DCFPI believes that savings should be encouraged, but not at the expense of needed shelter. We support a voluntary escrow policy, which would provide savings assistance, financial education and debt counseling, if needed.

Even jurisdictions with some type of mandatory savings program exclude the lowest-income families. New York City only requires individuals with earned income, not those that receive only TANF or SSI payments, to contribute to escrow.  Massachusetts requires a mandatory contribution of $150 per month from their TANF families who are in shelter, but their TANF benefits are much more generous than the District’s, $618 per month for a family of three compared to $428 per month.  After paying escrow, Massachusetts families have more in remaining benefits than District families have to start with.  With more than 70 percent of DC General Shelter families receiving public benefits as their only income, the majority of families will not be able to pay escrow and pay for necessities.

Current DC law requires homeless service providers to offer escrow but few providers do. A first step toward the goal of improving savings would be to enforce the requirement on providers to offer escrow.  This would allow the District to evaluate the effectiveness of a voluntary escrow program and measure the associated costs for both providers and the District government.

If the intention is to encourage savings and good financial management, DCFPI suggests implementing a matched savings program along with financial literacy classes as programs in Toronto (Canada), San Mateo County (California), and New York City do.  Programs like this that encourage savings without taking away from the very limited resources families have to meet their ongoing needs make the most sense.

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In Schmitt and Rosnick’s study, they found that city-level minimum wage increases led to higher pay for workers without job losses in San Francisco and Santa Fe. The data for DC, the third city in their study, were less clear, however. This is because the data did not show that DC’s 1993 minimum wage increase had led to higher wages, for a variety of reasons. The study noted that the data for DC did not “allow us to draw conclusions about the employment effects of binding citywide minimum wages.” Yet Sage Policy Group cherry-picked one piece of data from the Schmitt and Rosnick report to come to a conclusion that the authors had not made. 

John Schmitt issued a statement today in which he concludes “unequivocally that Sage Policy Group has misrepresented our findings.” The full statement is reprinted below:

Statement of John Schmitt, Economist, Center for Economic Policy Research
In Response to the Sage Policy Group Report on the DC Large Retailer Accountability Act

June 17, 2013

 In a March 2013 report, the Sage Policy Group projects that the Large Retailer Accountability Act would have a negative impact on jobs in the District of Columbia. Their conclusion is based on recent research that I conducted with David Rosnick for the Center for Economic and Policy Research. As a co-author of that research, I can state unequivocally that Sage Policy Group has misrepresented our findings.  The authors of the Sage Policy Group report appear to have made basic analytical and economic errors to arrive at conclusions completely at odds with the findings based on an analysis of the firm-level data presented in our original research.

The Sage Policy Group selectively and incorrectly used one part of our study to assert that the District’s 1993 increase of $1 per hour in the minimum wage had a negative impact on employment in the retail sector. In fact, as we stated plainly in our report, the data do not support that conclusion.

The Sage Policy Group’s erroneous conclusion is based on a highly flawed understanding of basic econometric analysis. In our report, we examined the impact of city-wide minimum-wage increases in the three cities with such laws at the time that we conducted our study (Washington, DC, Santa Fe, NM, and San Francisco, CA). The first step of any analysis of the impact of a minimum-wage increase is to determine whether the new minimum wage actually increased wages of low-wage workers. If wages did increase after implementing the new minimum wage, then, and only then, can we measure firms’ employment response to the increase. If, however, the minimum-wage increase was too low to raise wages, or if employers failed to pay the higher wage, then we cannot draw any conclusions about the impact of that particular minimum wage.

In Santa Fe and San Francisco, we found strong evidence that the minimum-wage did indeed raise wages in many industries that typically employ low-wage workers. In Washington, DC, however, we found that the smaller increase in the minimum wage implemented two decades ago had no discernible effect on wages in low-wage industries operating in the District. We presented evidence in our report that wages in the District at the time were already higher than the national average and therefore not much affected by the small increase. We also presented some evidence that suggested that employers may not have complied with the law.

In either case, the data are unequivocal that the small minimum-wage increase in 1993 did not raise the wages of workers in the retail sector. As a result, our analysis of the District’s 1993 increase cannot tell us anything about the effects of the minimum wage on retail employment. From an analytical point of view, if wages did not increase, it is as though there was no increase in the minimum wage. The minimum wage cannot have an effect on employment if it has no effect on wages.

