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AH&LA Media Monitoring - 6/1 Report
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As Minimum Wages Rise, Some Say Too Little, Too Late
Jun 1, 2015 | NBC News
Twana Davenport was disappointed. The San Francisco resident had been earning $12 an hour working as a home-health aide, and when the minimum wage went up by roughly $1.50 an hour, she had high hopes for a proportionate jump in her hourly rate. Instead, the agency she worked for bumped her up right in line with the new minimum. -
Los Angeles Labor Group Backs Minimum Wage Increase, Then Seeks Exemption
May 29, 2015 | New York Times
By Jennifer Medina
Labor unions across the country have been among the most vocal and important backers of the nationwide fight to increase the minimum wage to $15. At the same time, some labor leaders — including one here who helped lead the successful effort to raise the minimum wage in Los Angeles — have encouraged cities to adopt provisions that would allow employers with unions to pay below that level. -
Homeboy, other nonprofits fear wage hike will lead to program cuts
Jun 1, 2015 | LA Times
By David Zahniser
LA.'s elected officials and their political staffs are a frequent presence at Homeboy Diner, picking up sandwiches or holding meetings at the cafe that operates on the second floor of City Hall. -
In Los Angeles minimum-wage law, should union workers be exempt?
Jun 1, 2015 | Los Angeles Daily News
A City Council committee could finally vote today on whether to advance an ordinance to raise the minimum wage in Los Angeles to $15 per hour, following a flurry of last minute lobbying efforts by local labor and business leaders over an exemption for unionized workers from the proposed law. -
Despite $15 Minimum Wage Battle, Small Business Is Happy to Be Here
Jun 1, 2015 | LA Weekly
By Dennis Romero
Despite months of debate over the now-approved $15 minimum wage in Los Angeles, small businesses are upbeat about their prospects, according to a recent Thumbtack Small Business Sentiment Survey. -
For this McDonald's cook, wage hike could be more harm than help
Jun 1, 2015 | LA Times
By Don Lee
McDonald's grill cook Douglas Hunter is literally the poster child for a $15 minimum wage: The Chicago man's picture and story are featured in the "Fight for $15" national campaign. -
This dishwasher must choose between shoes for sons or paying phone bill
Jun 1, 2015 | LA Times
By Tiffany Hsu
Marissa Avila, 36, often faces difficult decisions: Does she buy shoes for her three sons or pay her phone bill? Splurge on movie tickets or treat her kids to meat? For nearly 12 years, Avila has washed dishes and helped cook at the Mid-Wilshire Convalescent Hospital, a nursing home. She started out earning $8.50 an hour and now makes $11.20. -
A new dawn for the minimum wage
Jun 1, 2015 | LA Times
By Don Lee
What has long been a hypothetical question may soon become a real one: What would the national economy look like with a $15-an-hour minimum wage? -
Child-care worker sees hours cut after Oakland's minimum wage hike
Jun 1, 2015 | LA Times
By Don Lee
Child-care assistant Eunice Medina, 23, was thrilled when Oakland's minimum wage took effect in March. But almost as quickly, Medina's workdays were cut and her hours shaved from eight to six. -
Minimum-wage hikes meet mixed reaction in San Francisco
May 30, 2015 | The Sacramento Bee
By Peter Hecht
In this diverse and densely packed city, known for high living costs and soaring rents, 77 percent of voters last year approved a series of pay hikes that will boost San Francisco’s minimum wage to $15 an hour by 2018.
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As Minimum Wages Rise, Some Say Too Little, Too Late
Jun 1, 2015 | NBC News
Twana Davenport was disappointed.
The San Francisco resident had been earning $12 an hour working as a home-health aide, and when the minimum wage went up by roughly $1.50 an hour, she had high hopes for a proportionate jump in her hourly rate. Instead, the agency she worked for bumped her up right in line with the new minimum.
"I'm just seeing a 25-cent raise. It's not really a difference," she said.
In Los Angeles last week, labor advocates and lawmakers celebrated the city's vote to raise the minimum wage to $15 an hour by 2020. But in San Francisco, where the first wage hike towards a $15 minimum kicked in last month, the response from the working poor has been tempered by what is still a day-to-day struggle to make ends meet.
"It's expensive out here. A gallon of milk starts at $3.69," Davenport said. Although she works full-time to support herself and her 19-year-old son, Davenport gets food stamps and pays around $400 a month for subsidized housing. Still, she sometimes runs out of money between paychecks.
"Even if we do raise it to $15 an hour, people still can't afford to live in the city," said Barry Stenger, executive director of the St. Anthony Foundation in San Francisco. Stenger sees firsthand how the grinding reality of getting by in a gentrifying city takes a toll on its poorest residents. "We're not solving a problem — we're just underscoring the need for more work in the area."
