COUNCIL AGENDA: 4/21/26
FILE: 26-433
ITEM: 3.5
TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Matt Loesch
SUBJECT: See Below DATE: March 30, 2026
Approved
Date:
4/10/2026
COUNCIL DISTRICT: Citywide
SUBJECT: Revisions to City Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
RECOMMENDATION
Adopt a resolution approving revisions to City Council Policy 3-3 and repealing Resolution No. 76911 setting the methodology for annual adjustments for the City’s Living Wage rate to align with the City’s Airport Living Wage rate methodology for the City’s new Living Wage rate, effective July 1, 2026.
SUMMARY AND OUTCOME
Revisions to the City’s Living Wage Council Policy 3-3 annual adjustment methodology are required to ensure accurate, reliable, and sustainable Living Wage rates. The current methodology is unique to the City of San José and requires the use of a third- party report, which staff has determined to be unreliable and inconsistent as compared to metrics and data collected by City departments.
Revisions to the adjustment methodology to align it with the City’s Airport Living Wage Ordinance (ALWO) will create continuity within City policies, align with other cities and counties’ living wage and minimum compensation policies, and ease administration.
BACKGROUND
On November 17, 1998, City Council adopted the City’s Living Wage Policy (Resolution No. 68554) to provide a livable wage for workers employed by employers who are
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
awarded service contracts or direct financial assistance from the City to enhance the welfare of workers of San José.
As written and adjusted, the intent of the Living Wage Policy provides that persons doing work on, for, or on behalf of the City should be paid a living wage, be provided with or able to afford health insurance, have reasonable time off, not be subjected to lay off merely because the City changes contractors, and should work in an environment of labor peace.
The Living Wage Policy is adjusted annually based on any change as of December 31 of the previous year in the federal poverty level standard or the geographic cost of living differential used by the City in determining the initial wage adjustment. If either standard has changed, the City shall recalibrate the wages using the original methodology with the new values. The Living Wage adjustment methodology is as follows.
Federal Poverty Income + Geographic Accessor = San Jose Living Wage Rate Standard for Family of 3 Factor
If neither the federal poverty level standard nor the geographic cost of living differential has changed, the Consumer Price Index (CPI) for all Urban Consumers in the San Francisco-Oakland-San José area shall be reviewed. If the CPI has increased by at least 1%, the wage rate shall be adjusted by the same percentage change in the CPI, but not to exceed 3%.
Revisions to the Living Wage Policy have addressed implementation, application, and enforcement activities. The following revisions to the Living Wage policy have been adopted since its inception.
Resolution / Ordinance Date Revision
Resolution 68900 6/15/1999 Clarification of Intent and Application Resolution 71584 5/27/2003 Compliance Requirements, Breach of Contract, Liquidated Damages
Resolution 75041 6/11/2009 Extend Living Wage, Worker Retention, Labor Peace and Employee Work
Environment to Regional Wastewater
Facility
Resolution 76653* 5/20/2013 Compensated Time Off
Resolution 76911 12/2/2013 Clarification of Living Wage and labor peace requirements does not apply to
leases with tenants who do not have
service contracts or receive direct
financial assistance from the City
*Resolution 76653 superseded by Resolution 76911
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
The Living Wage Policy expanded to the San José Mineta International Airport by amendment to Title 25 of the San José Municipal Code, which subsequently modified the methodology in determining minimum compensation and administrative enforcement.
Ordinance 28432 11/5/2008 Amending Title 25 of San José Municipal Code to extend Living Wage, Worker
Retention, Labor Peace and Employee
Work Environment to San José
International Airport
Ordinance 28862 12/7/2010 Amending Title 25 of the San José Municipal Code to revise the method for
determining minimum compensation and
administrative enforcement for Airport
Living Wage
Prior to January 1, 2011, the Airport Living Wage adjustments were calculated on an annual basis using the same methodology as the City’s Living Wage Policy (Resolution No. 68900).
On June 24, 2025, Public Works issued the 2025 Living Wage Rates information memorandum,
1 tying the 2025 rates to the prior year’s (Fiscal Year 2024-2025) rates because the recalibration resulted in a reduction of rates from the prior year.
Historically, the standard was to hold the rate fixed from the prior year and to not adjust the rates.
ANALYSIS
As discussed in the 2025 Living Wage Rates information memorandum, the original methodology requires both publicly accessible data from the U.S. Department of Health and Human Services and third-party geographic assessor reports. The vendor that has been used since the initiation of the Living Wage Policy to acquire the geographic assessor reports adjusted its methodology in the last few years, making the reports inconsistent with what was used for the first several decades of the Living Wage Policy.