Our analysis of confidential, firm-level data made available to us by the Bureau of Labor Statistics did find a fall in employment in retail in the District relative to retail employment the suburbs, but, as we make clear in our report, this observed decline could not have been due to the minimum-wage increase because the minimum-wage increase did not raise wages in the sector.

 The Sage Policy Group report and its conclusions are built around one number from our report (-1.5), taken completely out of context. This number is what economists call an “elasticity,” which shows the relationship between changes in one variable (in this case, the minimum-wage level) and another variable (in this case, retail employment). If the 1993 minimum-wage increase had raised wages, then this “elasticity” would provide an estimate of the effects of a minimum-wage increase on retail employment in the District. In this case, however, the minimum wage did not increase wages, so the elasticity is meaningless and cannot be used to assess the impact of the increase. The observed fall in retail employment in the District was due to some other factor or factors, possibly including population losses, falling average incomes, bad weather, or some other factor beyond the scope of our investigation. What the analysis and the data clearly do, however, is rule out the minimum wage as a cause of the decline in retail employment in the years after the 1993 increase.

(A technical aside: Table 6 in our report, which is the source of the crucial -1.5 number used in the Sage Policy Report, clearly demonstrates that the observed decline in employment was in response to an economically small and statistically insignificant change in wages in the retail sector. Employment in DC retail fell relative to employment in the suburbs, but retail wages did not increase relative to the suburbs. The -1.5 number appears in our Table 6, panel (d), column 7, row 4. The corresponding wage increase associated with the 1993 minimum-wage increase appears in the same table, panel (a), column 7, row 4; the increase is small (0.01 log points, or about one percent) and statistically insignificant (standard error of 0.02 log points). Panel (a) reports nine different ways of measuring the wage impact of the DC minimum-wage increase. In four cases, wages appear to have fallen after the new wage was passed; in two cases, measured changes rounded to zero; in three cases, wages increased by small, statistically insignificant amounts. No slicing of the data provides any evidence that the 1993 minimum-wage increase raised retail wages in the District in 1993 — a crucial finding that the Sage Policy Group failed to mention or to factor into their analysis.)

We clearly stated these findings and their implications in our report: the 1993 increase in the Washington, DC, minimum wage “does not allow us to draw conclusions about the employment effects of binding citywide minimum wages.”

Meanwhile, the Sage Policy Group’s selective reading of our report led them to ignore important findings based on the experience of Santa Fe and San Francisco. In those cases, where wages increased, the overwhelming weight of results pointed to no negative effect on retail employment. In Santa Fe, where the size of the minimum-wage increase was much larger than it had been in the District, average wages in retail increased by statistically significant amounts ranging from 2 to 9 percent. Of the seven tests where we found increases in retail wages, retail employment in Santa Fe actually increased in four cases; in two cases, employment fell by a statistically insignificant amount; and in only one case did employment fall by a statistically significant amount. The evidence for Santa Fe, therefore pointed strongly toward no negative effect on retail employment. Meanwhile, in San Francisco, the minimum-wage increase only raised retail wages by a statistically significant margin in one of the nine cases we examined. In that case, retail employment rose, but the increase was not statistically significant. Again, the best conclusion to draw from our analysis is that the minimum-wage there had no negative effect on retail employment in San Francisco.

The Sage Policy Groups report also chose to hide our major findings: “The results for fast food, food services, retail, and low-wage establishments in San Francisco and Santa Fe support the view that a citywide minimum wages can raise the earnings of low-wage workers, without a discernible impact on their employment.”

As an economist and long-time resident of the District of Columbia, I am deeply troubled by the misrepresentation by the Sage Policy Group of my research. The Sage Policy Group’s report does not accurately reflect our conclusions and should not be used as an argument against the implementation of a living wage for retail workers in the District of Columbia.

To print a copy of John Schmitt’s letter, click here.

