Union-influenced minimum wage law in WI could squash thousands of jobs

By Adam Tobias | Wisconsin Reporter

MILWAUKEE, Wis. — Sally Sprenger and her nearly 1,200 employees at Supportive Homecare Options Inc. could be out of work soon if a costly, Big Labor-boosting living wage proposal passes in Milwaukee County.

If approved, the ordinance, authored by Milwaukee County Supervisor David Bowen with help from Service Employees International Union officials, would impose salary increases on companies like Sprenger’s that provide contracted services for thousands of people through the county’s Department of Family Care.

The Family Care program, which gets a majority of its funding from the Wisconsin Department of Health Services, assists close to 8,200 Medicaid-eligible residents who are elderly or have physical, intellectual or developmental disabilities.

Those patients receive care for free or at reduced costs.

The annual expense to fund the proposed wage hike to Family Care’s approximately 2,400 contracted employees would be $5.4 million, according to a fiscal analysis by the county’s nonpartisan comptroller’s office.

That could dry up all of the department’s excess reserves by the end of 2017, or possibly sooner, Milwaukee County Comptroller Scott Manske says in the report.

Even if the agency were able to win approval for a budget increase supported by tax dollars, Sprenger said she is worried that giving her staff a minimum wage of $12.45 an hour would threaten any future agreements.

“This living wage would definitely put my contract at jeopardy with the county because we would be priced out of being economical and cost-effective,” Sprenger, president of Supportive Homecare Options, told Wisconsin Reporter.

It might not even get to that point. The current trend of the state has been to terminate insolvent programs, according to Manske.

“I can see where a whole bunch of us would probably hope we die before then,” said Margaret Ivers, a 65-year-old woman from Greendale who suffers from diabetic neuropathy.

Ivers has no idea what she would do without her caregiver who visits her home three times a week.

“I would be living in filth, but not because I’d like to live that way,” said Ivers, whose condition is so severe she struggles to wash her own dishes. “I just can’t do it anymore, which is very frustrating.”

If the Family Care program was eliminated, Ivers believes she would either have to relocate to an assisted-living facility — which she can’t afford — or move in with her children.

“We love each other, but they’re adults and they have their own families,” Ivers said. “They don’t need to take care of mom.”

The amount the state contributes to Family Care depends entirely on the number of people the entity serves on an annual basis. The department was given $257.9 million in 2013, according to Family Care Director Maria Ledger.

But the state has decreased Family Care’s capitation rate several times in the past four years. That has required the agency to draw $4.9 million from its reserves for this year.

Still, the department has been able to independently give its contracted employees a wage and/or benefit increase in each of the past three years.

However, the living wage ordinance would almost certainly force Family Care to ask for more tax funding. County Supervisor Steve Taylor said the board likely won’t look favorably on that request.

Altogether, the minimum wage law could necessitate taking more than $27.3 million from the tax levy through 2019. Annual costs could exceed $8 million after 2017.

“The reality is, we only have so much money to spend,” Taylor said. “We’re not going to taxpayers for more.”

Bowen and Big Labor have offered Family Care and its contracted companies an exemption from the living wage ordinance, but only if their workers are “covered by a collective bargaining agreement between the employer and a bona fide union.”

Roughly 300 Supportive Homecare Options employees voluntarily belong to SEIU, part of a collective bargaining agreement signed almost a decade ago with the union. Those workers turn over 2 percent of their gross pay every week to SEIU, about $115,000 in all for 2013, Sprenger said.

The annual contribution would be more than $400,000 if all of Supportive Homecare Options’ employees were obligated to join SEIU, something Sprenger isn’t going to agree to because she wants her staff to have a choice.

Those weekly dues would only cut into the pay of her workforce, which currently averages $10.45 an hour, Sprenger said.

“This is all about union security … It’s so political,” she said.

The Milwaukee County Board of Supervisors is expected to vote on the living wage ordinance in February.

Contact Adam Tobias at atobias@watchdog.org or follow him on Twitter @Scoop_Tobias

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