Living Wage / Minimum Compensation - California Cities and Counties
To address the ongoing misalignments regarding the annual wage adjustments, staff analyzed living wage / minimum compensation policies throughout California, the City of San José agreements requiring living wage, the City’s Living Wage and San José Airport methodologies, and the potential impacts of revisions.
1 https://www.sanjoseca.gov/home/showpublisheddocument/123118
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
The analysis was completed based on “Hourly Rate w/ Health Insurance,” as the City’s Living Wage and Airport Living Wage, as well as other cities / counties reviewed, have defined benefit rates for health insurance. The City’s Living Wage and Airport Living Wage have a defined health benefit of $1.25 per hour. That amount is simply added to the base Living Wage rate.
Approximately 21 cities and counties within California have living wage or minimum compensation policies (Attachment). The City of San José is the highest at $26.73 per hour without health benefits, and the City of Long Beach is the lowest at $18.58 per hour for Concession Workers.
The City’s and the County of Santa Clara’s living wage rates are identical due to the County Board of Supervisors’ Policy 5.5.5.5. Living Wage Provisions in County Contracts state they are “… adjusted annually for cost of living using the identical methodology to that used by the City of San José.” The City’s Public Works Department Office of Equality Assurance provides the County’s Executive Office of Countywide Contracting Management with the annual rate adjustment memorandum.
A review of cities and counties within the Bay Area, including San Francisco (city and county), Santa Cruz and San Mateo counties, and the cities of Oakland, Berkeley, and Hayward indicate the range of living wage and minimum compensation policies range from $16.51 to $26.73 per hour.
City of San José – Contracts / Agreements
The San José Living Wage Policy applies to service and labor contracts that are provided directly to the City or for services otherwise provided by City employees that involve an expenditure in excess of $20,000 and provide service or labor (as opposed to the purchase of good or other property) in the following services.
• Automotive repair or maintenance
• Facility and building maintenance
• Food services
• Janitorial and Custodial
• Landscaping
• Office and Clerical (i.e., copier and
printing maintenance)
• Parking Lot Management
• Pest Control
• Operation, programming, and
maintenance of recreational facilities
• Security
• Shuttle Transportation
• Street Sweeping
• Towing
• Moving Services
• Fabrication and Installation of
City Signs
• Maintenance of City-Owned
Equipment
• Any other service or labor
determined by the Director of
Equality Assurance to meet the
intent of the Policy
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
The San José Living Wage Policy overlaps with the State of California prevailing wage requirements in some service areas, such as landscaping, installation of City signs, and building maintenance. The San José Living Wage Policy is applied to service agreements for ongoing, routine maintenance or when the State of California Department of Industrial Relations does not include a classification or prevailing wage for work performed. When both the City’s Living Wage and the state prevailing wages apply, contractors and vendors are required to classify and pay the higher of the two wage rates.
While the City has hundreds of agreements requiring the City’s Living Wage rates, janitorial services and security services are the largest by contract value, agreement terms, and total full-time employment (FTE) and labor hours required. The initial janitorial services agreement, which includes work performed at City Hall, community centers, and the Police Department, has an approved total labor compensation of $6,360,112.51 for an approved 77.21 FTEs. The security services agreement from April 2025 through March 2026 has an approved total compensation of $987,734.00 for an approved 23,372 labor hours.
San José Airport Living Wage
On December 14, 2010, the City Council adopted amendments to the ALWO (Chapter
25.11 Airport Living Wage and Labor Standards) to bring parity with other Bay Area airports and reduce competitive disadvantages for the Airport. As of January 1, 2011, minimum compensation is reviewed annually; however, the methodology used for rate adjustments is based on annual average changes in the CPI for All Urban Consumers for the San Francisco-Oakland-Hayward metropolitan area, published by the United States Department of Labor, Bureau of Labor Statistics.
Since the methodology was amended, the percentage change in the ALWO rate adjustments is lower than the City’s Living Wage Policy rate adjustments. Since the separation of the City’s Living Wage and ALWO, the ALWO has increased at an average annual rate of 2.98% where the City’s Living Wage has increased at an average annual rate of 5.01%.
This table below shows the differences between the City’s Living Wage rate adjustments and the ALWO rate adjustments.