"If you're working at the current minimum wage in a lot of places, you're still in poverty, especially if you're supporting other people," said Ruth Milkman, a sociologist of labor and labor movements at the City University of New York Graduate Center. "That's a reflection of the growth in inequality." Gradual phase-in
Although the $15 minimums would bring these cities' wages up to more than double the federal minimum wage of $7.25 an hour, policymakers built in a gradual phase-in in each case to minimize the disruption to companies' balance sheets. advertisement
Economists who support raising the minimum wage tend to agree that such gradual steps are necessary, but the long lead time dangles the prospect of a living wage in front of low-wage workers years before they can actually attain it.
"Making sure wages align with affordability is a "moving target," Stenger said.
This can generate cynicism, as low-wage workers wonder if the prospect of financial relief will ever come. advertisement
"What you're tapping into is a lot of discontent in a lot of the working population," Milkman said.
"It probably won't even be better because the more the minimum wage goes up, the more people raise prices," Davenport said.
Overall, economists say this isn't the case. "Low-wage employment does not constitute a big part of the cost that goes into the cost of living," said Gary Burtless, a labor economist at the Brookings Institution. "If the increase in the minimum wage is only moderate, then we're not really talking about a big effect on the U.S. price index," he said.
Businesses that depend on an army of low-wage workers are most likely to raise prices, Burtless said, and some of these — think fast-food restaurants — are the type of places that are highly visible and heavily visited in low-income neighborhoods, which could make higher prices following a minimum wage increase seem more prevalent than they are.
What's more, the semantics of being a minimum-wage worker are demoralizing. "It's not fair that I have to wash behinds and clean up houses...and I get paid the same as a fast food [worker]," Davenport said. advertisement
"Like it or not, we link up the dignity of our work with the amount of money we make," Stenger said. "If I'm making the same amount of money that everybody doing the least, [most] menial job is making … that kind of defines my job as less than what it was."
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Los Angeles Labor Group Backs Minimum Wage Increase, Then Seeks Exemption
May 29, 2015 | New York Times
By Jennifer Medina
Labor unions across the country have been among the most vocal and important backers of the nationwide fight to increase the minimum wage to $15. At the same time, some labor leaders — including one here who helped lead the successful effort to raise the minimum wage in Los Angeles — have encouraged cities to adopt provisions that would allow employers with unions to pay below that level.
Last week, when the City Council here voted to raise the minimum wage to $15 an hour from $9 an hour by 2020, the Los Angeles County Federation of Labor, an umbrella group of local unions, brought hundreds of workers to voice their support for the proposal.
But this week, the same group was back before the Council asking that union workers be exempted from the higher wage requirement, saying that such a provision would give business owners flexibility to offer more generous health insurance packages, for example, and to make sure there was no conflict between federal labor laws and local minimum wage ordinances.
The plea from the union group drew criticism from many elected officials who had voted for the wage measure, as well as some accusations of hypocrisy. Critics argued that the Los Angeles County Federation of Labor was simply trying to increase its membership by giving employers a financial incentive to agree to a union contract as a way to gain exemption from the higher minimum wage.
The issue bubbled to the surface on Friday as the City Council moved toward finalizing its new minimum wage ordinance, which was passed without exemptions for any category of workers. After the labor group proposed an exemption for unions, the Council’s economic development committee approved a motion to study the idea — with no end date in mind — but there appeared to be little political support for the change.
“For me this was always about lifting people out of poverty, and the case hasn’t been made to me that this makes sense,” said Mike Bonin, a city councilman who has advocated the wage increase. “It is very hard for a lot of us who have said ‘no’ to restaurant exemptions, ‘no’ to nonprofit exemptions and ‘no’ to other exemptions, and then be faced with the same question from someone else and expected to say ‘yes.’ ”
As the Council has debated the impact of a citywide wage increase over the last several months, labor leaders have fought several exemption proposals, including one that would allow nonprofit groups that hire former gang members to pay less than $15 an hour.
Rusty Hicks, the head of the Los Angeles County Federation of Labor and a leader of the Raise the Wage coalition, said Friday that he had always assumed that a provision exempting unions would be included in any local wage ordinance, as it has been in such cities as Oakland, Calif., San Francisco and Chicago. A similar provision was also part of the $15.57 minimum wage for workers at large hotels that the city approved last year.
Mr. Hicks said any suggestion that the union was merely trying to increase its rolls was unfair.
“What this provision would allow is for employers and their employees to come to a mutual agreement that works for them,” Mr. Hicks said.
Local unions in cities with similar exemptions for unions have seen an increase in membership, according to a study released last year by the U.S. Chamber of Commerce.