Right now, DC gets 23.5 cents for every gallon pumped in the city, but there are problems with structuring the tax in this way. The cost of road projects rise from year to year due to inflation, yet gas tax revenues are unlikely to rise because the tax per-gallon doesn’t change. In fact, because gas consumption may go down over time, especially as the fuel efficiency of cars improves, there is a risk that gas tax collections will fall over time. 

That is, in fact, what is happening in in the District. Revenue collections from DC’s gas tax have eroded, falling 35 percent over the past decade, adjusting for inflation. This is a clear sign that continuing to rely on a per-gallon tax that is not adjusted for inflation will weaken the city’s ability to generate revenues to support transportation infrastructure. 

A provision of the Budget Support Act for fiscal year 2014, and the subject of today’s hearing, replaces the 23.5 cents per gallon tax with an 8.3 percent tax on the wholesale price of gas. This would improve the long-term viability of gas tax collections because fuel prices tend to rise over time.  

DCFPI supports strengthening the gas tax in this way, and there’s still room to improve upon it. Because the price of gas is volatile over time, as any driver knows, the amount of tax collected can go up or down too. In order to prevent a big drop, the proposal for the gas tax puts in place a cents-per-gallon revenue floor to maintain tax collections in case wholesale prices drop dramatically. DCFPI recommends that the new tax be amended to also place a ceiling on the amount of any increase in the cents-per-gallon equivalent of the tax from year to year, so that if fuel prices jump significantly, the tax would not spike at the same time. 

Our testimony can be found here.

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This bill would boost resources to schools with students who face high barriers to achievement. It would increase local funding for three groups:  students who are low-income, who attend schools with low graduation rates, and who are enrolled in career and technical education programs. The bill adds new weights for these groups to the per-pupil-funding formula that is used to fund DCPS and each charter school. The District already has supplemental weights for students with special education needs and English language learners. 

The changes to the funding formula would take place over two separate school years, starting in 2014-2015. The new weights would be cumulative, so if students qualify under all three categories, their base per-pupil funding would increase due to all three factors. 

DCFPI is very encouraged by the Council’s proposal to invest more funds into the education of our low-income students. Research shows us that children who grow up in poverty face a number of challenges outside the classroom – from housing instability to low levels of parent engagement – that affect their ability to learn in the classroom. 

However, the bill doesn’t address how much weight to give each of these factors. This is a critical decision that shouldn’t be made hastily. We recommend that the mayor and Council wait for the results of the DC Public Education Adequacy Study, a year-long examination of the funding needed to support an adequate education, to be released this fall. 

We encourage our readers to learn about these and other key features of this bill, including: 

• Direct Funding to School Budgets: Right now, DC Public Schools spends approximately 77 percent of its local funds directly on individual schools. The bill would require DCPS to increase that funding to at least 80 percent. 
• School-Based Budgeting: The bill would alter how local school budgets are put together, giving principals more control of their school dollars while requiring them to conform to a set of standards set by the Chancellor. Starting in the 2015-2016 school year, principals would have to report how their proposed budget will boost student achievement and address student needs, and they would be evaluated based on their performance.
• School Budget Stabilization: The bill would not allow any DCPS school to see more than a 5 percent loss in local funds from the previous fiscal year due to application of the funding formula. 
• Transportation Subsidies: Starting in the 2015-2016 school year, all DC high school students that qualify for free and reduced meals would be fully subsidized for public transportation costs. (Note: Last week, Councilmember Muriel Bowser introduced separate legislation that would fund Metro bus transportation costs for all DC public school students, including those in private schools, regardless of income level.) 

DCFPI looks forward to the public hearings on these education bills in the coming months, with several expected before the Council begins their summer recess. You can read our summary of all seven bills here.

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The District’s Exchange opens on October 1 and will begin offering coverage to individuals and small businesses beginning in January 2014. Health care plans sold through the Exchange will have to meet a number of quality standards and consumer protections, including national regulations and District-specific protections meant to address local needs. 

The District’s quality standards will benefits consumers in several ways. For the first time, insurers will have to cover mental health and substance abuse services in parity with physical health treatment, meaning no limitations on the number of days or visits that services can be received. As well, plans will have to cover “habilitative services,” such as treatment for autism. Finally, health plans will have to collect and report on the number and types of doctors they provide in their networks and submit plans on how to improve those networks. Based on these data, the District will set and enforce minimum provider standards.  

