Roompact is engaging in a concerted effort to become a Certified B-Corp. As we explore becoming certified as a B-Corp, we will be sharing some of our experiences, thoughts, and ideas right here on our blog. By practicing transparency ourselves, we hope you will hold us accountable. We also hope that by sharing our own actions and experiences, it will also give you ideas on how you can make your own departmental practices more socially responsible. Learn more about B-Corps.
Student Affairs is no stranger to debates about compensation and salaries. One need not look back any further than a few years ago when there were potential changes to FLSA and its impact on student affairs staff salaries, particularly those of live-on residence hall directors. Inline with our values, and as we seek to become a certified B-Corp, Roompact believes its vitally important that, at minimum, all of our staff members should be paid a living wage. All of our staff are currently salaried and exceed that threshold.
When we recently began developing our ACUHO-I internship position description, however, we paused for a moment on what the compensation should be for the internship. We want to ensure our internship is as accessible as possible to all. At the same time, we are still a relatively young company who doesn’t have access to infinite financial resources. Furthermore, as an internship, as opposed to a formal full-time or part-time position, the nature of the position is somewhat different. A further wrinkle is that the position will be remote, which is a bit unusual for an ACUHO-I internship (which typically requires that housing be provided).
As we pondered these circumstances, a few questions arose:
- What is a living wage?
- How does one determine what a living wage is?
- Should an internship, given its nature as both an educational and a work experience, meet a living wage threshold?
What is a living wage?
The term “living wage” is used by many, but what exactly does the term mean? We’ve found the work of Dr. Amy K. Glasmeier (MIT) to be particularly useful. Dr. Glasmeier defines a living wage as follows:
“The living wage model is an alternative measure of basic needs. It is a market-based approach that draws upon geographically specific expenditure data related to a family’s likely minimum food, childcare, health insurance, housing, transportation, and other basic necessities (e.g. clothing, personal care items, etc.) costs. The living wage draws on these cost elements and the rough effects of income and payroll taxes to determine the minimum employment earnings necessary to meet a family’s basic needs while also maintaining self-sufficiency. ” (Source)
How does one determine what a living wage is?
Living wages can vary by individual circumstances such as family composition and geographic location. When it comes to our ACUHO-I internship, the position is remote, meaning the individual hired could be working from anywhere in the country, and perhaps even internationally. The hire also may or may not have a family or dependents. As a complicating factor, a hiring agent wouldn’t know this information prior to hiring, making it difficult to determine what an initial salary offer should be and how it should be advertised.
This is where a Living Wage Calculator has come in particularly handy. As the website states: “We developed a living wage calculator to estimate the cost of living in your community or region based on typical expenses. The tool helps individuals, communities, and employers determine a local wage rate that allows residents to meet minimum standards of living.” This calculator was extremely helpful in understanding a ballpark figure to aim for.
Should an internship, given its nature as both an educational and a work experience, meet a living wage threshold?
This one is a toughy. Certainly internships offer a lot more than just financial compensation. As educational experiences, interns are able to put their educational goals more at the forefront of their experience. Graduate students, however, have a number of financial burdens that need to be taken into account. Additionally, too often companies and departments take advantage of interns by turning them into “free labor.”
Since we are striving to become certified as a B-Corp, their guidelines were a good initial start as we attempted to figure this out. The assessment instrument for becoming a certified B-Corp asks three questions related to a living wage:
- “What percentage of employees on an FTE (Full Time Equivalent) basis are paid at least the equivalent of a living wage for an individual?”
- “What percentage of employees on an FTE (Full Time Equivalent) basis are paid at least the equivalent of a living wage for a family?”
- “How many of your company’s full-time and part-time jobs were newly created over the last twelve months AND pay a living wage?”
As you can see from the questions, becoming a certified B-Corp does not require that a company reach a full 100% on each of these questions, although the higher the percentage, obviously the better one’s “score” will be towards achieving certification. Roompact also isn’t undergoing this exercise just to meet a requirement, but to do what’s right. Therefore, with the B-Corp criteria as a guide, we would hope to meet and exceed what is called for.
So what did we decide?
First we had to look at the financial viability of offering an internship in the first place. What is the average going rate for an ACUHO-I internship? Even at a quick glance, we could determine that it was financially doable, so we then needed to determine what the exact compensation should be.
We then took a look at different cost differences based on geography. Specifically, this meant looking at high cost-of-living areas that an intern may be based in. San Francisco and New York City seemed like two perfect areas as test cases. For a single intern with no children living in the “New York-Newark-Jersey City Area” the living wage would be $16.44 an hour. For a 40 hour work week, this would result in a weekly wage of $657.60. In the “San Francisco-Oakland-Hayward Area” the living wage would be $18.25 an hour. For a 40 hour work week, this would result in a weekly wage of $730.
Of course, with these two areas having some of the highest costs of living in the country, they represented a ceiling. Most of our candidates are likely to come from areas with a far lower threshhold. So for an initial published compensation rate, we decided to set the floor at $500 a week. We wanted to be transparent in our posting so that candidates could easily determine what a minimum would be. Then, after we make a final hire, we may adjust this given the intern’s circumstances and geography, as necessary. We also plan on discussing this with internship candidates to know this is a possibility, so they can disclose their situation as they feel comfortable after the hiring offer is made.
There is no easy answer to determining compensation levels for interns given the myriad of circumstances and contextual factors related to the internship’s structure, requirements, and some of the characteristics of the final hire themselves. We did, however, find this to be a useful exercise to learn more about the topic and all the factors we need to consider when determine salaries and pay rates. The utility of this exercise also extended beyond just compensation, but also brought up other questions about how we make our company more accessible and provide a more just work environment. This is a conversation all companies and residence life departments should be having. In future posts we’ll explore topics such as being family-friendly, medical benefits, and transparency.