“Now we find out what this has really been about for labor,” said Ruben Gonzalez, the senior vice president for public policy of the Los Angeles Area Chamber of Commerce. “It’s not about the working poor, it’s about setting up city regulations for union organizing. They are trying to get the very flexibility that they would not allow anyone else.”
Mayor Eric Garcetti of Los Angeles, who helped write the minimum wage legislation and said he would sign the ordinance, seemed skeptical about the need for a union provision and said nobody should receive less than the minimum wage.
Bill Lipton, the director of the New York State Working Families Party, which has been pushing for a statewide increase there, said there had been no discussion of a similar provision.
“We’re not considering a carve-out — we think an across-the-board $15 is the fair minimum floor,” Mr. Lipton said Friday. “We’re happy for workers to bargain up from that.”
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Homeboy, other nonprofits fear wage hike will lead to program cuts
Jun 1, 2015 | LA Times
By David Zahniser
LA.'s elected officials and their political staffs are a frequent presence at Homeboy Diner, picking up sandwiches or holding meetings at the cafe that operates on the second floor of City Hall.
The eatery, part of Homeboy Industries' well-known anti-gang program, opened four years ago to great fanfare. At the time, then-Mayor Antonio Villaraigosa praised the nonprofit group for finding work for onetime gang members and former convicts struggling to reenter society.
These days, Homeboy staffers have been making their way up to City Hall's third floor, where council members have been debating a plan to hike the hourly minimum wage to $15 by 2020. That's because Homeboy executives fear the wage increase, which comes up for a full council vote Wednesday, will force them to scale back the number of people they employ.
Homeboy has spent months seeking relief from the law, but only for clients in its so-called transitional jobs training program. Without an exemption, the nonprofit will need to eliminate 60 of its 170 trainee positions by the time the wage reaches $15, said Jose Osuna, the group's director of employment services.
"It would be heartbreaking, because I know a lot of them personally," he told The Times. "For a lot of them, we're the … only organization that's able to serve them."
Seven council members signed a proposal to grant an 18-month exemption for transitional workers employed by Homeboy and similar groups. But when the council voted last month to draft the ordinance, the idea was set aside for more study.
Councilman Curren Price, who heads the committee that crafted the wage increase, opposes the additional relief, saying the city already plans to give a one-year delay to nonprofits with financial hardships or special circumstances. Price said he's not convinced an extra exemption should be given to "a small collection of organizations."
"Philosophically, I do not feel comfortable saying to transitional workers that, because they have faced challenges in their lives, they deserve to be paid less than every other worker in the city," he said in an email statement.
That position puts Price in line with Rusty Hicks, who heads the powerful L.A. County Federation of Labor and is a leader of the Raise the Wage Coalition, which pressed for a $15 wage. Unions and their political action committees spent more than $800,000 to put Price into office two years ago. For weeks, Hicks has argued against extra exceptions for Homeboy and other programs that provide both temporary jobs and social services, such as classes and counseling, to its workers.
Hicks complained the 18-month exemption, which was proposed by Councilman Gil Cedillo, would cover a transitional worker's entire training period. Cedillo, in turn, says Homeboy's clients should not be considered as part of the workforce because they are receiving counseling and other services as they begin to find permanent employment.
"They're more akin to students or trainees," he said. "So the people who provide their education and training will have greater capacity [to help people] if we exempt their business model."
Labor leaders ignited a firestorm last week, pushing for their own exemption from the minimum wage hike, one that would apply to union workplaces where employees agree to a lower pay scale. Hicks suggested he would not have a problem with an exemption for Homeboy if its job programs had collective bargaining, which unionized workplaces do.
"If those program participants had a say in what their wage would be, then that's a different conversation," he said.
Homeboy is only one group seeking the extra help. Chrysalis, which focuses heavily on helping the homeless re-enter the workforce, also wants an exemption. So does the L.A. Conservation Corps, which provides transitional jobs for young adults, particularly those who have struggled in school or had run-ins with the law.
Executives with the corps warn the $15 wage could force them to cut the number of transitional job participants by as much as half, from 400 people to 200. On Friday, workers with the corps told council members their employer had helped them reach critical milestones: earning a diploma, getting a driver's license, learning how to raise a family.
"They helped me be a better parent," said Estefany Mendez, 20, of Echo Park. "They are like my whole family."
At Homeboy, trainees progress from janitorial work to clerical duties to posts in the nonprofit's various businesses, such as the cafe, bakery or silk screening shop, Osuna said. Though they tackle those jobs, they also receive counseling in an array of areas: parenting, substance abuse, anger management, domestic violence.
Miguel Lugo, 36, said those services helped him adjust after years in prison.
