Background: The Lives of Service Workers at American University
50 Years of Serving Food in the Terrace Dining Room and an Almost Empty Retirement Account
Colleagues, there are at least two aspects of the crisis the service workers face at AU.
Almost empty retirement accounts for service workers over 65. No contributions from Marriott for years. And uncertain retirements for younger workers.
After the university privatized cooking and cleaning services in 1982, the private companies on campus such as Marriott made no contributions to individual retirement accounts of the service workers. The result is a disaster. AU now has 65-77-year old service workers with almost empty retirement accounts. One 66 year old worker with 38 years on campus said she has $14,000 in her retirement account.
The almost empty retirement accounts issue in more detail.
Marriott was the first vendor to supply food services to the university after
privatization in 1982. As you can see in this contract with Marriott no provision was made for retirement accounts. Not a penny was provided for workers’ retirements for the term of this contract. We were so stunned at seeing this absence of funds, that we asked a labor lawyer to review the contract assuming that we have missed something. We had not. There was no money in retirement for the workers. Obviously, the university saved money in 1982 by now having workers on campus to whom no retirement payments were being made.
What would it cost to remedy this situation of fifteen to twenty over
65-year old workers who can’t retire?
Please remember in addition to the empty years, approximately 1982-2005, with no retirement contributions, these workers also will receive small social security checks based on many years at or near the minimum wage. The union has identified 15 workers who need help in order to retire.
How much monthly income does a worker needs for a decent retirement?
1. Professor Mary Gray of the Math/Stats Department has suggested using twice the poverty guideline amount for an individual. The national poverty guideline amount excluding Alaska and Hawaii is $11,880. Twice this amount is $23,760.
How much income can a low income worker depend upon from Social Security?
2. A food service worker with 39 years on campus said she expects to receive about $900 a month. Medicare will deduct $121.80 for the Part B premium, leaving a net Social Security benefit of $778 a month, or an annual Social Security benefit of $9338.
What is the gap between twice the poverty guideline and what a low-wage AU worker can expect from Social Security?
3. $23,760-$9,338=$14,422 a year or $1,202 a month.
What would the monthly cost be to American University of supplementing 15 workers over 65 with over 35 years of work at AU each?
4. $1,202*15 workers=$18,030 a month
What is this amount as a percentage of AU’s monthly spending?
With a total FY2017 annual budget of $610,000,000, the University spends $50,833,333 a month. The emergency supplement of $18,030 a month would amount to (0.000355) less than four thousandths of one percent of the monthly budget.
Where could American University find this sum without influencing tuition?
We recommend a 10% reduction in the salaries of University Vice-Presidents or a 4% reduction in the salaries of the twelve highest paid officers of the University to fund this pension supplement. See the IRS 990 form online for the salaries of these officers. Either reduction would entirely fund the pension supplements.
What is happening with younger service workers? Will the younger workers today ever be able to retire?
Aramark is making retirement contributions today unlike the practice of Marriott and other vendors in the past. In the current contract, Aramark provides $1.00 in retirement benefits for each hour worked during a year. So most of the cooks who only work 8 months a year or 32 weeks a year at 40 hours a week, or a total of 1280 hours of work would receive $1,280 per year in contributions to retirement accounts. This does not look like it will provide adequate retirement benefits for current workers. The cleaners who also work for Aramark are employed for the full year.
We urge the administration and the Board of Trustees to commission another
report from John Willougby or an equally skilled colleague to determine what
level of contribution from Aramark or the next vendor is needed. Of course, the
vendor would pass the cost along to the university which might involve
sacrifices on campus. Bonuses to senior executives might be reduced. Holiday
parties might have to be scaled back. Was the open bar paid for by American
University at this year’s American Political Science Association conference
really more important than adequate retirements for service workers?
We have provided as much detail as we know. Unfortunately, the HR department
at AU has nothing on its web site about the treatment of the service workers on
campus since 1982. And information in the university archives is incomplete. While there are articles from the Eagle about problems year after year in the 80s and 90s, there are no electronic copies of contracts between the vendors and the service workers. Current Aramark employees gave us the copies of the two contracts referred to on this web site. See the Library’s web site for archives of the Eagle. (Library web site>University Archives>Eagle)
AU has the resources to treat everyone who works on campus ethically. It has
not done this since 1982. It could begin again if it chooses.