CA Cities Engage in Minimum Wage Arms Race

Minimum WageForging ahead with plans to take minimum wages to new highs, California’s San Francisco Bay Area has touched off tit-for-tat increases, deepening fears that the region’s high cost of living has become a business-killer.

A growing dilemma

“Berkeley’s City Council approved a hike in June 2014 that will lift the minimum wage to $12.53 by next year,” the Los Angeles Times noted. “In November, voters in San Francisco and Oakland overwhelmingly approved increases, with San Francisco on track to hit $15 before Seattle does. Oakland went up to $12.25 this year.” Then, last month, nearby Emeryville surpassed Berkeley and Oakland with a $14.44 wage; “Berkeley sent its labor commission back to the drawing board. The council next month is expected to take up a proposal that would add paid sick days, extend wage hikes until they hit $19 in 2020 and then add cost-of-living increases in perpetuity.”

The upshot for businesses has been mixed at best: although some employers have crafted clever strategies for adding more value for customers, others have worried the path is unsustainable. “The necessity of paying people a living wage in the Bay Area is clear, so it’s hard to argue against it, and it’s something I’m really proud to be able to try doing,” one pizzeria owner told the Times. “At the same time, I’m terrified of going out of business after 18 years.”

As big wage increases have been passed into law across California, business interests haven’t always been the only ones to pump the brakes. In Los Angeles, where the city minimum is a $15 wage, critics of the increases howled when labor advocates wound up asking for a waiver on the eve of its passage. “The exemption was left out of the law’s final version after criticism from the local chamber of commerce and business groups,” noted the Wall Street Journal. “But similar exemptions are included in at least three other Los Angeles laws, including a minimum wage for hotel workers approved last year.”

Recalibrating business

Although California has led the country in grappling with stagnant wages and rising costs of living, the turn toward higher minimum wages has touched off broad debates across the country. Hospitality businesses such as the hotel industry have faced a particular challenge as wages have climbed upward. For years, bar and restaurant groups have lobbied policymakers to think twice, warning that dramatically hiking wages would undermine their business models, which politicians and analysts have often built into their assumptions about jobs and economic health.

“The problem with the minimum-wage offensive is that it throws the accounting of the restaurant industry totally upside down,” as Harold Miller, a restaurant consultant currently serving as vice president for franchise development at Persona Pizzeria, told the Chicago Tribune.

In tech-forward areas with high costs of living and high rents, the threat to the hospitality business model has accelerated the shift toward increased automation and decreased employment rolls.

Stalling statewide

Some California employers have set out to recalibrate their work forces, hoping that a shift to more temporary workers could blunt the economic impact of wage increases. But the political impact of such a shift has also become a problem. Faced with criticism over differential treatment between contract and career employees, the University of California system offered a $15 “minimum wage” set to apply to thousands of contract workers on a private, not public, payroll.

UC unions were still left cold. “Private contract firms will still make as much as $10 an hour or more in profit off the labor of workers being denied the same wages as UC workers doing the same jobs,” wrote the president of the system’s largest employee union in the San Francisco Chronicle. “UC could choose to send a different message by supporting SB376,” she argued, “legislation that would guarantee the employees of UC contractors equal pay as career employees doing the same work.” That bill was authored this spring by state Sen. Ricardo Lara, D-Bell Gardens.

But the latest Golden State bellwether, a bill creating a statewide $13 wage introduced by state Sen. Mark Leno, D-San Francisco, could signal that the minimum wage wave may be cresting. As the Sacramento Business Journal observed, Leno’s effort “moved farther than it did last year, but the bill’s fate is far from assured.” Although Gov. Jerry Brown has “proposed to tackle income inequality this year through an earned income tax credit,” he has declined to comment on the push for a $13 wage — letting a skeptical Department of Finance speak for him.

Do L.A. Council Members Pay Their Gardeners, Cleaners at Least $15 an Hour?

Amid Los Angeles City Hall’s push to raise the city’s minimum wage to $15 by 2020, some city lawmakers say they already are paying at least that hourly rate to the gardeners, housekeepers and baby sitters who work at their homes.

South LA and downtown City Councilman Curren Price, who co-introduced the minimum wage ordinance, employs a housekeeper and pays her more than $20 an hour, a Price spokeswoman said.

Price declined to release her name, citing privacy concerns.

On the east side of Los Angeles, City Councilman Mitch O’Farrell pays two gardeners $60 a month for about an hour’s work total at his home, an O’Farrell spokesman said.

Like Price, O’Farrell — and the other council members who responded to this news organization’s questions about outside workers — declined to release the names of the workers.

Council members earn $184,610 annually, among the highest in the country for city lawmakers.