"I never knew how hard society was going to be," said Lugo, fighting back tears as he addressed the council. "I never knew how to pay a bill. I never knew how to fill out a job application."
Mark Loranger, president and chief executive of Chrysalis, said he ran the numbers on the proposed wage hike and concluded the increases would add $2 million to its costs by 2018. He said he would not be able to raise enough extra money from donors or other sources to cover the entire expense.
"Any way you slice it, it's a very substantial financial hit," he added.
Chrysalis helped more than 500 clients, many of whom had been out of the workforce for years, find transitional jobs in 2014. The average age of a trainee is 42, Loranger said.
If approved, the wage law would go into effect in 2016. Cedillo remains confident he will have the votes to ensure the measure provides relief to Homeboy and the other transitional job groups.
For Cedillo, the exemption is about giving a second chance to some of the most challenging cases in society: the chronically homeless, former convicts and at-risk youth. "We're integrating people into the workforce, and we're making them better human beings," he said. "How do we put a cost on something like that?"
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In Los Angeles minimum-wage law, should union workers be exempt?
Jun 1, 2015 | Los Angeles Daily News
A City Council committee could finally vote today on whether to advance an ordinance to raise the minimum wage in Los Angeles to $15 per hour, following a flurry of last minute lobbying efforts by local labor and business leaders over an exemption for unionized workers from the proposed law.
Details about the law’s language have yet to be finalized, even though the Los Angeles City Council last week gave its tentative support to the measure.
The release of a draft of the minimum wage ordinance last Friday prompted labor leaders to push for inclusion of a provision that would exempt workers covered under collective bargaining agreements with their employers.
Labor officials said this provision is a “standard” part of wage laws in many other cities, including San Francisco, Oakland, San Jose and San Diego, and they had expected that it would also be in Los Angeles’s law. They contend the provision is aimed at respecting the existing collective bargaining agreements, and it would give employers and workers wiggle room to reach the best labor agreement for both sides.
However, business leaders who had opposed the wage increase, lashed back at the labor groups, saying the same people who had wanted the minimum wage hike in Los Angeles now want to exclude their own union members from the proposed law. They pointed to Seattle’s $15 minimum wage law, which does not have an exemption for unionized workers.
Despite labor’s efforts this week, the wage law that could be advanced by the Economic Development Committee today will likely leave out this exemption provision, which has little support from key members of the panel.
Council President Herb Wesson, who leads the City Council, and also sits on the committee, issued a statement Thursday saying that he plans to ask the committee to table the exemption idea so that it can be further studied. This decision came after criticism that this potential provision was being brought up at the last minute.
Other members of the committee -- including Councilmen Paul Krekorian and Paul Koretz -- also support moving ahead with the ordinance without this exemption. Mayor Eric Garcetti also said this week that he would like more study of the idea.
But with the first wage hike expected to go into effect July 2016, there is still time for tweaks to work their way back into the minimum wage law, including the proposed union exemption and another to require that employers provide paid sick leave.
The ordinance being considered today would increase the wage beginning July 2016, when it would rise to $10.50 an hour for businesses with 26 or more employees. By then, the state wage will have risen to $10 per hour.
The city minimum wage would then go up to $12 an hour by July 2017, $13.25 per hour by July 2018, $14.25 per hour by July 2019 and ultimately to $15 by July 2020.
Businesses with 25 or fewer employees would start raising their wages one year later and have until 2021 to reach the $15-an-hour mark.
Once the wage reaches $15 per hour for both small and large employers, the ordinance calls for the minimum wage in 2022 to continue increasing based on the cost of living.
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Despite $15 Minimum Wage Battle, Small Business Is Happy to Be Here
Jun 1, 2015 | LA Weekly
By Dennis Romero
Despite months of debate over the now-approved $15 minimum wage in Los Angeles, small businesses are upbeat about their prospects, according to a recent Thumbtack Small Business Sentiment Survey.
The folks at personal projects site Thumbtack say they received 5,055 responses from L.A. small business proprietors. They found that, for the the month of April, 29 percent of respondents said their financial outlook was "substantially better" than in previous months.
Fifty-two percent said it was "a little better," according to Thumbtack.
More than 28 percent of the owners said they believed their revenues would increase by more than 10 percent during the next three months, according to the data. Nearly half said revenue should rise by 1 to 10 percent during that time.
One in four said profitability would increase by more than 10 percent in the next quarter; about 47 percent said they project a 1 to 10 percent growth in profits.
Seventy-six percent of owners said they planned to keep the same number of employees in the next quarter, according to Thumbtack. More than one in five planned on hiring, the survey found.
The optimism comes at a time when opponents of the wage increase, which would see a gradual rise in pay until it reached $15 in 2020, argued that it would have dire consequences for small business owners in the city of L.A.
