California is raising the minimum wage for 2 industries. Others could see pay hikes, too

Californians in two industries are set to get new minimum wages just for them next year, and that could lead to pay bumps for other workers, too. 

Gov. Gavin Newsom this year signed two union-backed bills that will boost fast-food and health care workers’ minimum wages. 

California-based fast-food workers for chains with 60 or more locations around the nation will earn at least $20 an hour beginning in April, $4 higher than the overall state minimum wage of $16 that will be effective Jan. 1.

In June, health care workers will earn a minimum of $18, $21 or $23 an hour, depending on what type of facility employs them and where they work.

The industry-specific wage increases reflect a shift in unions’ strategies at the Capitol. After the Great Recession, labor groups led campaigns that resulted in then-Gov. Jerry Brown signing a law in 2016 that put California on a path to a $15 minimum wage. That law included inflation adjustments, which is why the minimum wage is higher today. 

The two new laws are expected to trigger pay increases for about 900,000 Californians, some of whom are earning more than minimum wage today.

They are going into effect in a competitive labor market that has seen employers, especially small businesses, struggling to hire and retain workers. California’s unemployment rate is at 4.8%, which is higher compared with the federal unemployment rate of 3.7% but is near a historic low. 

The new fast-food minimum wage could push up pay for other restaurant and food workers, experts say.

In a tight labor market, “other food-services companies will likely have to increase wages in order to retain workers in a sector in which chronic understaffing, and the stress and burnout that causes among remaining staff, is already a problem,” said John Logan, professor of labor studies at San Francisco State University.

Others say the industry-specific minimum wage could have ripple effects in other industries. 

Keith Miller owns three Subway sandwich shops in Northern California and is spokesperson for the American Association of Franchisees & Dealers, which opposed the fast-food worker legislation. The law passed with support from major fast-food chains, which gained assurances that unions would drop an initiative that would have made the chains liable for their franchises’ labor violations.

Under the law, Miller said, franchisors like McDonald’s or Subway avoid responsibility but franchisees like him will bear the costs of paying higher wages. 

Miller questioned why fast-food workers were singled out as needing a minimum-wage increase, and added that it could affect industries such as retail. He said retail workers might switch over to fast food if they can make more money there, or retailers might need to raise their workers’ wages. 

“It’s kind of a fallacy that this impacts only fast-food workers,” Miller said. “It kind of creates a market rate. In effect, the minimum wage for a lot of people will be $20.”

Upcoming minimum wage measures

California voters in November will see a ballot initiative that would raise the state minimum wage to $18 an hour. It’s backed by billionaire Joe Sanberg.

Workers in other industries, meanwhile, are fighting for higher minimum wages, too. In Los Angeles, a proposed ordinance would institute a $25 minimum wage for workers in the tourism industry before the 2026 World Cup and the 2028 Olympics, which would rise to $30 an hour by 2028. 

Jovan Houston, an airport security worker at Los Angeles International Airport, said she has been working there for six years and makes $19.78 an hour. She said a boost in wages would be “extremely” helpful for her and her 13-year-old son. They live with her niece and her four kids because rent is so expensive, Houston said. 

“It’s cramped, but I can’t afford to move,” she said, adding that she has coworkers “who work two or three days to survive. They’re sleeping in the back on their breaks because they’re tired.”

Even as she fights for the Los Angeles ordinance that would raise her wages, Houston thinks it’s possible that her company would cut workers if forced to pay them more.

“They might eliminate workers,” Houston said. “I’m definitely worried about that.”

The effects of higher minimum wages

The costs and potential consequences of the higher minimum wages worry some people, including economists and the governor, while others see upsides.

Economist Christopher Thornberg, one of the founding partners of Beacon Economics, said that in a competitive market, increasing minimum wages for the lowest-paid workers will lead to higher prices for consumers. For example, McDonald’s and Chipotle executives have said they plan to raise prices next year to offset increased labor costs.

But Michael Reich, an economics professor at UC Berkeley, said the effect of increased wages on product costs is relatively low and is usually seen in labor-intensive industries like dining and fast food. Reich said that when wages rise 10%, costs in the restaurant industry go up by about 2% to 3% and usually just on a one-time basis instead of a yearly increase.

Reich said raising wages for workers can lead to their upward mobility. Any negative effects such as higher costs for consumers or contribution to inflation are negligible, he and other economists say. 

By increasing minimum wages for the lowest-paid workers, “you raise the standard of living,” Reich said. “That is quite significant.”

In addition, securing minimum wages for certain groups could eventually be used as a model to benefit other types of workers, such as gig workers who don’t currently have employee status, said Nelson Lichtenstein, a professor at UC Santa Barbara who has written books about labor history.

“One could see a wage commission… for the Uber world that can establish certain kinds of criteria, which would have the effect of a minimum wage,” Lichtenstein said.

Meanwhile, the new minimum wage for health care workers is expected to cost $4 billion in the first year — half from California’s general fund and half from federal funds — during a time when it is facing a gaping budget deficit. So the governor reportedly is seeking changes, though it is unclear what form they will take.

