East Bay businesses and politicians react to new state minimum wage
on April 4, 2016
Today in Los Angeles, Governor Jerry Brown signed off on a new minimum wage bill that will make California the state with the highest in the country at $15 an hour by 2022. The bill cleared the state legislature last Thursday.
Brown negotiated the deal with top labor leaders, who were previously trying to pass minimum wage increases through ballot initiatives. The UC Berkeley Labor Center estimates that 5.6 million Californians will see their wages increase under the new law.
The current minimum wage in California is $10 an hour. Under the new law it will bump up to $10.50 on January 1, 2017, and then increase by a dollar every New Years Day until it tops out at $15 in 2022. The law allows for minimum wage increases to be temporarily suspended during an economic downturn in the state.
Several Bay Area cities including Oakland and Richmond have already passed local minimum wage increases. Oakland’s minimum wage, which went in to effect in January, is $12.55 an hour. Richmond’s wage is currently $11.52 but is set to rise to $13 by 2018.
While meeting with constituents last Thursday on the back patio of the Portumex restaurant on 23rd Street at an event called “Time with Tom,” Richmond Mayor Tom Butt said that he was glad to see that the wage increase was happening at a state level, but that there is some uncertainty about what the effects will be for business owners. Butt added that restaurant owners are vulnerable to wage increases since they tend to employ people who make the minimum wage and depend on tips to supplement their wages. “Some people will have to change the way they do business. We may see an end to the whole tipping culture,” Butt said.
Butt said that when Richmond was discussing its own minimum wage legislation, he argued for exemptions for non-profits and small businesses. Under the new California law, businesses with fewer than 25 employees will have an extra year to increase their wages to $15 an hour.
Toni Moura, the owner of Portumex who was hosting the mayor’s meet-up , said he supported the bill. “Most people don’t make that much money, and they need more to live,” Moura said. He said that he will likely raise his prices because of the increase, but that he is not concerned since he has been running a successful business in Richmond for 29 years. Moura added that he hopes the wage increase will be enforced equally among food trucks as well as restaurants. “If they don’t have to pay their employees as much, then we can’t compete with them,” Moura said of food truck owners.
Across town, Timothy Manhart, owner of Catahoula Coffee and a franchise owner of the cleaning service Merry Maids, was more concerned about the effects of the new wage. Manhart said that he would have to raise prices at both of his businesses, and that while customers may be willing to spend a little extra on coffee, that may not be the case for cleaning services. “We’re going to have to figure out how to do more with less,” Manhart said.
He questioned how beneficial the increase would be for his employees, some of whom have been with him for over 12 years. “They may see a gain, but it causes everything else to go up as well, like rent and a gallon of milk,” he said.
He said he still plans on opening a new business, a wood-fired pizza restaurant right next to Catahoula Coffee on San Pablo Avenue.
In Oakland last Thursday, which was also celebrated as Cesar Chavez Day, hundreds of janitors and fast food workers gathered for a rally organized by Service Employees International Union United Service Workers West (SEIU-USWW) and East Bay Fast Food Workers in downtown Oakland to fight for higher wages and to raise awareness about sexual abuse of workers. The workers marched with signs reading “Stop Low Wages & Exploitation,” “Stop Sexual Assault,” “Stop Attacks on Immigrant Women” in both English and Spanish. The rally started at 12th Street and wound all around the city center.
Among the supporters at the rally was former Assemblywoman for District 15, which represents Richmond and Berkeley, Nancy Skinner.
“It’s great,” Skinner said of the minimum wage increase. “The last law that we put in brought the minimum wage up to $10. It was a good bill, but it didn’t go far enough.” The main difference this time, Skinner said, is that the bill takes inflation into account. “So it’s a huge victory,” she said.
Some small businesses owners in Oakland said that the law may add to their already-increasing business costs.
Betty, who only provided her first name, co-owns Blessed Garden, a Chinese restaurant on 15th Street. She said that the increase in wages would cause the restaurant to change from service-based dining to a casual dining style to cut down on manpower and costs. “If we continue with our previous business model while the salary is increasing, the prices of ingredients are rising, and the economy is not good, we would soon have to close our business,” she said.
Betty is also finding creative ways to increase her customer base. She said, “We might have to become a fusion restaurant, serving Korean and Japanese foods as well, to attract more customers.”
Eddie Blyden, the chef and founder of Crossburgers at Frank Ogawa Plaza, adopted a more optimistic view.
“In one sense, as a business owner, you don’t want it to happen, but at the same time people have to make a living. So you’ve got to find ways to make it work for them,” said Blyden.
In response to the increasing cost, Blyden said that he has been limiting the hours of his employees during downtime and looking for more ways to increase his business, such as extending the restaurant’s open hours, engaging in more catering and special events services, as well as showcasing live music on Friday nights.
“This is Oakland—you’ve got to do something creative,” said Blyden.
For Cal, who also did not provide his last name, the owner of the Retail, a clothing shop which sources its supplies mainly from Oakland, the increase in minimum wage does not affect the store’s employees directly. “We are already progressive in the amount that we pay our employees, so it won’t affect us much,” he said.
He added that the factories in Oakland, which produce the shirts sold in his shop, will be affected as they would have to increase their workers’ wages. “It will definitely affect our bottom dollar on cost of goods that we produce locally, and if we go by the industry standard, we would have to increase our prices eventually,” he said.
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