Penn still illegally underpays security guards. The city may revoke $1.2M in subsidies.

Penn could lose over $1.2 million in Philadelphia subsidies if they do not comply with the city-mandated $15 per hour minimum wage, according to the Service Employees International Union 32BJ Vice President Gabe Morgan and the Mayor's office.

In February 2019, the Philadelphia City Council ruled that security guards employed by Penn and other Philadelphia universities must receive a minimum wage of $15 per hour by July 1, 2019. With this deadline six months past, Penn's security guards continue to receive the same starting salary of $11.85. The employees and their union await the city's response to this violation, which Morgan believes is likely to include revoking subsidies for Penn and other private universities.

Deputy Communications Director for the Office of the Mayor Lauren Cox confirmed in an email to The Daily Pennsylvanian that the $11.85 wages Penn officers receive violates the prevailing wage ordinance under Section §17-107 of the Philadelphia Code. Cox wrote that no legal action has been taken but suspending Penn's nonprofit water discount is on the table if Penn continues to violate the prevailing wage law.

"By not ensuring its contractor is paying building security guards a prevailing wage, Penn is not in compliance with Philadelphia’s prevailing wage law," Cox wrote.

The law established that all four-year higher education institutions that receive public subsidies would be required to pay the $15 prevailing wage to security guards. Prevailing wage varies by occupation and differs from Philadelphia's minimum wage of $7.25 an hour.

In 2018, Penn received a discount of more than $1.2 million from the city on their water bill, Cox wrote. This estimate does not include discounts to the University of Pennsylvania Health System, which also may be revoked, Cox added.

“The law is pretty specific in saying you’re required to pay the prevailing wage in return for receiving subsidies from the city or doing business with the city," Morgan said. "What the city can do under that law if you’re not compliant is end the subsidies, take back subsidies they've already been given, or terminate contracts they have."

Cox added the Mayor's Office of Labor has been in conversation with Penn and several other institutions in an effort to bring them into compliance. 

"Notification letters were sent to several institutions this summer regarding the potential suspension of their nonprofit water discount if they did not come into compliance with the prevailing wage law," Cox wrote. "Since then, the Mayor’s Office of Labor has been in conversation with those institutions, including the University of Pennsylvania, in an effort to bring them into compliance. Talks are still ongoing.”

University spokesperson Stephen MacCarthy, Penn Security Office, Allied Universal, and Penn Office of Human Resources did not respond to requests for comment.

Morgan said the union was stunned at Penn's disregard for the law and its employees but said the city will likely enforce the law.

"It's the city's responsibility to enforce [the prevailing wage], and it seems like that's what they're doing," Morgan said.

Morgan added Mayor Jim Kenney has been more active in enforcing the city's newer pro-labor laws than any Philadelphia mayor in recent history. Kenney's administration created the Deputy Mayor of Labor position, held by Rich Lazer, as a pioneer attempt to enforce city laws to protect workers, Morgan said. 

"The Student Labor Action Project demands that the University pay its security guards the prevailing wage, as determined by city law," the Penn Student Labor Action Project said in a statement to The Daily Pennsylvanian. "Subcontracted or not, the University owes its functioning to these workers, and it is in the best interests of all parties that Penn abides by this rule."

Representative for SEIU 32BJ Traci Benjamin confirmed in an email that the contract minimum remains at $11.85 for Penn Allied Universal security guards. Although salaries may increase marginally for long-time employees every few months of their continued employment, Benjamin wrote that the baseline pay of $11.85 applies to new employees.

"We'd rather see workers get what they're supposed to get than see subsidies removed," Morgan said. "For us, it's pretty unbelievable that these security officers who live in the communities around Penn have to ask for what the city law already says they get." 

Morgan said that before Philadelphia's prevailing wage law existed, thousands of security guards fought to raise wages from the state minimum wage to $15 and viewed the prevailing wage ordinance as a decisive victory.

"We're following the legal processes, but it's unbelievable to us that this institution would look at these workers they see every day and not care whether they make a decent living or not," Morgan said.