A Beacon Economics analysis of the wage hike, prepared at the behest of the pro-business Los Angeles Area Chamber of Commerce, argued that businesses would suffer because those outside city boundaries could pay less for workers and pass the savings on to regional customers.
It also also predicts that small businesses would layoff workers in an effort to keep costs steady as wages rise:
If certain workers are going to be paid more, the money must come from somewhere else in the economy. In the case of a minimum wage increase, the subsidies will be paid either by consumers through higher prices, by businesses in the form of reduced profits, and by workers who end up losing their jobs (and income).
It's an argument that hasn't really been proven in the real world.
Seattle's similar minimum wage ordinance this year has been met not with increased joblessness, but with a decrease in unemployment, for example. Anecdotal reports about a handful of restaurant closures in the wake of the Seattle increase turned out to be bunk.
And, to assume that a $15 minimum wage increase, in a city where it takes $26.04 an hour to be able to afford an average, 2-bedroom apartment, would result in layoffs assumes, it would seem, that owners employ more people than they need because the minimum wage has been so low.
It would seem that, in normal circumstances, a profit-minded businessperson would employ as many people as needed to keep their operation in the black.
But in this climate of low wages and a top-tier of wealthy folks who have seen almost all the nation's economic gains in recent years, the anti-increase argument seems to say, business owners are hiring excess people out of the kindness of their hearts.
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For this McDonald's cook, wage hike could be more harm than help
Jun 1, 2015 | LA Times
By Don Lee
McDonald's grill cook Douglas Hunter is literally the poster child for a $15 minimum wage: The Chicago man's picture and story are featured in the "Fight for $15" national campaign.
Hunter's current pay of $9.25 an hour leaves little left for the single father and his daughter, Serenity. When Hunter, 53, couldn't afford her junior prom outfit, he sewed a black-lace dress for her, even as they fought along the way about the hemline. "She picked the material," he said. "I got to pick the length."
Hunter's minimum pay goes to $10 an hour in July, but a steep pay raise would bring unintended consequences for Hunter, a diabetic with multiple medical conditions whose care is covered by Cook County's program for the uninsured and poor.
At $15 an hour, his annual income would become too high to qualify for CountyCare under the current income limit.
So any salary gains could be wiped out by the price of his medications and supplies, including two kinds of insulin at $403 a month and drugs to control high cholesterol and blood pressure that add an extra $330 a month.
And that's not including the syringes, health checkups and eyeglasses he receives for free, allowing him to avoid choosing between maintaining his health and providing for his teenager.
At $15, he figures he'd need to reduce his total work hours to ensure his new income didn't disqualify him from his current benefits.
"That's going to be a problem," Hunter acknowledged. "A raise will kick me out of CountyCare. Then the medicines are going to cost so much I won't be able to afford my apartment."
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This dishwasher must choose between shoes for sons or paying phone bill
Jun 1, 2015 | LA Times
By Tiffany Hsu
Marissa Avila, 36, often faces difficult decisions: Does she buy shoes for her three sons or pay her phone bill? Splurge on movie tickets or treat her kids to meat?
For nearly 12 years, Avila has washed dishes and helped cook at the Mid-Wilshire Convalescent Hospital, a nursing home. She started out earning $8.50 an hour and now makes $11.20.
At $15 an hour, which the city of Los Angeles is moving to require by 2020, the single mother sees better choices in her future.
"It's going to be a huge, huge difference," she said. "Even 25 cents or 50 cents could change a lot for my life and the lives of my kids."
First, she would hire a baby-sitter to watch her 8-year-old in the mornings so she doesn't need to wake him up at 5 a.m. and bring him to work until she can rush him to school during her 7:30 a.m. break.
Four years ago, Avila's husband divorced her and stopped supporting the children. Rent for her one-bedroom apartment rose 4% to $950 a month earlier this year. Sometimes, she has to delay her bill payments.
Initially, Avila was skeptical of the plan to phase in the citywide minimum wage increase. At her current pay grade, she probably won't feel an effect until the floor reaches $12 an hour on July 1, 2017.
But the promise of better compensation allows her to dream about saving a little for the future or affording a more prestigious college for her 15-year-old. "I'd feel proud to earn a little more," she said. "And I'd be happier."
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A new dawn for the minimum wage
Jun 1, 2015 | LA Times
By Don Lee
What has long been a hypothetical question may soon become a real one: What would the national economy look like with a $15-an-hour minimum wage?
Community activists and politicians see a $15 minimum wage as the antidote to the ills of rising inequality, a way to reduce poverty and stimulate the overall economy. Business owners warn it will tie their hands in downturns, drive small employers out of business and lead to millions of layoffs.
