profit margins for businesses tougher to survive with increased wages,
 insurance costs, rents, fee's, etc.

Q38: Please feel free to enter any feedback/comments you wish to share with GOAA
as the $15 minimum wage ordinance is undergoing consideration.
 • When GOAA puts out a request for a bid, they choose the lowest, responsible bidder. The next time the bid
 goes out, the next bidder has to beat that price in order to take the contract away from the current bidder.
 That cycle has continued for years. How can the lowest possible bidder be required to pay the wages that
 GOAA thinks they should be while still requiring companies to raise their employees wages?

 • It is not right for GOAA to impose salaries for someone else, it is overstepping their boundaries.

 • The overall ability to do business there needs to be evaluated from a rent perspective, product cost sale
 perspective (pricing is pre-set) and cost associated with CBA, which grants higher wages and healthcare. Also,
 pre-built in increase in the existing CBA.

 • The increased wage and increased interest in these airport positions may result in existing long term, hard
 working airport employees to lose their jobs to more qualified candidates. In addition, when considering the
 ordinance, we would recommend the ordinance covering all airport workers, not carving out specific
 positions/jobs

 • WE ARE ALL FOR PAYING OUR EMLOYEES HIGHER WAGES PER HOUR, HOWEVER WE NEED TO MAKE SURE THAT
 THE ASSOCIATED EXPENSES AND FEES ARE ADJUSTED ACCORDINTLY TO MAKE SURE OUR PROFIT PERCENTAGE
 REMAINS THE SAME

Q38: Please feel free to enter any feedback/comments you wish to share with GOAA
as the $15 minimum wage ordinance is undergoing consideration.
 • I personally think that I pay enough wage to my employees. For the small business owners, $15 minimum
 wages could be a big deal and it may impact us if we have quite an amount of an employees.

 • I think an interim or graduated increase would be better. My guess is we would lose this account.

 • While would certainly benefit some workers, it would also cause lay-offs, increased automation, hiring of
 higher-able talent. By definition, if a person is paid under $15.00 it is by definition an unskilled job, and that
 person's path is advancement, education, and hard work to attain better paying positions.

 • Allow the market to determine wages.

 • Any existing reimbursable contract would require an amendment for both reimbursable and non reimbursable
 management fee items

 • Provision of sufficient notice so that we have time to advise our clients of the increase coming their way.

 • An increase in airport wages would drive a better more reliable work force at the airport increasing customer
 service and the overall standards of the airport.

Q38: Please feel free to enter any feedback/comments you wish to share with GOAA
as the $15 minimum wage ordinance is undergoing consideration.
 • The hours GOAA requires to have the business open is 14 hours per day. As it is, this is our major expense in
 running our business. At $15.00 an hour we wouldn't be able to do business at GOAA.

 • Long over due. Service and safety of the traveling public depends on this change. $10.00 and $11.00 per hour
 wages produce poor, understaffed and unsafe working conditions. To put this low wage into perspective, 100
 folks interviewed at a job fare generally produces 8-10 working agents after wages are disclosed and less than 6
 month seniority as a group. Thank you for this consideration. I am more than willing to meet anytime to openly
 discuss.

 • Long overdue

 • Any wage increase would be covered by either higher prices or lower commissions to GOAA

 • We would have to have a higher estimated sales/best locations when evaluating new opportunities at MCO.

 • This initiative will help with employee retention.

Key Observations
• Adoption of the minimum wage ordinance would create problems for some businesses currently
 working at GOAA.

 • Many already pay above the proposed minimum wage

• There will be changes implemented by businesses in the wake of passage that may impact both
 workers and travelers.

 • Qualifications for new hires
 • Shift toward labor saving investment
 • Change to non-wage benefits
 • Higher prices for customers

• Small businesses will be disproportionately impacted by the ordinance and may require GOAA
 support.

The Outlook for Wages at GOAA

• It is impossible to state with precision future wage levels at GOAA in the absence of a minimum
 wage ordinance.
• Some of the factors that could impact the path that lesser skilled labor’s wages might follow at
 the airport in absence of a minimum wage ordinance include:
1. The overall economic environment in the Orlando regional economy.
 a. Prevailing market unemployment rates
 i. Currently much lower than the national unemployment rate indicating an extremely
 tight labor market.
 ii. Overall performance of the economy, all of the recent hikes in the minimum wage
 have been undertaken during the longest economic expansion in U.S. history. A
 recession could alter the dynamics that we have observed to date.
2. Workforce supply for specific skill sets needed by airport employers.

The Outlook for Wages at GOAA

3. The ability of individual companies to pass along the higher wage costs to the price of goods and
services.

4. Differences in other non-wage benefits. The ability to offset higher wage costs via changes to non-
 wage benefits could impact the path that wages follow at GOAA.

5. Airport worker accessibility challenges.

6. Ability of companies working at the airport to substitute capital for lesser skilled labor. An example
 would be using touch screen terminals to replace servers in restaurants, self-checkout kiosks to
 replace cashiers in retail outlets, vending machines.

SURVEY RESULTS
  Competing impacts on implementing a $15 per hour living
 wage

  Small businesses most likely to be adversely impacted

  Large businesses view it as a benefit allowing them to
 attract and retain employees from other companies in the
 area

OTHER FACTORS
  Implementation of the wage increase would vary by
 contract term

  Florida’s Third District Court of Appeal’s decision in Ultra
 Aviation Services, Inc. v. Clemente calls into question the
 Aviation Authority’s ability to impose a living wage
 requirement on companies that do not directly provide
 goods and services to the Aviation Authority

OTHER FACTORS
 Florida voters will decide in 2020 whether to raise the state’s minimum
 wage from $8.46 to $15 per hour.

 The measure, which will appear on the ballot as Amendment 2, would
 increase the minimum wage to $10 per hour on September 30, 2021,
 and raise it by $1 per year until reaching $15 per hour on September
 30, 2026.

 Thereafter, the minimum wage would be adjusted each year based on
 changes in the Consumer Price Index for Urban Wage Earners and
 Clerical Workers (CPI-W).

RECOMMENDED ACTION

It is respectfully requested that the Aviation
Authority Board resolve to defer action on
implementation of a $15 per hour living wage

Greater Orlando Aviation Authority
 Board Meeting
 Wednesday, January 15, 2020