Pay Equity & Living Wage (3.0)

132 0 0 September 6, 2024

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Credit Language

PA 13: Pay Equity and Living Wage – version 3.0

Indicators

  • 13.1. Internal pay equity assessment
  • 13.2. Percentage of employees that receive a living wage
  • 13.3. Percentage of significant contractors that pay a collectively determined or living wage

Questions & Answers

How has this credit changed between STARS Version 2 and Version 3?

  • A new indicator (13.1) requires information about an institution’s pay equity assessments. 
  • In-kind benefits that address basic needs (e.g. medical insurance) may now be counted toward the living wage.
  • Base wage amounts for various employee categories are now required for transparency.
  • Certified living wage employers may now earn points on that basis.
  • A comprehensive list of differences can be found in the STARS 3.0 Summary of changes.

What types of internal pay equity assessments qualify under Indicator 13.1? 

Institutions should report on assessments completed within the previous three years and the results of the most recent assessment to have been finalized. External (e.g., market-based) pay equity assessments do not qualify. Campus climate surveys that focus on student/employee diversity, equity, and inclusion do not qualify here, as they are recognized under the Institutional Climate credit. Employee satisfaction survey do not qualify if the assessment does not address pay equity. 

How should the local living wage be determined under Indicators 13.2 and 13.3?

An institution’s living wage must be based on a family of four (assuming two adults in paid employment) or the nearest alternative available in its national context. A family of four is used to help harmonize different living wage standards and to support international comparability. It is not assumed to be the most common or representative family size.

Guidance by region:

Australia

  • Use 60 percent of the most recent median weekly earnings for full-time workers published by the Australian Bureau of Statistics (expressed as an hourly wage). 

Canada

  • For the community in which the main campus is located, use the most recent “living wage amount” published by Living Wage Canada or otherwise calculated using the Canadian Living Wage Framework. In the absence of a locally or regionally appropriate living wage amount, use the after tax Low Income Cut-Off (LICO) for a family of four (expressed as an hourly wage) for the community size in which the main campus is located.

Ireland

New Zealand

United Kingdom

United States

  • Use the Living Wage Calculator hosted by the Massachusetts Institute of Technology to look up the living wage for “2 Adults (both working), 2 Children” for the community in which the main campus is located.

Other Locations – adopt an existing living wage standard, for example:

  • A local living wage ordinance (e.g., that applies to civil servants or government contractors).
  • A living wage published by a grassroots campaign, non-governmental organization (NGO), or trade union.
  • A Global Living Wage Coalition Benchmark.
  • The most recently estimated national gross living wage for a “typical family” published by the WageIndicator Foundation (expressed as an hourly wage) . Use the upper bound of the published range, which reflects a median basic needs budget.
  • An independently developed local living wage calculated in a manner that is consistent with the Anker Methodology.

In the absence of a credible, existing living wage standard, estimate conservatively by using one of the following: 

  • The unadjusted local poverty indicator for a family of four (expressed as an hourly wage). 
  • 60 percent of median national/regional household income.
  • 200 percent of the national minimum wage (consistent with Just Organizations).

What living wage accreditation programs qualify for this credit?

To inquire about adding a living wage accreditation program to this list, email stars@aashe.org.

What types of “significant contractors” should we reference under Indicator 13.3? 

Significant contractors are entities that provide regular services that are foundational to the operations of the institution, e.g., functions that were once performed by direct employees and subsequently contracted out or that direct employees would be required to perform in the absence of a contractor. Examples include contracted providers of regular on-site dining/catering, cleaning/janitorial, maintenance, groundskeeping, professional/technical, transportation, and retail services. Construction and renovation firms and other contractors that perform highly specialized services on a limited or irregular basis may be excluded, as may sole proprietors, independent contractors, and any contracts with an aggregate value of $50,000 US Dollars (USD) or less per year or an aggregate duration of one month or less.

Suggestions for Institutions

  • Work with your Human Resources office or similar to collect the information requested under this credit.
  • To simplify the calculation process, begin by checking to see if base wages alone meet the living wage, because this will mean that no further calculations are required. If the base wage for employees or a group of employees does not equate to a living wage, then add other forms of remuneration as described above.
  • When calculating remuneration, begin with the lowest paid workers. This is the most efficient way to reveal whether there are employees or groups of employees that are paid below a living wage.

Example Responses

Potential Data Quality Issues

  • Indicator 13.1 Affirmative responses must be supported by information provided in descriptive fields.
  • Indicator 13.2 Numeric Outlier: Low amount under “The local living wage” ($20 or less) may indicate that a standard other than (2 Adults, 2 Children) was incorrectly applied. Low responses should be double-checked. U.S. institutions: MIT Living Wage Calculator; Canadian institutions: Living Wage Canada; Other institutions: a local equivalent or the local poverty indicator for a family of four.
  • Indicator 13.3 This indicator is only applicable to institutions that have one or more significant contractors. If no significant contractors are referenced, valid documentation that the institution has no significant contractors must be provided.

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