The reality is not that simple: An increase to $15 an hour would ripple through the U.S. economy in some unexpected ways that are, generally, not as bad nor as beneficial as each side claims.
The push for a higher minimum wage has gained momentum over the past few years. Seattle, San Francisco and most recently Los Angeles have adopted a floor of $15 an hour to take effect over the next few years. That's more than double the current federal minimum-wage law of $7.25.
Other cities such as Chicago. Oakland and Washington, D.C., have raised the minimum wage, but not as much. At least a dozen other cities and states, including New York and Oregon, may soon follow.lRelated BUSINESSChild-care worker sees hours cut after Oakland's minimum wage hikeSee all related8
The recent movement is rooted in years of stagnant wages and a general disaffection from the slow and uneven recovery since the Great Recession officially ended in 2009. Like the Gilded Age in the late 1800s, the last quarter-century has seen fabulous income gains for corporations and individuals at the top, but very little for everybody else.
It's true that higher minimum wages would address some of that inequality, lifting many Americans from poverty.
Almost 60% of workers who are paid on an hourly basis — some 44 million people — currently make less than $15 an hour, Labor Department figures show. If the minimum went up to $15 tomorrow, nearly half of those workers would get at least a 50% bump in pay.
And it's not just teenagers and young adults who would benefit. More than 8.4 million people earning less than $10 an hour today are in the prime of their work life, between ages 25 and 54. About 62% of these workers are women, many with children.
Yet the benefits from higher wages would be offset for many by a reduction in government benefits that low-wage workers now receive, such as child-care subsidies or public aid for food, housing and medicines.
Millions of workers would have more money in their pockets to spend, boosting demand for goods and services. But they would also likely face increased prices in the marketplace as retailers, restaurants, child-care centers and other businesses that employ low-wage workers shift the higher labor costs to their customers.
When Oakland's minimum wage jumped from $9 an hour to $12.25 in March, residents noticed many stores tacked on a dime or a quarter to an assortment of items. Creole food caterer David Smith went further, jacking up the price of his dishes by $2 to $3 a plate. "I had to," says Smith, 35, who has three employees.
Longer term, many low-paid workers could lose their jobs or find fewer openings as employers cut back to cope with the higher wage requirements.
An analysis by the nonpartisan Congressional Budget Office last year estimated that raising the minimum wage to $10.10 an hour, which some lawmakers had proposed, would result in a half-million jobs lost. At $15 an hour, the hit would likely be in the millions.
"Fifteen dollars still scares me," says Harry Holzer, a Georgetown University economist, adding that what might be doable in high-priced cities like Seattle and San Francisco could prove more difficult in other areas.
No doubt higher wages will push some struggling companies into bankruptcy, especially smaller ones that operate on thin margins.
But other businesses will do just fine, maybe even thrive, with improved productivity and greater sales generated as weaker rivals fold and consumers pump more money into the economy.
Some businesses will adapt by outsourcing more. Others will try to speed up automation and substitute labor with machines, shrinking lower-wage jobs in the process but also adding some higher-paying ones to handle new technologies.
How all of these competing forces play out is anybody's guess. But as the push for higher minimum wages spreads, workers and employers are already beginning to envision life in a $15-an-hour world.
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Child-care worker sees hours cut after Oakland's minimum wage hike
Jun 1, 2015 | LA Times
By Don Lee
Child-care assistant Eunice Medina, 23, was thrilled when Oakland's minimum wage took effect in March. But almost as quickly, Medina's workdays were cut and her hours shaved from eight to six.
Her employer, Asiya Jabbaar, says she had no choice. Despite slicing hours and laying off one of three assistants, Jabbaar says she still may need to close her business next year and convert it to a part-time after-school program.
It's a big letdown for the 38-year-old Jabbaar, who launched Reaching Beyond Care in 2010 from her East Oakland loft apartment.
Her experience illustrates what can happen to small employers when minimum wages jump suddenly. The effect on licensed or government-regulated entities, such as Jabbaar's, can be particularly sharp.
Because state law requires at least a 6-to-1 child-teacher staffing ratio for small home-based child-care providers, it's difficult to respond to higher wage costs by simply trimming hours or staff. And Jabbaar voluntarily adheres to an even stricter ratio of 3 to 1.
Similar business owners have responded by raising tuitions, asking parents to provide lunches and supplies, or simply closing down, says Richard Winefield, head of the child-care referral agency known as Bananas.
So while Oakland's new higher minimum wage may lure some stay-at-home parents back into the labor force, the irony is that they may face higher prices and fewer options when searching for child care.
Jabbaar worries most about maintaining high-quality staff if she's unable to offer steady pay raises. Before the wage hike, she started workers at $9, and every year bumped up their pay by a dollar or so, hoping to keep them satisfied and at their jobs until the next raise came around.
