Harvard University isn’t your typical employer. They are a wealthy and well-established institution with a large endowment. Still, Harvard’s policy of paying their workers a living wage, which was explored recently in a piece by The New York Times, sets an example for other organizations (and their employees).
Income inequality is getting worse, not better, despite a booming job market with a low unemployment rate of just 3.9 percent.
The food service industry exemplifies this conflict. Jobs for these workers are on the rise but wages are stagnant. But, Harvard has been paying their service workers a living wage for years. In doing so, they’re helping many reach the middle class.
At The New York Times, Eduardo Porter explains:
At the university, service workers on the payroll of an outside contractor earn the same pay and benefits they would get as direct university employees — including health insurance and pension benefits, paid vacation and child care assistance.
Enacted 16 years ago by then-president Lawrence H. Summers, the parity policy removes the incentive to contract with outside companies for jobs in food and janitorial services. The result is higher pay and better benefits for workers.
The right policies for the right reasons
The parity policy means that a job at Harvard pays more than the majority of service jobs in the area. According to the New York Times, a Harvard janitor’s starting wage of $22.69 bests 75 percent of local janitor’s salaries. A grill cook is paid $21.27. That’s more than what almost 90 percent of food preparation workers earn in surrounding towns.
This is a good policy for Harvard, not just because it means that the institution is doing the right thing by its employees but because happy workers really are more engaged and more productive. Sure, the policy costs the institution on paper — a rough estimate of $2.4 to $3.7 million a year was offered in 2001. But Harvard can afford it: their operating expenses approached $5 billion last year.
There are many institutions and companies across the country of comparable size. For Harvard, helping workers to ascend from the bottom of the labor market to the middle class while stimulating the economy and pushing back against income inequality is the decidedly right thing to do. And, they hope it starts a trend that other organizations and workers can benefit from.
“This is an important private-sector policy innovation — a very good template for a socially minded organization,” said Summers to the New York Times.
What a difference a union makes
Unions and protests played a major role in this process of this policy being instituted at Harvard. In April of 2001 dozens of students from the Harvard Living Wage Campaign protested the low wages of the school’s service workers and demanded change. The student protestors felt that a school with a gigantic endowment ought to do better by their workers.
In 2001, before the policy was instituted, only 58 percent of workers from outside contractors operating at Harvard were represented by a union. The share was up to 96 percent by 2013.
Union members have powerful collective bargaining power which helps them to increase and protect their rights as workers, and improve their pay and working conditions. Plus, union members are paid more than non-union members. It’s no surprise that Harvard’s fairly paid service workers are unionized.
Income inequality is increasingly extreme and pervasive
Policies that support a living wage go a long way toward helping to reverse income inequality, which has become increasingly extreme and pervasive in recent years. America’s top 10 percent of income earners now make more than 9 times as much as the bottom 90 percent. And, the top 1 percent averages more than 40 times the income of the bottom 90 percent.
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Service workers fall toward the lower end of the economic spectrum. Large institutions like Harvard can afford to do their part to help move this group toward the middle class. Other organizations can and should consider following their lead.
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