Report by Kelly Jeong, concentrator in Applied Mathematics-Economics and Computer Science, SF Living Wage Coalition intern, Brown University Careers in the Common Good Wintership program

Calculating the Increase in MCO (FY 2024-2025)

Motivation

“The Minimum Compensation Ordinance (MCO) covers most City service contractors as well as tenants at the San Francisco International Airport. The law generally requires covered employers to provide to their covered employees: (1) No less than the MCO hourly wage in effect; (2) 12 paid days off per year (or cash equivalent); and (3) 10 days off without pay per year” (SF Gov).

MCO focuses on increasing wages for workers on contracts with the City and County of San Francisco. Thus, in anticipation of the new fiscal year beginning on July 1st, the goal of this section of the report is to find the amount that the MCO budget should increase. We use the MCO rate from 2021 (rather than from other, more recent years) because that was the final year where MCO increase funds were calculated individually.

Restatement of the Problem

By how much should the MCO budget increase for Fiscal Year 2024-2025?

Overall Logic

In FY 2020-2021, a 3.31% increase in MCO resulted in a budget increase of $2,125,000. We use that information to find what the budget increase for FY 2023-2024 should be after finding the percent increase in MCO from 2021 to 2024.

Definition of Variables

Step 1. Calculate the % increase in MCO: 6.973%

By applying the percent growth formula  , we plug in $20.25/hr for New_MCO and $18.93/hr for Old_MCO to solve for the following equation:

=  =

The $20.25/hr refers to the increase in MCO rate for 2024, and the $18.93/hr refers to the increase in MCO rate for 2021. After performing the calculations, we see that there was a 6.973% growth in MCO from 2021 to 2024.

Step 2. Find budget of FY 2020-2021 before the MCO increase

In FY 2020-2021, there was a 3.31% increase in MCO rate from the previous year, which resulted in a budget increase of $2,125,000. With this information, we start by calculating what the budget before the increase in 2020-2021 was.

Again, using the percent growth formula  , we get:

Solving for , we can rearrange the above equation:

=  = $64,199,395.77

Step 3. Find budget increase necessary for FY 2023-2024

Using the calculated from Step 2 and  = 6.973%, we now have all the relevant values to find the budget increase necessary for FY 2023-2024.

=  =

Plugging in the respective numbers, we get the following equation:

=   = 0.0673  = 4,476,623.87

Calculating the Increase in CODB (FY 2024-2025)

To calculate the budget increase necessary for the CODB, we apply the same process as for calculating the MCO.

Motivation

“The cost of doing business definition is any expense a business incurs while in the process of conducting business. A cost of doing business could be a direct cost, like raw materials, or an indirect cost, like building security” (UpCounsel).

Because the CODB includes costs other than wages for workers, an important distinction between raising the CODB from MCO is that it is not guaranteed that the increased funds will go towards increasing the wage of workers.

Restatement of the Problem-

By how much should the CODB budget increase for Fiscal Year 2024-2025?

Overall Logic

We first calculate the percent increase in CODB using the CPI values from 2022 and 2023. From this information, if a 3% increase in CODB (from FY 2020-2021) resulted in a budget increase of $19,400,000, we can find how much the budget increase be.

Definition of Variables

Step 1. Calculate the % increase in CODB: 3.666%

By applying the percent growth formula  , we plug in 339.050 for New_CPI and 327.060 for Old_CPI to solve for the following equation:

=  =

339.050 refers to the CPI for all urban consumers in SF (not seasonally adjusted) in 2023, and 327.060 refers to the CPI in 2022. After performing the calculations, we see that there was a 3.666% growth in CPI from 2022 to 2023.

Step 2. Find budget of FY 2020-2021 before the CODB increase

In FY 2020-2021, there was a 3% CODB increase, which resulted in a budget increase of $19,400,000. With this information, we start by calculating what the budget before the increase in 2020-2021 was.

Using the percent growth formula  , we get:

Solving for , we can rearrange the above equation:

=  = $646,666,666.70

Step 3. Find budget increase necessary for FY 2024-2025

Using the calculated from Step 2 and  = 3.666%, we now have all the relevant values to find the budget increase necessary for FY 2024-2025.

=  =

Plugging in the respective numbers, we get the following equation:

=   = 0.03666  = 23,706,700