The Districts Dime

Latest DC Minimum Wage Increase Helping Improve Families’ Security

July 7th, 2015 | by Ilana Boivie

The second round of DC’s minimum wage increase went into effect on July 1, instantly boosting the income and standard of living of tens of thousands of city workers.

The Minimum Wage Act of 2013 increased the minimum wage in three steps: to $9.50 per hour on July 1, 2014 and $10.50 per hour this July, with a rise to $11.50 per hour coming next year. After that, there will be automatic annual increases to keep up with the cost of living. By 2016, wages will be boosted for some 64,000 workers in the District—10 percent of the people who work in the city.

The increase helps more people make ends meet in an economy where, increasingly, the biggest gains are going to a relative handful of people making the most money. Right now, a parent working full-time at the minimum wage earns less than $20,000 per year, which is below the poverty rate for a family of three. Meanwhile, those with the highest incomes continue to accrue more and more of the city’s wealth. The top 5 percent of DC households have incomes over $500,000 per year—higher than the top earners in any major city. The city’s gap between the wages of low- and high-paid workers is the highest it has been in 35 years.

The minimum wage increase is one of several new labor laws in the District that will help DC working families. Others include expanding paid sick leave protections, ensuring the rights of pregnant and breastfeeding workers, and “ban the box” rules that prohibit employers from asking about any criminal arrests or convictions before making an offer of employment.

To help workers become more informed about their rights, the DC Department of Employment Services (DOES) is embarking on an initiative to distribute more information about workers’ rights and employer obligations. In that vein, DOES recently created a “Know Your Rights” flyer that summarizes the new labor laws in the District.

Know your rightsWhile these new laws will go a long way in helping more DC families make ends meet, further minimum wage increases may be warranted, considering that the District’s extremely high cost of living. Average expenses for the typical household are higher in DC than in any other metropolitan area of the country, according to the Bureau of Labor Statistics. The “living wage” in DC—what it takes to meet all basic living expenses—is $20.27 an hour for a family of four, according to MIT. Below that level—even for people above the federal poverty line—having enough money for food and housing is often very difficult.

With that in mind, efforts are underway to raise the minimum wage even higher. The DC Working Families Party is working on a ballot initiative to gradually raise the District’s minimum wage to $15 per hour. As more and more research shows, moderate increases in the minimum wage over several years improve workers’ standards and, contrary to the claims of opponents, don’t run the risk of increasing unemployment.

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Approved Tax Triggers Could Hurt DC’s Ability To Fund Critical Services Next Year

July 6th, 2015 | by Wes Rivers

The DC Council approved a budget last Tuesday that will speed up a package of tax cuts and make it harder to fund DC’s needs next year. Any growth in DC revenues between now and September will trigger tax cuts recommended by the Tax Revision Commission and approved last year by the Council. The problem with this is that the tax cuts will take place before we know if there is enough money for next year to cover the costs of basic city services like schools and health care or affordable housing.

Last week’s vote significantly alters the timeline for tax cuts and their impact on DC’s finances. The DC Council adopted a timeline a year ago which would cut taxes every February if revenues grow more than expected. The excess revenue would go toward implementing portions of the tax commission package that have not yet gone into effect – including income tax cuts for households at all income levels, an estate tax cut for estates worth more than $1 million, and cuts to the business income tax.

However, under the new timeline, tax cuts will automatically go into effect if there is any increase in revenue collections in the projection of revenues that the DC Chief Financial Officer will make in September. Chairman Mendelson had proposed that the tax cuts begin in June, but a “compromise” was reached to change the effective date to September. (See chart book for how tax triggers work.)

The problem with this provision is that it will devote every dollar of revenue growth above current levels – between last February and September – to tax cuts, yet some revenue growth will likely be needed just to cover the expanding cost of basic services, for things like rising health care costs, growing school enrollment, and Metro needs. Indeed, there already are budget needs for 2017, such as $100 million in services funded in fiscal year 2016 budget with one-time sources. This means that DC will have to find new money to fill big gaps to keep services going next year, including $50 million for the Housing Production Trust Fund. Lastly, there may be unexpected expenses like a lawsuit, and using all new revenues for tax cuts would leave the city without a cushion.

A revenue forecast issued just after the budget was adopted on Tuesday suggests that tax cuts will be triggered this fall. The forecast shows that revenues in 2017 and beyond will be $38 million more than previously expected. That money will not immediately go to tax cuts, but if the increase is maintained in the September revenue forecast, all of the new funds will then go to tax cuts.

This approach is notably different and riskier than waiting until next February to make decisions about tax cuts, as would occur under the Council legislation adopted last year. By February, the mayor and Council would have a clearer picture of both the city’s revenues and spending needs for 2017, allowing for better decisions about how much to devote to tax cuts and how much to keep for schools, housing, and other needs.

By putting all new revenue toward tax cuts, the DC Council and the mayor will have to make tough choices to fund the programs that residents and businesses need, and may not have enough to maintain services or make new investments that would help the city grow. The tax triggers, as approved last week, pose a real threat to the city’s ability to meet DC resident’s basic needs.

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DCFPI Welcomes Claire Zippel to Our Team!

June 29th, 2015 | by Ed Lazere

claire_zippel_headshot smallA new staff member, Claire Zippel, is joining the DC Fiscal Policy Institute team today! She will serve as DCFPI’s Housing Policy Associate.

