San Jose to consider 'living wage' changes at Mineta airport

Dec. 7, 2010
San Jose officials will consider changes aimed at making it more palatable to airlines and other companies they desperately need to keep and attract.

Two years after requiring airport businesses to give their employees a "living wage" -- at the urging of labor leaders -- San Jose officials Tuesday will consider changes aimed at making it more palatable to airlines and other companies they desperately need to keep and attract.

Businesses and airline officials had objected to the requirement, saying that it imposed a costly burden.

"In my conversations with CEOs about what we can do to get more flights in San Jose, this is one of those things," said Mayor Chuck Reed, who will lead a committee next year focusing on attracting more business to the airport. "It's not the fact of the living-wage ordinance, it's how it's applied and how they have to deal with it."

The move comes as city officials panic over the future of Mineta San Jose International Airport. It has suffered worse than its Bay Area competitors during the recession, losing a third of its scheduled flights since 2007, while facing debt payments for a $1.3 billion makeover unveiled this summer.

Earlier this year, airport officials told the City Council that major changes are needed to cut costs and attract business for Mineta San Jose to survive, and presented a menu of unpopular choices.

Among them: relax the airport's 11:30 p.m. to 6:30 a.m. curfew to allow for more international flights, which nearby residents oppose; restrict future downtown building heights, which developers and business oppose; outsource city airport jobs including police and fire protection, and lower the living-wage requirement that took effect in 2009, both of which unions oppose.

Airport and airline officials say the living-wage law adds costs that pose a hurdle to expanding business at the airport, an assertion disputed by labor leaders who note both San Francisco and Oakland airports have similar requirements.

San Jose's airport living-wage minimum is $14.19 an hour without benefits or $12.94 if the employer provides health insurance and pays half the cost. Oakland requires $12.82 an hour without benefits or $11.15 with them. San Francisco has two wage provisions requiring either $11.54 or $12.33 an hour depending on the type of employee, as well as a separate health care requirement.

Because of differences in the laws and how they are applied, straight comparisons between the three airports' living-wage laws are difficult. Airport officials studying the laws concluded that because San Jose doesn't mandate things like paid time off, the total cost of its living wage to employers is often lower.

City officials asked airport officials for a proposal that would align San Jose's airport living wage with those in San Francisco and Oakland to eliminate any competitive disadvantage. But that proposal drew fire from labor leaders and airlines alike.

Ben Field, chief of staff at the South Bay AFL-CIO Labor Council, which had urged adoption of the living wage for the airport, said the airport staff's "parity" proposal, which would lower the wage requirement with benefits to $11.65 an hour, would amount to a 10-percent pay cut for many workers now making $27,000 a year.

"It would not make the airport more competitive, but would be devastating to hundreds of airport workers," Field said.

Southwest Airlines, Mineta San Jose's major air carrier, complained that the airport parity proposal would allow the expiration of a provision that lets airlines count the value of retirement and health benefits they pay their employees toward the wage requirement.

In a letter to Reed, CEO Gary C. Kelly said Southwest's health care, 401(k) retirement match, profit-sharing, life insurance and other benefits are worth $3.79 an hour on top of what must be provided to qualify for the $12.94 wage.

"Southwest Airlines provides its employees an outstanding benefits package," Kelly wrote, noting that nearly 9 out of 10 of its workers are covered by nationwide union contracts that cannot be tailored to individual cities.

To ease concerns, Reed -- along with Vice Mayor Judy Chirco and council members Nancy Pyle and Rose Herrera -- offered a modified proposal that would allow all airport businesses to apply the value of health care and retirement benefits to a minimum rate of $12.83 an hour. The proposal would also ease reporting and enforcement provisions that airlines say are costly to comply with.

A Southwest spokesman and Field said they approve of the mayor's proposal.

"We think that it's a victory in that it preserves the principle of a living wage," Field said.

But the proposal was unlikely to satisfy at least one mayoral ally, Councilman Pierluigi Oliverio. The lone vote against the living wage when it was approved two years ago, he said that even with revisions the law remains an obstacle to making San Jose more attractive to airlines and other businesses, raising the likelihood the city will have to pursue other options residents oppose, like lifting the flight curfew.

"We need to do everything to ensure our airport is cost-competitive so we can pay off the mortgage on the airport," Oliverio said. "The airport should be allowed to run as a business. Every time the government intervenes into that, it makes it more expensive."

Contact John Woolfolk at 408-975-9346.'living WAGES' at area airports SAN JOSE: $14.19 an hour without benefits, $12.94 if the employer provides health insurance OAKLAND: $12.82 an hour without benefits, $11.15 with benefits SAN FRANCISCO: Either $11.54 or $12.33, depending on type of employee and health care requirement