While the absence of rate shock is a victory for consumers, the transparency of a fully unified market will be needed in future years to keep downward pressure on rates. By the end of 2015, all individual and small business plans will have to compete through the Exchange’s online portal, allowing consumers to compare prices side-by-side.  This price transparency will be critical to keeping prices as low as possible.  

The rates submitted for 2014 still need to go through a review process to see if any increases are justifiable based on the costs of doing business. Rate review will be another important mechanism for helping consumers avoid large rate hikes. Legislation that will likely go before DC Council in the fall could include language that strengthens the ability of regulators to prevent unjustifiable rate increases. The competition and transparency of premium rates, along with a robust oversight process, will allow consumers to receive better quality benefits at the best possible prices. 

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In Friday’s blog, we highlighted Interim Disability Assistance (IDA) as one of the programs that the D.C. Council should consider funding if additional revenues are forecasted prior to the final approval of the budget on June 18. IDA provides short-term assistance to residents who have disabilities that prevent them from working. During the Great Recession, funding for IDA was cut and the number of individuals served has dropped by 65 percent, though the need remains unchanged. An investment of $4.4 million will provide benefits for 1,050 additional residents and provide application assistance to all recipients. 

The IDA program provides $270 a month — or about $9 a day — to residents who are in limbo — unable to work and waiting to learn if they are approved for federal Supplemental Security Income (SSI) benefits. IDA provides critical financial assistance during this period, helping residents meet basic needs, such as rent (often shared with others), medical copays, and necessities like toothpaste. Without IDA, many people with disabilities are forced to rely on more costly crisis services, such as shelters and emergency rooms, thus costing the District more.

The SSI application process is difficult and time-intensive. It can take up to a year or two to receive a decision. Applicants must complete a long written application, submit medical and vocational documentation, and often undergo special medical and psychological evaluations. Nationally, just one-out-of-three SSI applicants are approved based on their initial application. Many only receive benefits after completing a lengthy appeal process.

Currently, DC offers no application help to SSI applicants, despite the difficulty of the process. Providing application assistance to SSI applicants can lead to quicker determinations and higher acceptance rates. This would reduce the number of months a recipient receives IDA, and higher acceptance rates would increase the amount of federal reimbursement the District receives.

Recognizing these benefits, the mayor included $1 million to provide this assistance in his proposed budget, but placed it on the revenue contingency list, the list of items that would be funded if revenues were higher than anticipated. The council decided to remove this list and instead include a provision that if additional revenues were forecasted before the final vote of the budget June 18, the council could spend up to $50 million of these funds. If additional revenues are forecasted, the council should fund IDA application assistance and add $3.4 million to the budget to serve an additional 1,050 residents in need. The Council already has identified $500,000 to help serve 150 more residents, but this additional investment will ensure that more residents receive needed financial assistance as well as assistance in making strong applications.

There are reasons to think additional monies might be forecast, but there are also precautions. The latest revenue collections or cash report released by the CFO shows that revenues are up by 21 percent when you compare March 2013 collections to March 2012 collections. It also states that revenue collections have been unusually strong in the first six months of FY 2013. But even while DC revenues look bright at the moment, there’s no guarantee collections will continue to come in at this pace throughout the rest of the year. Unfortunately, the latest available report is through March 2013 and doesn’t show the important April 2013 collections which would include income tax filings. It also doesn’t show what the impact of sequestration might look like later in the year and as sequestration continues on and the impacts start to realize, it may put a drag on DC’s economy in the later part of the year which could reduce the gains seen in the first half of the year.  

If revenues do come in higher than expected the council should aim to use some of DC’s strong economic growth to help District residents who are struggling. Figures show that nearly one-in-four single parents is unemployed and that child poverty, which rose by one third in the recession, remains high.  

The mayor and council included several increases in the FY 2014 budget to help low- and moderate-income residents. Yet there are still great needs. Homeless families sleep in hotels because shelters are full, families with children are currently waiting three to six months to receive job training, more than two dozen schools are on a wait list for school mental health services, taxes on DC’s middle-income earners are far higher than those at the top, and significant changes to the high school equivalency exam (GED) mean that investments are needed to help prepare DC residents to meet the new requirements.  