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
*2025 rate was fixed to prior year’s rate due to unreliable date
The City’s Living Wage adjustment factor outpaced the ALWO adjustment factor 10 out of the 15 years, with considerable difference in eight of the 10 years. For eight years, the City’s Living Wage adjustment factor was between 1.98% to 10.62% higher than the ALWO, with the average difference of 4.98%. The ALWO adjustment factor was between 0.87% to 4.24% higher than the City’s Living Wage for five years, with the average difference of 1.99%. For 2015 and 2019, the adjustment factors for both City Living Wage and ALWO were negligible, with differences of 0.02% and 0.51% respectively, however, the adjustment factor was higher for the City’s Living Wage for both years. The City’s Living Wage rate is 25.3% higher than the ALWO rate due to the methodology used in determining the adjustment factor.
2025 City’s Living Wage - Fixed FY 2024-2025
As discussed in the 2025 Living Wage Rates information memorandum, the City’s Living Wage annual adjustment employed the use of a third-party geographic accessor factor that includes average annual dollars spent on consumables, transportation, health services, rent / utilities / insurance, and income + payroll taxes.
In determining the third-party’s inconsistent data, discrepancies, and impacts to the City’s Living Wage rate, staff utilized the City Housing Department’s Housing Market Report, specifically, the 2024 “Q4 Average Apartment Rents of All Sizes” 2 issued on
March 26, 2025. The Housing Market Report provides quarterly and annual data in the
2 https://www.sanjoseca.gov/home/showpublisheddocument/119786/638785996610230000 Effective
Date
ALWO CPI
Adjustment
Factor
ALWO Rate
Without
Benefits
City Living
Wage
Adjustment
Factor
City Living Wage
Without Benefits
July 1, 2025 2.7627% $21.34 0.000%* $26.73
July 1, 2024 3.6660% $20.80 2.571% $26.73
July 1, 2023 5.5983% $20.11 1.361% $26.06
July 1, 2022 3.2114% $19.11 6.813% $25.71
July 1, 2021 1.7220% $18.55 3.705% $24.07
July 1, 2020 3.3108% $18.26 2.337% $23.21
July 1, 2019 3.8651% $16.46 4.372% $22.68
July 1, 2018 3.2214% $15.85 5.639% $21.73
July 1, 2017 3.0057% $15.36 2.135% $20.57
July 1, 2016 2.6140% $14.91 9.934% $20.14
July 1, 2015 2.8414% $14.53 2.864% $18.32
July 1, 2014 2.2420% $14.13 12.864% $17.81
July 1, 2013 2.6822% $13.82 7.128% $15.78
July 1, 2012 2.6030% $13.46 8.389% $14.73
July 1, 2011 1.3699% $13.12 5.023% $13.59
July 1, 2010 $12.94 $12.94
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
multi-family rental and ownership market in San José, including residential permits data, housing affordability, and average rents. The reports can be reviewed on the City’s Housing Department website3 from 2014 Q1 through 2025 Q4 at the time of writing.
Revisions to the third-party geographic accessor factor, replacing “rent / utilities / insurance” with the Housing Market Report’s “average rent,” allow for the annual adjustment factors to be completed. However, the information obtained in the report only accounts for “average rent” and does not include the annual cost of utilities or insurance or validate other data used in the third-party geographic assessor report.
Adjustment Factors- Cost of Living Adjustment (COLA)
The San José Living Wage methodology used in determining the annual adjustment factor is unique to the City of San José, and reflexively the County of Santa Clara. The cities and counties with living wage or minimum compensation requirements predominantly make annual adjustments based on Consumer Price Indices as published by the Department of Labor, Bureau of Labor Statistics. 4 The Department of Labor, Bureau of Labor Statistics issues multiple Consumer Price Indexes (CPI) for the U.S. and various geographic areas per year that measure the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The set of components and sub-aggregates published for regional and metropolitan indexes is more limited than at the U.S. city average level.
Each local index has a much smaller sample size and is subject to substantially more sampling and other measurement errors. Of note, area indices do not measure differences in the level of prices between cities, they only measure the average change in prices for each area.
In all cities and counties analyzed, CPIs are used as the annual adjustment factor, with a majority specifying a regional, geographic index. For example, the San José ALWO utilizes CPI-U- San Francisco-Oakland-Hayward and the City of Los Angeles utilizes CPI-W- Los Angeles Metropolitan Area.
Revising the original methodology used in determining the annual adjustment factor to align with the ALWO regional CPI-U- San Francisco-Oakland-Hayward or revised, replaced of superseded regional CPI will streamline administration, create consistency in City policy, and potentially benefit short- and long-term budgets. This revision will utilize current, publicly available, replicable, and reliable data sources.