Those making the $9-an-hour minimum wage earn about $16,000 annually, according to a UC Berkeley studycommissioned by Los Angeles Mayor Eric Garcetti.

Asked what hourly wages council members pay for household services, about half the 15-member council declined to comment or didn’t respond to the request.

City Councilman Felipe Fuentes, who represents parts of the San Fernando Valley, has contracts with businesses that provide household services and a child care provider, all of whom he pays above $15 an hour, his spokeswoman said.

The councilman also pays for vacation and sick time, she said.

Valley Councilman Bob Blumenfield and his family also hire employees to handle home maintenance and child care-related tasks, a Blumenfield spokesman said.

Those employees “earn decent wages in excess of $15 per hour in addition to vacation, sick time, social security and other benefits,” the spokesman said.

The hourly mean wage for housekeepers and cleaners in the greater Los Angeles metropolitan region is $12.17, according to the U.S. Bureau of Labor Statistics. The figure is $11.06 for child care workers.

Amid sometimes emotional debates about the minimum wage and economic inequality, several council members have cited their humble upbringings in arguing for a citywide pay hike.

At a council meeting two weeks ago, Price recalled growing up in a working-class family in South LA, while Councilwoman Nury Martinez said her father made $13,000 a year as a dishwasher.

In raising wages, Los Angeles is poised to join Oakland, San Francisco and Seattle in hiking citywide pay.

Garcetti first proposed the hike last year, telling crowds at a South LA event that the city’s $9 wage is a “poverty wage.”

Garcetti resides in the Getty House, the official mayoral residence, with his family. Garcetti spokesman Jeff Millman said the mayor pays any worker in his household “at least” $15 an hour.

At least three City Council members — Gil Cedillo, Tom LaBonge and Bernard Parks — said they don’t hire any outside workers. Parks, who has two grandchildren, said: “I baby-sit periodically for free.”

Originally published by CityWatchLA.com

(Dakota Smith covers City Hall for the Daily News.  She can be reached  at dakota.smith@dailynews.com. Posted originally by the Daily News.)

Oakland council to vote on surveillance camera limits

As reported by the San Francisco Chronicle:

The Oakland City Council will vote Tuesday on a set of rules to ensure that surveillance cameras at the Port of Oakland could not become — as was once planned across the city — an Orwellian spy system intruding on the privacy of people in and around the port.

The camera network known as the Domain Awareness Center has been controversial since 2013, when it was envisioned as a way to help police and first responders keep watch over the entire city, aggregating footage from traffic cameras, license-plate readers and the city’s gunshot detection system, ShotSpotter, along with data from police records.

That idea was abandoned last year after activists disrupted and even shut down City Council meetings, accusing the city of trampling on their First Amendment rights. …

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Water-wasting fines of $10,000 proposed by Gov. Jerry Brown

As reported by the San Jose Mercury News:

Waste California’s water, risk a $10,000 fine.

Residents and businesses could soon face that threat after Gov. Jerry Brown on Tuesday unveiled legislation that would increase potential penalties on the most flagrant water scofflaws and allow cities, counties and water districts to issue fines without having to go to court.

“As this drought stretches on, we’ll continue to do whatever is necessary to help communities save more water,” Brown said after meeting with California mayors, including San Jose’s Sam Liccardo and Oakland’s Libby Schaaf.

But whether the proposal — which would boost maximum fines 20-fold from the current $500 — will ever take effect was unclear Tuesday.

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Answers demanded after vets’ disability claims found in cabinet

As reported by the San Francisco Chronicle:

One number will hang over a congressional hearing Wednesday looking into mismanagement at a U.S. Veterans Affairs regional office in Oakland: 13,184.

That’s the number of compensation and disability claims that were found in 2012, wrongfully stashed in a filing cabinet — some dating to the mid-1990s and many unprocessed. But what the number represents remains the source of fierce debate.

Employees who came forward about the claims say it’s the number of veterans whose much-needed benefits may have been delayed, or not paid altogether, because of what they described as organized negligence that continued even after the cabinet was emptied. …

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Stadium plan for Chargers, Raiders near Los Angeles advances

As reported by the Associated Press and featured in the Sacramento Bee:

A proposed stadium near Los Angeles that could become home for the NFL’s San Diego Chargers and Oakland Raiders hit an early milestone Wednesday.

Organizers said sufficient petition signatures have been verified by election officials to qualify the proposal for the ballot in Carson, where the project would be built on a former landfill.

The Raiders and Chargers are planning a shared stadium in the city on the edge of Los Angeles if both teams fail to get new stadiums in their current hometowns.

