Emeryville City Council, eager to trail blaze ahead on their own path, heard a resounding “not so fast” from the public at last Tuesday’s Council Meeting in regards to Small Business. In contrast to the January 20th meeting where labor groups and a cast of RULE members mostly spoke in praise of the more aggressive hike, this meeting was more reflective of the climate of the city and small business. Councilmember Nora Davis’ was excused with an illness but is said to be recovering.
A packed house at last Tuesday’s Minimum Wage Study Session.
Because of the turnout, Mayor Atkin exercised her right to limit public comment to two minutes but despite this, the period still took nearly two hours. Representatives from local favorites Rudy’s Can’t Fail Cafe, Prizefighter Bar, The Townhouse, Scarlet City Espresso and many others were joined by a variety of family-owned franchises and union representatives. In the end, small businesses and Unions seemed to coalesce under a more gradual, regional compromise of $12.25/hr. for small business. Despite the stakes and tension in the room, the evening was relatively civil until the end. Councilmember Scott Donahue’s brother, RULE bullhorn and Tattler Editor Brian Donahue inserted himself into public comment exercising what he cited as his right to be anonymous through Califonia’s Brown Act (I certainly could not find any language regarding this but you’re more than welcome to read it yourself). Donahue has a history of theatrics and generally insists on having the final word in public comment.
Can the City find a Small Business Compromise?
After hearing from the public, Council deliberated and negotiated amongst themselves. The narrow proposed ten employee threshold in the previous draft of the ordinance was a big concern and the council wisely raised this to more realistic 55 (a bit arbitrary and presumably to accommodate Rudy’s & Black Bear Diner. Both of which are on this threshold). Businesses of over 55 would stick with the proposed $14.42/hr. with a trajectory toward $15 by 2017 based on CPI. Small business would begin at $12.25/hr. but then have annual jumps until it converged with Consumer Price Index defined “Living Wage” metric of an estimated $15.98 in 2019. It’s unclear if the immediate 36% hike and nearly 200% jump from 2013 in the course of 6 years would ultimately spare them. Reports continue to surface of Oakland businesses struggling and even shuttering as a result of their recent hike. In San Francisco, The popular Abbot’s Cellar shut down as a direct result of their hike and the neighborhood bookstore Borderlands is hanging by a thread as the community has tried to intervene (San Francisco’s wage does not actually increase to $12.25/hr. until May 1st so the immediate results are still unknown).
Additional provisions outlined include:
Opt out provision for collective bargaining units
No wage credits for provision of health insurance or receipt of tips
Regulations regarding hospitality charges equivalent to the Oakland Lift Up Ordinance with the additions of revisions proposed by Lift Up
Will the Youth be left behind?
Another critical component of the ordinance was establishing a youth exemption. Many of the businesses I spoke with reiterated that youth employment would probably be hit the hardest by this as they are typically less-skilled and would have to compete in the labor pool with more experienced adults. Asher argued against any youth exemption citing the need for even minors to earn a living wage. “I think a 16 to 18-year-old has a lot of expenses”. The majority settled on a State-defined “learner” exemption of a mere 160 hours (only 4 full-time weeks) at 85% of the minimum wage ($10.41 for small businesses & $12.25 for “big”). “It’s definitely going to change the dynamics of how we operate” noted Head Over Heals Athletic Arts executive director Katreece Stone, a non-profit that instills self-confidence in youth through organized athletics. Head over Heels often hire youths from 15-18 years old but their inconsistent schedules to accommodate their education can make training them take anywhere from 3-5 years for them to become reliable. “We’ll definitely be hiring fewer youths at $12.25/hr. and at $14.42/hr., we’re definitely not hiring any kids”. Katreece is still trying to determine how much she’ll need to raise prices to offset this but did not rule out leaving Emeryville completely when their lease expires.
