Berkeley is a step closer to implementing a minimum wage raise it hopes will be adopted regionally after a new ordinance was introduced at a special City Council minimum wage meeting on Thursday May 1, International Worker’s Day.
At the conclusion of a long meeting in a hot auditorium at Longfellow Middle School, at which dozens of people gave public testimony, the City Council voted to consider at its meeting next week a new ordinance introduced by Councilman Laurie Capitelli, co-sponsored by Councilman Jesse Arreguín. If passed, the measure would eventually raise Berkeley’s minimum wage to the highest in the state.
The new ordinance, which came as a surprise to many who attended the meeting, was a modification of a draft submitted by the city’s Commission on Labor last month that had been more than a year in the making.
Under the new suggested rollout, Berkeley’s minimum wage would be increased from $9 to $10 an hour on Aug. 1 this year. (A state mandated rise from $8 to $9 an hour goes into effect on July 1, 2014 regardless of the city’s decision.) Then it would go up every year in increments until it reached $15.25 — at which point it would align with the city’s living wage of $15.02 — on Jan. 1, 2020. (The full breakdown is not online yet, but Berkeleyside will link to it when it is.)
The Capitelli plan phases in the hikes at a more gradual pace than the Commission’s proposal, which would have seen a jump to $10.74 on June 30 this year. (The Commission also proposed an immediate increase to $13.34 for large businesses and corporate franchises). The new plan exempts nonprofits and youth programs, and a health benefits element would be deferred.
The plan could be adopted as quickly as this month if Councilman Capitelli’s preferred timetable materializes.
“By the end of May, I want us to have a minimum wage that goes to a living wage on the books,” he said, suggesting that the ordinance have its two required readings at City Council meetings this month, on May 6 and May 20, before being adopted.
Capitelli said he hoped the plan will serve as a model for neighboring cities. A minimum wage initiative for the November ballot is being circulated in Oakland, and Richmond has already had the first reading of a minimum wage ordinance. Mayor Tom Bates said he had met with other local councils and that cities, including El Cerrito and Emeryville, were watching Berkeley.
Bates proposed on April 22 that a number of East Bay cities join together to enact a regional minimum wage. “I don’t want to put our businesses at a disadvantage with regard to neighboring communities. It makes sense for everyone to have the same wage,” he said then.
More than 200 people attended the special meeting and the majority, if not all, supported raising the minimum wage.
The Capitelli proposal was endorsed by Raise the Wage East Bay and its large coalition of partners, including the California Nurses Association and the Berkeley Federation of Teachers.
Nicky Gonzalez Yuen, spokesman for Raise the Wage East Bay, said: “When the City Council acts, they will do the most incredible thing in the country.”
There were concerns, however, voiced in particular by restaurant owners, about the impact an “aggressive” rollout might have on the economic livelihood of small businesses — although many of them said they already pay above minimum wage, and they all appeared to support a raise in principle.
Alex Popov, manager of Pappy’s, and founder of the Telegraph Restaurant Assocation, said the new proposal would raise his payroll to $80,000, adding that he and his wife had not taken a pay check since they opened the restaurant three years ago. He said other costs were also going up: for utilities and for produce in the wake of the statewide drought, for instance. Beef prices had increased 50%, he said.
One key issue for restaurateurs who spoke at the meeting is how the new minimum would affect employees who receive tips. There was discussion about including a so-called tip credit to reduce the guaranteed wage for tipped employees (who, some restaurateurs argue, make far more than minimum wage thanks to tips). A tip credit is not legal under California labor code, however.
Popov said his waiters can earn $48 an hour ($40 worth of tips on top of $8/hour wage), while his line cook makes $13, but Popov “might not be able to afford him” after a big hike.
Marsha McBride, owner of Café Rouge on Fourth Street, said a raise to $10.74/hour would cost her $67,000 a year.
Greg Mauldin, General Manager of Hotel Shattuck Plaza, said the downtown hotel has 150 employees and that the suggested raise would cost them $300,000 “just this year.”
“We think it will negatively impact business in the area,” he said.
Lisa Holt, the co-founder of BUILD Pizzeria, which opened in downtown a year ago this month, urged the Council to take a deliberate approach and consult more closely with business owners.
“What is being proposed is a little too much and a little too fast, especially for businesses like restaurants,” she said. “Consider a workable solution that excludes our tipped employees. It’s particularly hard for new businesses. We have poured our life savings into this business and our success is directly related to this decision.”
Holt’s partner, and BUILD co-founder, David Shapiro said the raise as suggested would have made opening the restaurant a non-starter. “Berkeley’s viability for full-service restaurants is not like San Francisco or San Jose where there is higher consumer spending, he said.
A presentation by Labor Commission chair Sam Frankel showed how Berkeley is a city of small businesses. Frankel said 57% of businesses in Berkeley are classified as small, and the vast majority of businesses have fewer than 50 employees. Councilman Capitelli also pointed out that there are more than 400 restaurants in the city.
The special meeting also saw a presentation by Ken Jacobs of the UC Berkeley Labor Center, co-author with Michael Reich and Miranda Dietz of When Mandates Work: Raising Labor Standards at the Local Level. Citing research done in San Francisco, his data showed that higher wages reduce turnover, improve performance, and prompt small increases in restaurant prices.
Presentations were also made by the city’s Commission on Labor and by its Health, Housing and Community Services department. The latter reported that the cost to the city of implementing minimum wage raises, including ensuring compliance, would be $180,000 in the 6-month startup phase, and $200,000 each year after that. The money would have to come from general funds, the department’s Amy Davidson said.
The meeting was held on the same day that Seattle unveiled a plan for a $15/hour minimum wage.
Berkeley Mayor proposes East Bay minimum wage (04.22.14)
Berkeley Council hears minimum wage increase pleas (04.03.14)
Minimum wage ‘tip credit’ idea gets cold shoulder (06.21.13)
Berkeley considers city-wide minimum wage hike (06.18.13)
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