3 https://www.sanjoseca.gov/your-government/departments-offices/housing/data/housing-market 4 https://www.bls.gov/regions/west/news-release/consumerpriceindex_sanfrancisco.htm
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
Policy Alternatives
Alternative #1: Revise City Council Policy 3-3 relating to Living Wage to specify the replacement of the City’s Housing Market Report Q4 “average rent” in the third- party geographic assessor report.
Pros: City’s Housing Market Report Q4 identifies data specific to the City of San José rental housing market.
Cons: City’s Housing Market Report Q4 provides City-specific data for rent only.
Utilities, Insurance, and other data utilized in the third-party geographic assessor report would not be replaced, which may be unreliable and unverifiable, as data is not currently collected.
Reason for not recommending: Staff identified discrepancies in the data by the third-party geographic assessor report and utilizing the City’s Housing Market Report Q4 will adjust only one of the many data points used in the report. The policy alternative will continue the inconsistencies between City policies.
EVALUATION AND FOLLOW-UP
No additional follow-up action with the City Council is expected at this time related to this policy.
COORDINATION
Prior to bringing the item forward for discussion at City Council, City staff met with a representative from Working Partnerships USA to discuss the staff recommendation.
This memorandum has been coordinated with the City Attorney’s Office, City Manager’s Office, and City Manager’s Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City Council Agenda website for the April 21, 2026 City Council meeting.
HONORABLE MAYOR AND CITY COUNCIL
March 30, 2026
Subject: Revisions to Council Policy 3-3, Living Wage Policy, Relating to Living Wage Setting Methodology for Annual Rate Adjustments
BOARD, COMMISSION, COMMITTEE RECOMMENDATION AND INPUT
No board, commission, or committee recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-008, General Procedure and Policy Making resulting in no changes to the physical environment.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
MATT LOESCH
Director of Public Works
For questions, please contact Christopher Hickey, Division Manager, Public Works Department, at [email protected] or (408) 535-8481.
ATTACHMENT:
California Cities and Counties Living Wage and Minimum Compensation Policies
Attachment
California Cities and Counties
Living Wage and Minimum Compensation Policies
Jurisdiction Type of
Ordinance
LW
Hourly
Rate w/o
Benefits
provided
LW Hourly
Rate
w/Benefits
provided
Formula Source
1 San Jose (City)
City LWO
(Tiered rates for
City contractors) $27.98 $26.73
Federal Poverty
Limit + Geographic
Factor
https://www.sanjoseca.gov/your-
government/departments-offices/public-
works/labor-compliance/living-wage
2 Santa Clara
County
County LWO
(Tiered rates for
County
contractors) $27.98
$25.98 1
$23.98 2
Federal Poverty
Limit + Geographic
Factor
https://prc.santaclaracounty.gov/legislative-
administrative-policies/living-wage-policy
3 Sonoma County
County LWO
(Applies to
government
service
contractors must
pay at least the
current living
wage rate) $23.15
$21.65
1 $20.15 2
CPI-All Urban
Consumers-
SF/OAK/HAY
https://sonomacounty.gov/development-
services/sonoma-public-infrastructure/living-
wage
4 Santa Cruz
County
County LWO
(Applies to County
contractors and
subsidized
employers) $23.13 $21.20
CPI-Urban Wage
Earners and Clerical
Workers-
SF/OAK/SJ
https://www.santacruzcountyca.gov/Departme
nts/GeneralServices/Purchasing/CurrentLiving
WageOrdinance.aspx
5 Berkeley (City)
City LWO
(Tiered rates for
City contractors) $22.83 $19.58
CPI-All Urban
Consumers-
SF/OAK/HAY
https://berkeleyca.gov/doing-
business/operating-berkeley/workforce-
standards-and-enforcement
6 Santa Monica
(City)
City LWO
(Specific to
hotel/concession
workers and city
contractors) $22.50 $22.50
PI-Urban Wage
Earners and Clerical
Workers-
LA/Riverside/Orang