Paid Sick Leave: Council Direction
Paid sick leave for employees would mirror Oakland’s Lift Up Ordinance. Small Business Employees would accrue one hour of paid sick leave for every 30 hours they work with a cap at 40 hours. The cap would be 72 hours for employees of larger employers. There would be no limits on the amount of paid sick leave an employee could use each year (i.e., the employee may use up to the amount of leave accrued). In addition, employees may use paid sick leave to provide care for a designated individual in the event the employee does not have a spouse or registered domestic partner. The employee may change the designation on an annual basis.
Implementation Date
Councilmembers Scott Donahue & Dianne Martinez both pushed for a later October implementation date but settled with the more assertive Asher and Atkin (the absence of Davis was huge here as she generally tends to align with local business and does not as easily back down). The ordinance, by law, would require two additional readings before it is passed. The next reading will occur on May 5, and the second reading and final vote is anticipated to occur May 19. The ordinance would go into effect 30 days after the adoption of the ordinance or upon the effective date specified in the ordinance (proposed to be July 1st), whichever is later.
Will “Big” Business counter?
No representatives from the larger “big box” stores identified themselves amongst the many speakers but presumably, they have a plan to counter this and there are State and Federal measures on the table that may seek to overturn some of the municipal measures including a Tipped Employees exemption introduced by Tom Daly (D-Anaheim) and passing so-called “Preemption” laws to override local ordinances outlined in this NY Times article being explored in Texas.
Do Emeryville Businesses deserve an Impact Study?
In the end, it’s unclear if Council really addressed the “competitive disadvantage/regional approach” question of Emeryville Small Businesses as they’d still be in fact higher than their neighbors as of next year and still the highest in the nation paralleling our wealthier neighbors in SF (some of Seattle’s various minimum wage schedules that apply to SeaTac jobs will ultimately eclipse Emeryville’s). Meanwhile, Minimum Wage for businesses larger than 55 employees will in fact be the highest in the nation. It is estimated that restaurants will have to increase their menu prices as much as 20% to offset this and it’s unclear if this will be “palatable” for consumers.
Without the impact study that this council has opted to forgo, there are still many “I don’t know’s” here. Council continues to cite UC Berkeley’s labor-backed IRLE study as evidence that the effects of this on small business will somehow be mitigated. This study does not specifically address an increase of this magnitude as Emeryville Staff reiterated in their 2/17 report: “None of the cities recently studied by UC Berkeley specifically analyzed an increase of this magnitude in the first year of implementation. As a result, the extrapolation of the findings of those studies to the legislation currently under consideration may be less applicable than if Emeryville pursued a similar wage increase schedule to that of Oakland or Berkeley.” Even progressive economists like Jared Bernstein who supports a substantially higher minimum wage argues that some caution is merited with this pace. $15/hr. gave him pause because it was “out of sample.” That is, there was no precedent to demonstrate it wouldn’t cost jobs according to this recent NY Times piece.
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The Staff presentation can be viewed below on Slideshare:
Further Reading & Resources:
Emeryville, Berkeley consider raising minimum wage | ABC7News.com
Emeryville Business Owners, Workers Weigh in On Minimum Wage | East Bay Express
The Unappetizing Effect of Minimum-Wage Hikes | Wall Street Journal
These Bay Area cities may adopt even bigger minimum wage hikes | SV Business Journal
Californians working for tips could miss minimum wage increase | SacBee.com
Minimum wage hike hits booming Oakland dining | SFGate
SF Minimum Wage Hike Hits Shopowners Hard | SF Chronicle
Business-friendly CA minimum wage bill could carve into servers’ tips | SF Business Times
States Are Blocking Local Regulations, Often at Industry’s Behest | NY Times
Will a Higher Minimum Wage Close a Beloved Bookstore? | The New Yorker
Businesses, workers adjusting to Oakland’s higher minimum wage | SJ Mercury News
Meet the Czech immigrant whose suspender business faces extinction | FreeBeacon.com
Wage Effort Poses Test for Clinton Campaign | NY Times
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