"There's no room for growth now," Jabbaar said on a recent morning as she cared for three 2½-year-olds. "It wouldn't be fair to keep [workers] at $12.25. They're at that cap."
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Minimum-wage hikes meet mixed reaction in San Francisco
May 30, 2015 | The Sacramento Bee
By Peter Hecht
In this diverse and densely packed city, known for high living costs and soaring rents, 77 percent of voters last year approved a series of pay hikes that will boost San Francisco’s minimum wage to $15 an hour by 2018.
Yet there are tensions these days on Valencia Street in San Francisco’s multicultural Mission District over the minimum wage hike and what it means for businesses and the ability of residents to keep up with rising costs.
As other cities, including Sacramento, ponder increases to the local minimum wage, the stories told along Valencia illustrate the complexities of the issue.
Amid aromatic kitchens turning out Salvadoran pupusas, Pakistani goat curry and only-in-San Francisco plates of tofu ranchero, low-wage workers are feeling anxious. That’s despite getting a raise to $12.25 an hour on May 1, the first of four annual wage jumps to take place under the city’s voter-approved Proposition J.
Muhammad Seikh, 56, a Pakistani immigrant who works as a kitchen helper at Alhamra Restaurant at Valencia and 16th streets, is happy with the $1.20-an-hour pay hike he received this month. Yet Seikh feels uncertain about his future in a city where the technology boom is gentrifying neighborhoods and driving up the cost of living.
Seikh shares a $1,400-a-month apartment in the city’s Tenderloin district with his son Shaheer, 20, another restaurant worker, and wife, Jabeen, who works part time.
At work, his hands covered in flour from preparing samosas, Seikh said he is proud of his labors. But the restaurant is thinking about raising menu prices to cover the higher worker costs. And at home, he fears his landlord might raise the rent, envious of what other owners are getting from the higher-income residents moving in.
“I just got a raise, and I need more,” Seikh said.
“We love this work,” he added. “We want to do it. It’s hard here, but we love this city. We don’t want to move out. But there’s young people coming in paying $4,000 for one-bedroom apartments. There is all this new construction, high-rises, and it is starting in the Mission (District), too.”
Ana Hernandez, 43, a 14-year resident from Puebla, Mexico, expressed similar concerns. She lives with her husband, Alvaro, and their two youngest children in a one-bedroom unit in the Mission that costs $1,100 a month. She earns the minimum wage as a server at El Toro Taqueria on Valencia Street. Alvaro often gets more than the $12.25 standard in construction work, but his limited hours produce barely $1,000 a month.
Ana Hernandez said she gets a free lunch when she works at El Toro. Otherwise, she said, she can’t afford the sizzling plates served along Valencia, the huevos con chorizo at the Puerto Alegre Bar or the renowned “Mission Style” burritos at Taqueria La Cumbre. She scrimps to pay for rice, beans and spices for the mole poblano chicken she prepares at home. And, like Seikh, she worries about the rising cost of living.
“My pay has gone up, but it’s not making much of a difference,” Hernandez said. “I have a little more, but we’re not able to save anything, and we have a lot of expenses. I think $15-an-hour will be better. But, by then, is everything going to cost more? Am I going to be in a safe place that I can afford?”
‘The tension is real’
Nationally, labor groups and advocates for the poor are pushing cities to set higher local minimum wage standards. The movement has spurred discussion on rising income inequality, the opposition in Congress to raising the federal minimum wage of $7.25, and the failure of state legislatures to address surging costs of living in many regions.
In Sacramento, a task force is set to begin studying raising the city’s minimum wage above the $9 state rate, evidence that “addressing income inequality is a priority issue across California,” said Mayor Kevin Johnson.
San Francisco’s new minimum wage law replaced an earlier cost-of-living standard that had boosted the city’s minimum wage from $10.74 last year to $11.05 in January.
Amy Glasmeier, an economic geographer at the Massachusetts Institute of Technology, said the uncertainty felt in the Mission District is emblematic of economic pressures in many California communities.
“California is a high-cost state, and you have a constrained housing supply and a large low-income population,” Glasmeier said. As higher-earning residents benefit from an economic upswing in places such as San Francisco, she said, many also are “invading the low-income housing stock, and that’s displacing the poor.”
Glasmeier, who earned her doctorate in urban and regional planning at UC Berkeley, created an online “living wage calculator” with MIT that measures residents’ basic needs of shelter and living, including food, child care, rent, transportation, taxes and medical expenses in regions across the country.
Under her formula, a single working adult in San Francisco required an hourly wage of $14.37 to meet basic living costs in 2014. A single parent with one child at home needed $29.37 an hour. Two parents with two children at home – people such as Ana and Alvaro Hernandez – each needed to pull in $17.75 an hour.
