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L.A. needs a real-life living-wage ordinance

The law needs to be updated to reflect the current costs of health insurance coverage.

August 15, 2009|E. Richard Brown and Gerald F. Kominski | E. Richard Brown is the founding director of the UCLA Center for Health Policy Research. Gerald F. Kominski is associate director of the center. Both are also professors in the UCLA School of Public Health.

Los Angeles is the epicenter of the nation's crisis in health insurance coverage. One in four residents of the city is uninsured for all or part of the year, based on our analysis of the 2007 California Health Interview Survey. Contractors who work on city projects contribute to this problem because many don't provide affordable health insurance to their employees. Contractors at Los Angeles International Airport are among the big companies that fail to provide affordable healthcare.

But even in the midst of this deep recession, there is a solution if the Los Angeles City Council enacts a change in the living-wage ordinance. For more than a decade, the City Council has recognized the importance of providing fair wages and health benefits for the contracted service employees who keep the city running. In 1997, the council passed the ordinance, which required city contractors to pay their workers a fair wage and gave employers a financial incentive to provide health benefits. Under the law's two-tiered wage structure, employers can pay their employees the lower tier as long as they provide health benefits, and the latter amount is tax-free. If they do not provide health benefits, employers must pay an additional $1.25 per hour in wages to help workers purchase insurance on their own.

When the living-wage ordinance was enacted, this lower tier of wages netted employers average savings of $2,600 per employee per year, which could be used to cover the cost of insurance. But even in 1997, $1.25 an hour added up to an amount somewhat less than the cost of individual coverage and substantially less than the cost of a typical policy for family coverage.

Since 1997, the city has not increased the $1.25 per hour that contractors must provide for health benefits, and it has now fallen far behind the current costs of healthcare. Health insurance has more than doubled in price since the ordinance was adopted. The city's living-wage law is also the lowest living wage of the six major California cities with such laws.

The failure of city contractors to provide adequate health insurance has forced thousands of these mostly low-wage workers to go without care or turn to taxpayers for medical help. An estimated 5,000 contract workers at LAX and their family members are uninsured or have to rely on taxpayer-funded healthcare programs, such as the state's Medi-Cal and Healthy Families programs. This taxpayer-supported coverage costs an estimated $4 million a year, burdening already depleted state and local resources, according to a recent report by the Los Angeles Alliance for New Economy. And many of the children of these workers who are covered by the Healthy Families program will lose their coverage because of the drastic state budget cuts.

These gaps in coverage put all L.A. residents and visitors at risk, in addition to the harm they inflict on the workers and their families. Workers at LAX, for example, prepare food, handle our baggage and clean and search airplanes. They are the first people to encounter global public health risks, such as the H1N1 virus, and are at greater risk of passing on communicable diseases to LAX users.

LAX contractors, which benefit from this city-owned facility, should contribute their fair share for employees' health insurance rather than adding to the burdens of taxpayers.

The L.A. City Council can help ensure affordable health insurance for these crucial workers. It should adopt the unanimous recommendation of its Trade, Commerce and Tourism Committee to update the health insurance component of the ordinance to bring it in line with the current cost of family coverage. Employees share responsibility by accepting a lower wage in exchange for benefits, and, in response, government provides tax benefits for both workers and employers. It's time for employers to take responsibility as well.

Many other living-wage employers at LAX already provide family healthcare. Airline contractors, which are bound by the ordinance, make up the largest sector that does not. Providing family healthcare for their employees can be accomplished with an additional 28 cents on the average airline ticket, according to estimates by the Los Angeles Alliance for a New Economy.

A fairer living-wage ordinance would enable all workers at LAX and their families to have health insurance coverage. And it's the right thing to do.

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