Below are DCFPI’s recommendations to the council for helping DC residents with these important needs. 

Preventing Homelessness/Helping DC Residents in Crisis 

• Invest in Interim Disability Assistance (IDA) to Serve Residents Unable to Work. IDA provides $270 a month to residents with disabilities who are unable to work and are waiting to qualify for federal assistance. Due to past year budget cuts, the caseload that DC has been able to assist has been cut 67 percent since 2008.  The council has already identified $500,000 to help serve 150 more residents. An additional $4.4 million will help serve 1,050 additional residents as well as provide application assistance for first-time applicants.  Research shows that providing assistance can help increase the chances that someone is able to get their federal assistance application approved on the first try. 
• Invest in Permanent Supportive Housing (“Housing First”) to help end chronic homelessness.  Housing First provides both housing and supportive services to the city’s chronically homeless, who typically suffer from life-threatening health conditions and/or severe mental illness. It also saves the city money, because permanent supportive housing ends up being cheaper than more expensive crisis-related services like emergency rooms, psychiatric hospitals, and jail. The council has already identified $2.2 million for Housing First for 93 chronically homeless residents. An additional $2.1 million will help ensure an additional 94 households receive help in FY 2014, the first step in the Interagency Council on Homelessness’s plan to end chronic homelessness by FY 2020.  
• Invest in Homeless Youth to help give children a safe place to stay and the tools to succeed independently.  Nearly 300 youth seeking emergency shelter were turned away in February. This funding will support shelter beds to meet emergency needs as well as independent living programs that provide longer term housing and support services. The council has already identified $486,000 for LGBTQ youth. An additional $4.6 million investment would help create a total of 125 beds and spaces in the independent living program.  

Helping Residents With The Rising Cost of Housing  

• Invest in the Tenant-Based Part of the Local Rent Supplement Program (LRSP). While the FY 2014 budget includes increases to a number of affordable housing programs, the increases are largely focused on affordable housing production and a substantial share of these units will not likely be available until at least FY 2015.  Tenant-based vouchers, by contrast, will be ready to be used immediately. The council has already identified nearly $2 million which will help make 100 homes affordable to low-income families. An additional $5.75 million could help make 400 homes affordable for very low-income families. 
• Increase Rapid Re-housing for Individuals. Rapid re-housing moves people out of shelter quickly and into housing with supportive services. With federal funding, DC was able to serve individuals through the program in prior years. Other cities have implemented rapid re-housing programs for individuals with success. The council identified $400,000 to start a pilot program. An investment of an additional $600,000 could help serve even more individuals and help to move them out of shelter. 
• Create a centralized system to assess homeless individuals and refer to appropriate program. Research has found that centralized intake is key to preventing homelessness and helping individuals leave homelessness.[1]  It enhances the quality of client assessment and ensures that clients are provided with the services they need.  It is also a requirement of the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act, the law that governs federal homelessness funding. An investment of $1 million could help create a centralized system for individuals. 

Giving Residents the Tools to Succeed in the Job Market & Improving Job Conditions 

• Invest in Adult Literacy to help DC Residents prepare for major changes to high school equivalency exams.  Without additional funds, adult educators will not have sufficient resources to help residents prepare for the changes to the high school equivalency diplomas.  A $4 million investment in OSSE’s Pathways to Adult Literacy Fund will help 1,000 residents obtain a high school equivalency diploma or post-secondary credential as well as increase professional development and certification among adult educators.  
• Invest in Job Training for Low-income Families with Children. The approved FY 2014 budget sustains the FY 2013 maximum capacity to serve 3,630 unemployed TANF parents. This is not sufficient to meet the need for these services and as a result there is a waitlist of more than 3,250 TANF parents for these vendors. As of April 2013, the average wait time to access vendor services is between three and six months. This wait time is likely to increase as the Department of Human Services plans to assess the remaining 9,000 parents who have not yet received an assessment by the end of June 2013. It is anticipated that the vast majority of these parents will be referred to an employment vendor based on the results of their assessments.  
• Invest in Protections for Low-income Families with Severe Barriers to Work. In the FY 2014 budget, the council was able to identify $3.6 million to fund five of the six protections for families with severe barriers to work, including domestic violence and caring for a family member with a disability. The remaining unfunded exemption is for parents caring for an infant under 12 months of age. Zero to Three, a national organization devoted to improving the lives of infants and toddlers finds that “infants and toddlers, particularly those at risk, need dedicated time with their parents to form the critical relationships that are the foundation for healthy social, emotional, and cognitive development.”^[2] An additional $1.5 million investment could help cover parents of infants. 
• Improve job conditions for DC government workers.  Last year, the Protecting Injured Government Workers Act was introduced.   This bill would restore processes that were in place prior to 2011 within the the public sector workers compensation program–a program that provides access to medical care and some income support for DC government workers who are injured while working–in order to avoid some workers from experiencing sudden cut offs from access to medical care and income supports before some they have had a chance to appeal decisions or fully recover.  An investment of $800,000 to would help 1,300 injured workers by restoring the processes that were in place prior to 2011.