Glasmeier is an advocate for higher wage standards. But she said some businesses may encounter significant challenges, particularly if they are operating on a financial edge or “have constructed a cost situation that is long-term not viable.”
“The tension is real for proprietors,” she said.
On Valencia Street, an avenue that includes thrift stores, galleries and eclectic boutiques, some merchants don’t want to talk publicly about the minimum wage, because the arguments have been so divisive.
Alan Beatts, owner of Borderlands Books at Valencia and 19th, managed to infuriate people on both sides of the debate.
Beatts crunched the numbers for his cafe and bookstore that specializes in science fiction and fantasy. He found that San Francisco’s wage increase – to $12.25 this year, $13 in 2016, $14 in 2017 and $15 in 2018 – presented a burden his business couldn’t bear.
With five employees in the bookstore and seven in the cafe, Borderlands stood to lose $25,000 a year by the time the top wage kicked in, Beatts said. So he announced in February that he would close his store at the end of March. That angered local progressives who accused him of selling out on fair wages and taking away a beloved neighborhood institution.
But Beatts also argued that “the tens of thousands of people who are going to benefit from the minimum wage” in the city “are more important than me keeping my bookstore” – sentiments that sparked a backlash from advocates for small businesses.
“I didn’t realize how visceral and emotional the minimum wage is,” he said.
In the end, Borderlands Books stayed open. That’s because neighbors, and the store’s 10,000 Twitter followers, rallied behind it. After Beatts announced his plan to close, supporters in two days raised $30,000 – in 300 annual pledges of $100 – to cover anticipated future operating debt as well as maintenance and repair costs.
Supporters since have raised a total of 800 pledges, or $80,000, for the store’s annual expenses. Beatts said that support will help with his new goal of finding a nonprofit group to buy the building, where he leases, and help run the store “in perpetuity.”
Debating the sweet spot
Despite the popularity of the minimum wage hike among voters, many local merchant associations are seething as the pay increases go into effect.
“I would say, pretty much to a ‘T,’ that we are all opposed to it,” said Henry Karnilowicz, president of the Council of District Merchants, an umbrella group for business districts in the city. “At the end of the day, people are just going to have to increase their prices. That’s the long and short of it.”
Gwyneth Borden, executive director of the Golden Gate Restaurant Association, said the minimum wage law is creating unnecessary challenges for dining establishments whose waiters get tips on top of the hourly wage. Unlike many other states, tipped workers in California cannot be paid less than the minimum wage.
“Our concern is over giving a pay increase to tipped workers who already make well over the minimum wage,” Borden said.
Yet she also said the restaurant industry is having trouble hiring cooks, managers and other workers, “because San Francisco is expensive, and it’s difficult to live here.” She said owners and employees alike worry about “the Manhattanization of San Francisco.”
Similar concerns are stoking the broader wage hike movement. In Oakland, a 2014 measure to increase the local minimum wage to $12.25 passed with 82 percent approval, and went into effect March 2. The Los Angeles City Council voted last month to hike the minimum wage to $15 by 2020. Two dozen major cities have raised base pay standards in recent years, including Seattle, Chicago and Washington, D.C.
“This is driving the nation,” said Shum Preston, a minimum wage advocate for the Service Employees International Union. “The 2014 votes in San Francisco and Oakland were watched very closely. There was a consensus among the population: The economy was not working, and raising the minimum wage was a great way to help people.”
Sacramento Mayor Johnson, in a written statement, said he doesn’t have a figure in mind yet for the minimum wage in the capital city.
“Raising the minimum wage is something that will have a widespread impact on both employers and employees, and we can’t pick a number only because it works in other cities,” he said. “We have to make sure we come up with a solution that is right for Sacramento.”
In the Mission District, arguments persist over the right number.
At the family-owned Pay and Save corner market, two blocks above Valencia Street, manager Zuhdi Khalil said he has no problem giving his two minimum-wage employees a raise to $12.25 and more down the line.
“We’ve got to put this in perspective,” he said. “They’re good workers. And you can pay somebody $10 an hour, and that’s the price of a sandwich in this city.”
Dominique Hall, an employee at the Project Juice smoothie shop, where organic cold-pressed juices sell for $10, said she is happy for any pay increase. “I mean, it’s impossible to live here anyway,” said Hall, 20, a single mother who is studying psychology at San Francisco City College.
But at nearby Cafe Ethiopia, owner Tesfai Makonnen just added 50 cents to the price of his Assa chicken and fish stews to help cover raises for three employees. He said he’s feeling stressed.
“I support the wage increase,” said Makonnen, 65. “But the overhead is just higher, and that is harder for me.”
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