Claire recently earned a Master’s in Public Policy from Georgetown University. Previously, Claire worked on DC’s housing affordability crisis, inclusionary zoning, and temporary rentals of income-restricted units as a policy fellow at the Coalition for Smarter Growth. Claire is particularly interested in the connection between housing affordability and economic mobility.

Please help us to welcome Claire!

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Reforms Needed to Boost Jobs for DC Residents At Businesses that Get Public Subsidies

June 26th, 2015 | by Ilana Boivie

The new Marriott Marquis isn’t employing DC residents at anticipated levels because hiring practices and the job training program at the hotel were flawed, a new report found. Reforms to both the DC law aimed at increasing employment for residents and job training programs would go a long way toward ensuring that DC residents receive quality employment opportunities at new businesses that receive economic development subsidies from the city.

Trained to DeathThe long-awaited Marriott Marquis Hotel opening at the Washington Convention Center last year was to be a “win-win” for DC residents and the business community. Developers received over $206 million in subsidies to open the hotel, and in exchange—and in compliance with DC’s “First Source” law—committed to hiring DC residents for at least 51 percent of their available jobs. To supplement those efforts, Goodwill Industries of Greater Washington received $2 million to lead a jobs training program aimed at giving unemployed DC residents the skills they needed to be hired by the hotel.

Unfortunately, these efforts failed to live up to expectations at nearly every level, according to a new report from One DC, a community group dedicated to racial and economic equality. The report, “‘Trained to Death’ and Still Jobless,” finds that:

  • The hotel initially hired only 178 out of 719 graduates of the jobs training program, while eventually hiring a total of 820 employees.
  • While the hotel claims that the total number of DC residents employed there is above the 51 percent minimum required by law, progress is not tracked, and there is no ability to solicit fines for noncompliance.
  • The job training program’s rigidity was a problem for many residents. For example, the training schedule was inflexible, forcing many to give up part-time work or child care in order to attend, and many were notified of potential job interviews with less than 24 hours’ notice, and no ability to reschedule.

Suggested reforms include:

  • Increased tracking, transparency, and enforcement of First Source agreements, as well as other labor laws already on the books.
  • Increased accountability and transparency in DC’s job training programs.
  • Targeted job training programs to specifically serve those who are more difficult to employ.

This is not the first time the First Source law has been called into question. A 2011 DC Fiscal Policy Institute report found that the law was largely ineffective in ensuring that DC residents gain quality employment from development projects. The report called for increased compliance and oversight of the law; ensuring that eligible projects receiving subsidies have signed First Source employment agreements; and making certain that District residents seeking jobs are listed on the city’s First Source job registry.

A recently enacted federal law, the Workforce Innovation and Opportunity Act (WIOA), should compel many improvements in job training programs. WIOA encourages a specific focus on those with the highest barriers to employment as well as new performance measurement systems to better track the effectiveness of job training and education programs. A WIOA plan is due next March. The city should develop a solid, workable plan based on practices that have proven most successful.

WIOA changes and First Source reforms would help workers in the District achieve the skills they need to gain quality employment—especially from development projects subsidized by the city.

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The Value of Investing in Trauma-Informed Schools in DC

June 24th, 2015 | by Soumya Bhat

Children who grow up in poverty are often exposed to high levels of trauma or stress, which can hurt their ability to do well in the classroom. This trauma or stress can result from witnessing violence, suffering from physical or sexual abuse, or not having a stable home. Although DC is implementing programs that help some students overcome trauma, these services should be available in all DCPS and charter schools so every child has the opportunity to succeed.

Across the city, over one in four children live in poverty, and in some neighborhoods in Wards 7 and 8, the child poverty rate is greater than 50 percent. Low-income children are more often exposed to trauma and stress during their developmental years, which leads to high rates of emotional or social problems.1 As a result, these children are more likely to have problems in school, be absent, be suspended or expelled, or drop out.2 Repeated exposure to trauma can lead to chronic, toxic stress which hinders development of key skills necessary for learning, including memory, attention, and language.3

But students who experience trauma can adjust to the classroom if schools create an environment to help students to feel safe and supported. Currently, there are some programs and interventions in DC schools that are having positive results, such as improved attendance, reduced behavior infractions, and decreases in post-traumatic stress disorder symptoms. But, these services are only available to a small number of students with the greatest needs in schools.

Instead, DC needs to take a system-wide approach and train all staff to be sensitive and responsive to students affected by trauma. According to a paper released yesterday by the Children’s Law Center, other cities and states, such as Massachusetts, San Francisco, Washington State, and Wisconsin, are leading the way in this area and have created models for trauma-sensitive school environments that may help the District develop a better system. DC can borrow from these states to create a comprehensive, system-wide effort.

You can find DCFPI’s testimony from yesterday’s Council roundtable on this topic here. For more information on mental health services in DC schools, see our issue brief here.

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1 Evans, G. W., “The Environment of Childhood Poverty”, American Psychologist, Vol. 59, No. 2, February/March 2004, pgs. 77-92.
2 Stagman, S. & Cooper, J., “Children’s Mental Health: What Every Policymaker Should Know,” National Center for Children in Poverty: Mailman School of Public Health, Columbia University, April 2010. Available at: http://www.nccp.org/.
3 Evans, G.W; Brooks-Gunn; J. & Klebanov, P., “Stressing Out the Poor: Chronic Psychological Stress and the Income-Achievement Gap,” Pathways Magazine, Winter 2011, Stanford Center on Poverty and Inequality.

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