Giving Tax Relief To Hard-Working Residents 

• Increase the standard deduction.  The District’s standard deduction is a part of the DC income tax that is available to all residents, but provides the greatest benefits to families and individuals with low-and-moderate incomes.  Despite the importance of these tax provisions, the DC deduction is far lower than the federal standard deduction and the standard deduction in many states. Raising the DC standard deduction to be closer to, or actually match, the federal standard deduction would help exempt a greater share of working poor families from owing DC income tax, increase the effectiveness of DC’s earned income tax credit for lower-income working residents, and provide substantial tax benefits to low- and moderate-income working families with incomes above poverty.  This also would make DC’s tax system more progressive. 

Give Children A Safe Place to Learn and Grow 

• Invest in school mental health services to expand availability of a critical service for kids. Mental health clinicians offer a range of on-site services — from prevention and early intervention to treatment of more severe issues — and there are waiting lists both for schools to participate and for students needing services at participating schools.  a $2.7 million investment will expand mental health clinicians in an additional 27 schools, which would include both traditional public and public charter schools.   
• Raise Child Care Reimbursement Rates and Increase Childcare Slots. In his initial budget submission, the mayor had as his number one contingency revenue priority to raise the childcare reimbursement rates and increase childcare slots. Reimbursements rates for childcare providers have not been updated since 2006 and are based on child care costs in 2004.  A rate increase would help ensure that providers can provide quality child care and that families have access to child care centers throughout the city. In addition, an increase in reimbursement would more closely match the operating costs of providing quality child care in the city.^[3] An $11 million investment would increase the childcare subsidy rate by 10 percent and provide child care subsidies to 200 more families with infantsand toddlers.

To print a copy of today’s blog, click here.

The action taken by the council was important to optimize competition, transparency, and affordability, as well as guarantee that all health care plans offered in the District meet quality standards under the law. The legislation requires all health insurance plans for both individuals and small businesses be sold through the exchange by 2015. Some in the insurance industry had pushed to delay implementation, but consumer advocates successfully argued that this would only handicap the exchange and disadvantage residents. 

There are several reasons why a sole, unified marketplace is advantageous. First, the exchange’s online portal will offer an apples-to-apples comparison of plans, fostering competition and providing consumer protections because all plans through the exchange will meet specific criteria set by local and federal governments. In some states, this kind of competition already is leading insurers to cut their prices. 

For small businesses in DC, the exchange will expand health care options and purchasing power. Competition will lower prices and expand choice, while some businesses will qualify for tax credits worth up to 50 percent of their annual premiums, making insurance much less costly than it is now. 

DC Fiscal Policy Institute applauds the efforts of the DC Council and the exchange authority to make getting health insurance as affordable and consumer friendly as possible. 

But there is still important work to be done. An amendment that should be included in permanent legislation would allow the Department of Insurance, Securities, and Banking expanded authority to review proposed rate increases. This would help ensure that premium hikes are directly tied to quality and cost of services rendered and would create a strong mechanism for consumers to report excessive rate increases. The council did not approve this amendment as part of the emergency act, but even councilmembers who did not vote for the amendment said they understood the reasoning and intentions behind the proposal. 

DCPFI looks forward to the council approving this important consumer protection in the permanent bill.  