https://www.santamonica.gov/living-wage-
ordinance-certification
7 Petaluma (City)
City LWO
(Applies to City
contractors,
concessionaires) $21.75 $19.41
CPI-All Urban
Consumers-
SF/OAK/HAY
https://cityofpetaluma.org/petaluma-living-
wage-ordinance-faqs/#/What-is-the-Petaluma-
Living-Wage
8 San Francisco
(City & County)
City & County
MCO/MWO
(MCO is Minimum
Compensation
Ordinance)
$21.54 3
$23.00 4
$23.00 5 $21.54
CPI-All Urban
Consumers-
SF/OAK/HAY
https://media.api.sf.gov/documents/MCO_Kno
w_Your_Rights_Effective_FY25-26_English.pdf
9 San Jose Mineta
Airport
ALWO applies
to all Airport
businesses, and
required to
provide covered
employees with
the following
minimum
compensation: $21.34 $20.09
CPI-Urban Wage
Earners and Clerical
Workers-
SF/OAK/HAY
https://www.flysanjose.com/sites/default/files/
strategy-and-
policy/ALWO%20Rate%20Adjustment%20April
%202025.pdf
10 West Hollywood
(City)
City LWO
(Applies to City
contractors, also
has a high MWO) $21.32 $21.32
CPI- Urban Wage
earners and Clerical
workers- LA/Long
Beach/Anah
https://www.weho.org/business/doing-business
with-the-city/living-wage
11 San Diego (City)
City LWO
(Also has specific
LWO provisions
for certain city
contracts)
(Work performed
outside City
geographic
boundary is 15
cents/hr. less) $21.06 $17.67
CPI- All Urban
Consumers- San
Diego/Carlsbad
Metro
https://www.sandiego.gov/sites/default/files/20
25-06/fy26-living-wage-rates.pdf
12 Oakland (City)
City LWO
(Tiered rates for
City contractors
and hotel workers)
$20.43 6
$24.48 7
$17.79 6
$18.36 7
CPI- Urban Wage
and Clerical
Workers-
SF/OAK/SJ
https://www.oaklandca.gov/Government/Depar
tments/Workplace-Employment-
Standards/Download-Minimum-Wage-and-
Hotel-Wage-Posters
13 San Mateo
County
County LWO
(Applies to County
contractors and
unincorporated
areas) $20.19 $20.19
CPI- All Urban
Consumers-
SF/OAK/SJ
https://www.smcgov.org/ceo/san-mateo-
countys-living-wage-ordinance-lwo
14 San Leandro
(City)
City LWO
(Tiered rates for
City contractors) $20.17 $18.67
CPI- All Urban
Consumers-
SF/OAK/SJ
https://www.sanleandro.org/DocumentCenter/
View/12816/LIVING-WAGE-POSTER-JULY-
2025
15 City of Ventura
Refer to Link for
Exemptions to
LWO
(LW Rate expired
6.30.25. An
updated rate is
not available) $19.78 $15.43
CPI-U- Local region
not specified
https://www.cityofventura.ca.gov/DocumentCe
nter/View/39473/Attachment-A---Notice-to-
Workers?bidId=
16 Los Angeles
County
County LWO
(Applies to
unincorporated
areas and
contractors) $20.06 $20.06
PI-Urban Wage
Earners and Clerical
Workers-
LA/Riverside/Orang
https://file.lacounty.gov/SDSInter/isd/dbw/1076
044_LWContractorGuideJuly2020.pdf
17 Los Angeles (City)
City LWO
(Applies to City
contractors)
$19.12 6
$30.15 8
$17.87 6
$22.50 8
CPI- W- Local
region not specified
https://bca.lacity.gov/living-wages-ordinance-
lwo
18 Hayward (City)
City LWO
(Applies to City
contractors) $19.09 $16.51
CPI- Urban Wage
and Clerical
Workers-
SF/OAK/SJ
https://www.hayward-ca.gov/your-
government/programs/living-wage-city-
hayward-service-contracts
19 City of
Sacramento
LWO
(nonprofessional
service
contractors that
receive at least
$2.48/hr. in health
benefits may
receive
a base hourly
wage of
$16.48/hr.) $18.94 $16.47
CPI- All Urban
Consumers-
SF/OAK/SJ
https://www.cityofsacramento.gov/content/da
m/portal/finance/Procurement/contract-
ordinances/Living-Wage-Rates.pdf
20 Marin County
County LWO
(Tiered rates for
County
contractors) $18.95 $17.45
CPI- All Urban
Consumers-
SF/OAK/SJ
https://www.marincounty.gov/departments/exe
cutive/economic-vitality/employer-
resources/living-wage-ordinance
21 Long Beach (City)
City LWO
(Specific to hotel
workers and
airport
concessionaires)
$25.00 9
$18.58 10
$25.00 9
$18.58 10
CPI- All Urban
Consumers-
LA/Riverside/Orange
https://www.longbeach.gov/finance/business-
info/compliance/minimum-wage/
1 (Health or Retirement)
2 (Health & Retirement)
3 (For-profit rate)
4 (Non-profit rate)
5 (Public Entities)
6 (General)
7 (Hotel Workers)
8 (Airport)
9 (Hotel 100+ rooms)
10 (Concessionaire Worker)