Oakland minimum wage hike burdens businesses, hurts employees

Oakland’s minimum wage rose by 36 percent to $12.25 less than a month ago, but the city’s neighbors to the north in Emeryville are already trying to follow suit. This week, the City Council settled on a plan to increase the minimum wage by 36 percent for smaller businesses, and by 60 percent for larger businesses.

Before acting on this plan, the council would be wise to take a closer look at what’s happening in the city it’s trying to emulate.

Lift up oakland minimum wageOakland’s minimum wage increase was approved by voters in November, following a campaign by proponents in a labor union-backed coalition called Lift Up Oakland. Their argument, which can still be viewed at LiftUpOakland.org, was that increased labor costs would be good for business — indeed, that smaller businesses would even “appreciate” the new mandate.

A team of researchers at the University of California-Berkeley, including a former living-wage organizer from San Francisco, reached a similar conclusion: The costs of the mandate would be negligible, and the benefits would be substantial.

However, a series of news articles published in the weeks since the minimum wage took effect — in publications such as the East Bay Express and the San Francisco Chronicle­­ — suggest that costs of the new minimum wage are real. Restaurants have reported raising prices by as much as 20 percent, hoping customers won’t be turned off. The Chronicle interviewed a member of the Oakland Chinatown Chamber of Commerce, who noted that (predictably) some businesses have closed up shop for good.

To expand on these anecdotes, we worked with a survey research firm and contacted 223 mostly-small businesses in the city between March 23rd and March 25th, all of whom were affected by the wage increase to $12.25. What we found in these conversations was a sentiment far different than appreciation.

Of the businesses surveyed, 56 percent reported a large increase in labor costs. One in five of those businesses who were able to estimate the size of the cost increase pegged it at greater than 20 percent.

Customers might expect price increases following a minimum wage increase, and indeed, 47 percent of surveyed businesses reported raising prices. But the law didn’t just cost customers — it cost employees, too. For instance, 30 percent of the surveyed businesses either reduced their employees’ hours or their hours of operation. Seventeen percent — or about one in six — laid off employees or otherwise reduced staffing levels. Perhaps most concerning, 27 percent of surveyed businesses reported that they were “somewhat” or “very” likely to close their doors altogether.

In follow-up conversations after the survey was complete, we spoke with some of these “likely” businesses. One husband-and-wife team, who’ve owned a sewing business in Oakland since 1990, cut their staff from 5-6 additional employees down to 1-2 additional employees. One of the business owners said they’re going to try this overworked arrangement for 6-12 months — and close down if it isn’t feasible.

At a seafood restaurant in Oakland that’s been open less than a year, a similar dynamic applies. The owner, who used to operate with three additional employees, has cut two people from his staff since March 1st just to make ends meet. His wife sometimes comes in to help with the restaurant. Like the husband-and-wife sewing team, he said it’s possible he’ll close if he can’t make the low-staffing model work.

Child-care providers have also been pinched. The Chronicle reported the Salvation Army’s childcare service was “scrambling” to fill a $146,000 hole that the minimum wage increase ripped in its budget. One small provider I spoke with, Muriel Sterling, has had to make cutbacks for the first time in her business’s existence: Employees are working fewer hours, and she’s posted a sign warning of higher childcare rates to come — which typically means a loss of business.

Members of the Lift Up Oakland coalition have shown a surprising lack of empathy for the damage they’ve wrought. When asked about the deleterious impact on childcare services, for instance, a spokeswoman said they “did not specifically analyze impacts on all industries.” Oops.

She offered that the childcare cuts might not matter, because employees’ higher pay might create a beneficial situation where “less child care is needed in the first place.” This response highlights perfectly the economic illiteracy that underpins these campaigns. Instead of destroying job opportunities for the many in order to give higher pay to a few, we should create more pathways for all to a better-paying future.

It may be too late for Oakland to learn this lesson — but Emeryville still has a chance.

Michael Saltsman is research director at the Employment Policies Institute

Oakland Mayor Jean Quan angers Occupy camp’s supporters, rivals


From the SF Chronicle:

Mayor Jean Quan told residents and others gathered at a raucous City Council meeting this week that the Occupy Oakland encampment at City Hall is damaging the city.

Hundreds of jobs are being lost, police are being diverted from violent parts of town, some businesses are closing, and others are choosing not to locate in downtown Oakland at all, she said at Thursday’s special City Council meeting.

Yet at the same meeting, three of Quan’s staunchest supporters urged the council to support the Occupy Oakland encampment. One of them, Don Link, told The Chronicle that they spoke at the meeting on behalf of a group that emerged from Quan’s mayoral campaign and is led by Quan’s husband, Floyd Huen.

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