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The bill comes at a time when the District is experiencing a population boom, and when development in many neighborhoods is attracting national retailers. A growing retail sector adds jobs to the District, but the hourly pay is often at or close to the city’s minimum wage, which is currently $8.25 an hour.  The median wage for cashiers in DC area is $10.38 an hour – meaning half earn less than this and half earn more – while the median wage for retail salespeople is $11.21 an hour. 

In a high cost of living city such as the District, where the average cost of a one-bedroom apartment is more than $1,000 a month in most neighborhoods, the typical annual salary for these workers — under $25,000 — makes it hard to pay for even basic necessities such as housing, transportation, and food costs. 

The Council is attempting to address these concerns by requiring large retailers in the city to hire workers at D.C.’s living wage, which is currently $12.50 an hour. Initially, the bill defined large retailers as those with 75,000 square feet or more retail space, but the legislation was changed to retailers whose gross revenue exceeds $1 billion. As the committee noted, many of the city’s large retailers already have an average wage that meets or exceeds the living wage, which means the living wage requirement would affect their lowest-paid workers but not all.   

The bill exempts franchisees and workers who are covered under a collective bargaining agreement. For large retailers who currently operate in the District, the bill gives a four-year period to raise starting wages to $12.50 an hour. 

The legislation has several benefits. Research has shown that one of best ways to lift DC families out of poverty is to provide work that can pay for housing, transportation, food, and other basic essentials. In fact, full-time work at $12 an hour would lift about two-thirds of DC’s working-poor families out of poverty. The District’s economy also would benefit, because lower-wage workers spend their earnings at local businesses. 

Efforts to raise wages for DC’s working poor, such as the Large Retailer Accountability Act, are important to ensuring that the District remains affordable to all residents and that the benefits of DC’s economic boom are widely shared.

To print a copy of today’s blog, click here.

DCFPI policy analyst Kate Coventry presented recommendations on four sections of the Homeless Services Reform Act today. Here is her testimony:

Provisional Placement of Families

The proposed legislation would establish a 14-day period of provisional eligibility for families seeking shelter, in part to give DHS time to work with families to seek alternatives to entering shelter.  DCFPI shares DHS’s goal of identifying alternatives to shelter for families when possible and recognizes that identifying potential alternatives may take a number of days.  We have several suggestions to ensure that provisional placement is structured in a way that meets families’ needs and that protects families from being terminated from shelter in error. 

The District must ensure that provisional eligibility causes as little disruption to the family as possible.  Parents need to be able to attend work or training and get their kids to school without worrying that these activities are interfering with their shelter applications.  That is not what happened this past winter, when some families were given shelter “respite stays.”  These families were guaranteed shelter for just one night at a time.  Each morning, the family had to pack up all of their belongings and report to the Virginia Williams Center.  Families spent entire days either waiting at the Center or gathering paperwork.  Not surprisingly, this process made it difficult, if not impossible, to perform needed tasks such as getting kids to school or attending work preparation activities.  At least one mother was investigated by the Child and Family Services Agency because her child was truant during this period.  Provisional placement should be structured to avoid these problems.

Additionally, DCFPI believes that families should be allowed to remain in shelter during an appeal of shelter termination.  Recognizing that decisions about shelter eligibility may be made in error, families currently have the right to remain in shelter while they appeal termination decisions.  This ensures that the family has a safe place to sleep while the decision is reviewed.  Changing this policy means a family who is wrongfully denied shelter may be forced to sleep in unsafe conditions for weeks awaiting an appeal decision.  DCFPI strongly recommends that this provision be dropped from the bill.

Finally, the process for determining whether suitable alternative housing is available – particularly whether a family can stay with friends or family in the community — must be improved.  Homeless families report stories of hosts being under the impression that the stay was for just one night or one week.  Or they find that the individual who consented to house the homeless family had not consulted with the other adults in their household to secure their permission.  Or the potential host has discovered from reading their lease that they are at risk of eviction for hosting another family.  To prevent this from happening in the future, the Virginia Williams caseworker, homeless parent, and adults in the hosting household should have a meeting, in person or by phone, to clarify the length of time the family can stay, the terms of the host household’s lease and the responsibilities of each party.  Otherwise, community placements will lead to a revolving door, threatening the family’s ability to stabilize.

