Study of Living Wage Ordinance in the City of
Ventura: The Economic Impact on Workers,
Contractors and the City
Jamshid Damooei, PhD
Professor of Economics and Chair
Department of Economics, Finance and Accounting
California Lutheran University
September 28 th , 2009

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 The Rational Behind the Ordinance:
– A city government should not contract with or subsidize employers who pay poverty-level wages.
 Ventura City Followed, the County (2001) , Oxnard
(2002), Port Hueneme (2003) in May of 2006.
 Created agreement by providing exceptions and exclusions.
 Important vote for protection of low wage workers.
 Need for more comprehensive study in 2008.

Arguments for and Against Living
Wage Ordinance
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– Increase in wage reduces the number of jobs offered .
– Substitution of more skilled workers.
– Use of capital-intensive methods of production.
– Cost of Contracts to cities and counties go up.
– Companies may increase prices to consumers.
– Companies may bill the City at a higher level.
– Companies may leave the City.
– Reduction of wages within the companies.
– Greater restriction for upward mobility within companies

Arguments for and Against Living
Wage Ordinance….Continued
 Arguments For:
– Living wage laws benefit working families.
– Increased productivity by reduction in workers’ turnover.
– Increased productivity by reduction in absenteeism.
– Competitive bidding process may reduce growth in contract prices.
– Improvement in bidding by keeping low wage bidders out.
– Long-term relationships versus competitive bidding.
– Higher wages is a good discipline and create stable businesses.

Examining the Impact of LWO in City of Ventura
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– The employees’ questionnaire with 35 items of inquiries.
– The owner/manager questionnaire with 50 strings of questions.
– The Municipality questionnaire included 25 strings of information

Examining the Impact of LWO in City of Ventura….continued
 In total, 47 employees were interviewed
– Quality Landscape Care (30)
– Sunridge Landscape (5 employees)
– US Metro (9 employees)
– City of Ventura (3 employees)
 50% of the employees have been with their companies less than 3 years.
 38.3% between three to ten years.
 8.4% more than ten years.
 95.7% Hispanic, 2.1% White, 2.1% Indian American
 74% married, 26% not married, More than 80% have children
 89% male and 11% female
 23% have other family members in addition of children living with them
 27.7% live in the City of Ventura

Findings and Possible Policy
Implications
 Workers Survey:
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17 workers out of 47 worked in their companies before LWO was Passed
– Some 90% of workers are working for 40 or more hours a week.
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Health Insurance before Passage of LWO: 88.2% no, 11.8% yes (17 observation).
– Health insurance after the passage: 19.1% yes, 72.4% No, and 8.5% not answered (total observation 47).
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Health insurance for family members: 0.0% before, 6.4% after.
– Wages on average improved by 30.8% over a period of three years.
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Similar percentage based on wage comparison of those that are working for the same companies in the City of Ventura and other cities without LWO.
– Wages of 64.7% went up immediately other had to wait for the policy to be used (total observation 17).

Findings and Possible Policy
Implications…continued
 In the following areas total percentages of strongly agree or agreed exceeded the total of disagreed or strongly disagreed :
– Having a LWO made me work harder
– I feel that I am more valued by my company because of the LWO
– Increase in my pay through the LWO makes me miss work less
 In the following areas total percentages of strongly agree or agree was less the disagree or strongly disagree:
– A living wage made my company look for more skilled workers.
– Without the LWO, I would not be able to receive health insurance.
– I feel my working hours are reduced because of the LWO.

Findings and Possible Policy
Implications…continued
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– Two of companies are involved in landscaping and one provides janitorial services.
– One of the three has been doing business in the City for the last five to ten years.
– Other two more than ten years.
– All three companies have City contractors for three to five years.
– None of the companies were either franchised or part of a national or regional chain.
– One of the three had branches in other cities without LWO.
– None have any plans to move away from the City of Ventura.

Findings and Possible Policy
Implications…continued
 Based on the pattern of responses we can come to the following conclusions:
– Living wage ordinances make workers work harder.
– Workers are less likely to miss work.
– A LWO works good for those who are up for promotion.
– Passage of a living wage ordinance may create greater demand for a skilled workforce and therefore greater competition in the unskilled labor market.
– The LWO did not negatively impact the increase in pay for non-living wage jobs in most companies concerned.
– The LWO marginally impacted the overall payroll as for a number of them the pay level was close the living wage level.
– Most companies did not increase their bid for their contracts significantly.

Findings and Possible Policy
Implications…continued
– Charging the City more in order to make up for the higher wages is not a regular practice.
– Some companies liked the ordinance as it reduced the number of contractors paying low wages out of bidding process.
– Most companies did not increase their prices to customers in the City.
– LWO attracts more efficient companies to the City.
– LWO reduces employees’ turnover and companies benefit from a greater learning curve effect.
– LWO created a significant positive impact on the wellbeing of their workers.
– Most of the companies agreed that the LWO did not discourage them from bidding for contracts.
– Some succeeded to make up for the increase in their costs through increase in their workers’ productivity.
– With some doubt about one company, the other two are not deterred and will be seeking other contracts with the City.
– Most companies have not experienced any reduction in their profitability.

Findings and Possible Policy
Implications…continued
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– The City of Ventura brought a policy that benefits its workers, their families, attracts more efficient companies to contract with the City and these companies provide greater stability for themselves and for their workers.
– The study finds that at least one of the City contractors provides health insurance for a number of its living wage workers.
– The study shows LWO in a city can be more successful if other nearby cities adopt the same policy
– Bringing such transformation to other cities is outside the ability of the City of Ventura, expanding this good policy to other departments is a good reconsideration.

Findings and Possible Policy
Implications…continued
– LWO is most likely to increase efficiency through harder work, missing work less and a better feeling among the workers that their work is appreciated more.
– We had a small number of workers and managers whom we interviewed, this should not be considered as a reason to undermine, reject or belittle the relevance or the strength of the findings of this study.
– We conducted a census of all workers and managed to interview a majority of them.
– We interviewed all three managers of the workers who have contracts with the City.
– Burden of LOW as a deterrent not to bid for contracts has no concrete foundation.
– A big drop in companies’ profit is not a sound conclusion.
– Finally, although a city might have some budgetary expenses, the benefits of having this ordinance outweigh the drawbacks by a clear margin of positive difference.