Berkeley could OK raised minimum wage plan this month

A rally was held before a special Berkeley City Council meeting held on Thursday, May 1, 2014 to discuss raising the minimum wage. Photo: Tracey Taylor

A rally was held before a special City Council meeting on Thursday, May 1, 2014 to discuss raising the minimum wage. Photo: Tracey Taylor

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.

Min wage presentatin

The special minimum wage Council meeting, held at Longfellow Middle School, drew a crowd of more than 200. Photo: Tracey Taylor

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.

Min wage rally

Some rally participants would like to see minimum wage increased to $15 immediately. Photo: Tracey Taylor

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

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  • Berkeley in the Trend
  • Tiny Tim

    Yes, I am confident that Berkeley can continue to be at the forefront of finding new ways to drive consumers and businesses out of town!

  • Realist

    How about doing it this way like I did : Live in a converted garage working a custodial job at (the old) minimum wage while doing five years of college (Deans List !) and getting a degree / skill that’s in demand. In other words….delay gratification, don’t disparage others success, and don’t complain that “off the sidewalk non skilled “jobs” pay s – – – .

  • Fthenobelprize

    Thanks for the link to The toilet paper of record NY Times with Krugman’s pic below the article (how much more reason could you possibly need to cancel your subscription and abandon Keynesian bs forever than Krugman What a freakin embarrassment to anyone with a brain. All you Nobel laureates in this town should quickly hand back your prizes lest you be associated with a nimrod like that!!! Or perhaps your alignment with peace prize recipients will keep you in the mix…

  • Peter schiff is right
  • Trythis
  • Or this
  • Not John freeman

    Hahahahaha… Yes liberal cities will leave the rest behind. Kind of like the us has left china behind….

  • mtaysic

    uh… he totally misses the point. having a guy harass you with a donation box is totally different than seeing an across the board price change

  • Morepeopleontedoleisbetter

    You’re right. It’s better to point the barrel of the gun at Walmart execs to force them to pay higher wages than allow people to voluntarily decide on how important higher wages are for the employees at the stores at which they shop.

  • Mises

    Wouldn’t even more be even better? Why stop at these numbers? Livable would be more like $30 an hour. Let’s do that as think about all the extra money it would put into the economy. Even better $50! Workers (sorrry last remainingworker) rejoice.

  • Berkeley Realist

    So explain how you can suddenly, raise the minimum wage in a small city in a urban area with such complexity that it will cost up to $200,000 a year to maintain and enforce? Why no mention of the restaurants who will be most impacted? Where do the $ come from in their costs of goods, pricing and operations? Virtually no discussion in the Labor Commissions presentation on how businesses come up with a new structure to generate these dollars to pay people more.

    Why no mention on how many folks actually get paid minimum wage in Berkeley and Alameda County and, how old are they? Most of the restaurant staff, back of the house already make at least $15 an hour, and the front of the house makes on average, $25 to $40 a hour in a decent restaurant with tips and the current minimum. This law is now telling businesses how they must run their business and let them figure out where to get the money.

    AND, lastly why doesn’t the council spend several 100 hours on the real issues in Berkeley like closing the gap on the deficit, the issue of the inadequate retirement obligations going forward, paving the streets, making it cheaper and easier to get a permit for a new business, cutting city overhead and oh yes, getting more businesses to actually want to be here so we can gain revenue to our city budget to….pay our City of Berkeley bills.

    The ignorance of this “progressive” thinking reality is what gets this Council stuck in ideological “good ideas” that in the end don’t solve any real problems, just pander to the folks with the signs that show up at meetings.

  • John Freeman

    the issue of the inadequate retirement obligations going forward,

    Don’t you understand that that problem is in flux at the state level and can not be solved at the municipal level?

  • Lumbergh

    It could be easily solved at the municipal level by just NOT OFFERING THE SAME KINDS OF RETIREMENT BENEFITS.

  • joannatheresa75

    What happens with the gratuity schedule? Will diners be expected to add the now customary 20% to what will likely be higher priced meals?

  • resident

    Why is no one asking how this will apply to household employers? Some of us are in shares where the nanny makes $20+ an hour for more than one child, and yet, legally each of us is a separate employer. Will each employer have to pay this rate? This will just push the household employers to pay under the table even more and hurt household employees who will not receive social security. This is why small cities like Berkeley don’t make these kinds of decisions. It is just too big with too many exceptions and considerations for a city the size of berkeley to make.

  • eyraud94

    The Mayor and each Council Person should be asked these two questions:
    (1) Will they survey the businesses in each of their
    districts about this increase?

    This survey should ask businesses if this legislation will create new jobs in the City of Berkeley. Will the legislation encourage businesses to stay in Berkeley? Will businesses pass on the costs of this legislation to Berkeley consumers? And if so, will this legislation decrease sales and tax
    revenue to the City.

    (2) Will the Mayor and the City Coucil ask the City Manger to do a report on
    the cost of administering this legislation and the loss of revenue to the city
    based on the survey of businesses.

  • Bill N

    Does this mean you wouldn’t feel like you had to tip at a level that might hlp make a reasonable wage but merely as a reflection of service?

  • concern citizen

    Bad News: I never thought I’d think it but maybe that Republican rhetoric about goverment overreach was not as cuckoo or as far fetched as I’d believed it to be…until now.

    I wonder if the noble men and women of Berkeley are really ready to pay the 200% annual price increases that will be hoisted on the backs of consumers as a result of these proposed wage hikes? Probably, NOT! yet if this myoptic vision takes root and become law then it will get a lot worst before it ever gets better for every mom & pop business struggling to stay open in this city.

    Good News: On the other hand, this will be great news for Oakland and Albany as Berkeley legislate itself into the national spotlight at the sacrifice of its citizen’s largest pool of employers (namely, the small business with 5 or less employees). Let’s see now… baby, bathwater..which one were we suppose to throw out?

  • guest

    You must not know that Oakland and Albany are doing exactly the same thing…?