Defining Rapid Re-housing Placement as Per Se Appropriate

DCFPI supports the use of Rapid Re-Housing as a tool for moving families out of shelter as quickly as possible.  We recommend some changes to ensure that Rapid Re-housing serves as an important element of DC’s homeless services system that protects the needs and rights of homeless residents.

Current law allows providers to terminate a shelter resident if the resident turn down two offers of appropriate housing.  Residents have the right to appeal termination if the housing was not appropriate for their needs, such as lacking wheelchair accessibility or being located near their abuser.  The proposed HSRA changes would define a Rapid Re-housing placement as per se appropriate housing, which would mean that residents would lose their rights to appeal a placement based on factors that would be grounds for appeal of any other housing placement.  The proposed legislation should establish a family’s right to appeal a Rapid Re-housing placement.

Beyond that, there a number of issues that should be resolved before families are compelled to accept Rapid Re-Housing placements.  The regulations for this program are not finalized and thus the District has not defined which populations are appropriate and eligible for the program.  Additionally, the District has not determined what assistance will be offered to families who despite their best efforts are unable to maintain their housing after the Rapid re-housing subsidy period ends.  At the very least, families must have a year-round right to shelter to ensure they have a safe place to stay if they are unable to maintain their housing.  It is understandable that families would refuse Rapid Re-housing placements if they do not think they will be able to afford the apartment on their own and might have to wait until hypothermia to access shelter.

Mandatory Escrow

DCFPI agrees with DHS’s goals of helping residents accumulate assets and exit shelter successfully.  We have several recommendations for modifying the escrow proposal to ensure that it matches a family’s ability to save.

Current law requires homeless service providers to offer escrow but few providers do.  We believe a first step toward the goal of improving savings would be to enforce the requirement on providers to offer escrow.  This would allow the District to evaluate the effectiveness of a voluntary escrow program and measure the associated costs for both providers and the District government.

 Additionally, we believe that escrow programs should be voluntary, include incentives for saving, and should exclude the lowest income residents.  The DC Housing Authority recognizes that some families have income so low that they would be unable to pay rent and meet their basic needs, so these families pay no rent.  Other jurisdictions also recognize this.  New York City only requires individuals with earned income, not those that receive only TANF or SSI payments, to contribute to escrow.  Massachusetts requires a mandatory contribution of $150 per month from their TANF families who are in shelter, but their TANF benefits are much more generous than the District’s, $618 per month for a family of three compared to $428 per month.  After paying escrow, Massachusetts families have more in remaining benefits than District families have to start with.  With more than 70 percent of DC General Shelter families receiving public benefits as their only income, the majority of families will not be able to pay escrow and pay for necessities.

 If the intention is to encourage savings and good financial management, DCFPI suggests implementing a matched savings program along with financial literacy classes as programs in Toronto (Canada), San Mateo County (California), and New York City do.  Programs like this that encourage savings without taking away from the every limited resources families have to meet their ongoing needs make the most sense.

 Changes to the Permanent Supportive Housing Program (PSH)

DCFPI supports DHS’s goals to save money and place new clients in the program.  We question, though, whether the proposed changes will create true savings or simply move costs to other District agencies.  PSH serves chronically homeless persons, those who are by definition at high risk of hospitalization or incarceration.  PSH provides the supportive services and stable housing that these persons need to address their problems.  If individuals lose these services while hospitalized or incarcerated, they will become dependent on more costly emergency services upon their release.  And these services can do little to help an individual re-stabilize.  DCFPI recommends that PSH clients retain access to supportive services during periods of institutionalization and upon release.  If the client is absent for an extended period of time and the subsidy is reassigned to another client, the institutionalized client should be put at the top of the waitlist for subsidies.  This will allow DHS to avoid paying rent on unused units and ensures that PSH residents can re-stabilize after institutionalization.

In closing, DCFPI hopes to work collaboratively with this Committee, DHS, and other stakeholders to improve these amendments to reach the goals of preventing families from becoming homeless, moving families out of shelter and into housing as quickly as possible, and providing shelter year-round to families in need.