What’s next for California labor?

Worker advocates and labor leaders are cheering their victories on wages as they strive to improve workers’ lives in other ways. 

The unions that advocated for the fast-food and health care minimum wages say their list of priorities is long and includes other concerns such as how artificial intelligence will affect work, housing costs, worker classification and more. 

“We can talk about leave, minimum wage, etc., but it doesn’t matter if we’re replacing people with robots in the workplace,” said Lorena Gonzalez Fletcher, head of the California Labor Federation.

Isabel Urbano, a spokesperson for the Service Employees International Union, which campaigned for the fast-food bill and played a critical role in championing the minimum wage increase Gov. Brown signed in 2016, said: “The wage increase won’t mean anything if we don’t stabilize schedules and have predictable hours.” 

Lisa Fu, executive director of the worker-advocacy group California Healthy Nail Salon Collaborative, said “what’s happening in the state and around the country with the labor movement has been really really inspiring for us,” though she said her organization’s main goal is to educate nail-salon workers and businesses about labor laws. Fu said there is “widespread” misclassification of such workers as independent contractors who are not entitled to sick pay, breaks and more. 

Click here to read the full article in CalMatters

Gov. Newsom Signs New Law Raising Fast Food Minimum Wage To $20

‘We’re seeing more and more of these automated kiosks pop up, and this is why’

A bill to raise the fast food minimum wage to $20 an hour in California was signed into law by Governor Gavin Newsom Thursday, with the new wage change to take effect in January 2024.

Assembly Bill 1228, authored by Assemblyman Chris Holden (D-Pasadena), became one of the most contentious bills this session during the summer, with only a compromise between the Service Employees International Union (SEIU) and fast food companies managing to keep the bill alive earlier this month.

Originally, the bill had planned to raise the minimum up to $22 an hour and hold franchise corporations accountable for labor law violations at individual locations. In addition, thanks to a new Fast Food Council created from a new law signed last year (AB 257), benefits like paid leave and predictive scheduling would be introduced. Faced with drastically increased costs, fast food companies took action. The number of electronic kiosks instead of cashiers swiftly climbed across the state, with a ballot referendum that would overturn AB 257, as well as put the law on hold until at least November 2024, getting enough signatures earlier this year.

With both sides ready to take even more drastic action, and the end of the legislative session looming, lawmakers brought together unions and fast food companies to work a compromise. Earlier this month, it was agreed the AB 1228 would be altered to have minimum wages for fast food workers going up to $20 an hour rather than $22 starting in April 2024, with local governments prohibited from raising them even further. The raise would only apply to chains with 60 or more nationwide locations and would not apply to chains that also operate an on-site bakery, such as Panera Bread.

The Fast Food Council, meanwhile, would be able to raise the minimum wage each year through 2029, but would no longer have the power to set workplace standards, only recommendations. They would also be prohibited from implementing paid leave, vacation, predictive scheduling, and other standards wanted by the SEIU and other unions.  Also under the agreement, Franchise corporations would no longer be held for labor law violations at individual locations.

With a compromise reached, AB 1228 passed both the Assembly and Senate on September 14th, albeit with divisive votes of 53-17 and 32-8 respectively. This led the way for Governor Newsom to sign the bill into law on Thursday.

“California is home to more than 500,000 fast-food workers who – for decades – have been fighting for higher wages and better working conditions,” said Newsom at the signing on Thursday. “Today, we take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table.”

AB 1228 signed into law

Assemblyman Holden added, “Today, we witnessed the signing of one of the most impactful fast food wage laws that this country has ever seen. We did not just raise the minimum wage to $20 an hour for fast food workers. We helped a father or mother feed their children, we helped a student put gas in their car, and helped a grandparent get their grandchild a birthday gift. Last month, when we were knee deep in negotiations, hundreds of workers slept in their cars and missed pay days to come give their testimony in committee and defend their livelihood. Sacrifice, dedication, and the power of a government who serves its people is what got us to this moment. My goal for AB 1228 was to bring relief and solutions where they were needed and together with my colleagues and Governor Newsom, that is what we have done. Thank you to the SEIU and all who supported this important effort. We, as a state, should be proud.”

Despite some praise for the bill, others responded to the bill in a more negative light on Thursday. Many pointed out that the higher wages would only further push companies to hire less people overall and could lead to the pull out of several locations because of the higher costs.

“The worst parts were thankfully taken out of the bill,” explained fast food restaurant consultant Linda Medina. “The liability part was a no-go and what they wanted to put on these locations was harsh. They forget that these aren’t these big corporations running them directly. They are franchises, and the risks can be similar to running a stand alone restaurant. Pushing higher wages on them is pretty bad.”

Click here to read the full article in the California Globe

California Fast Food and Health Care Workers Poised to Win Major Salary Increases

 Nearly 1 million California workers are poised to win major salary increases after labor unions flexed their collective muscle in the state’s Democratic-led Legislature on Monday following a summer of high-profile strikes in the entertainment and hospitality industries.

Most of the state’s 500,000 fast food workers would be paid at least $20 per hour next year under a new bill aimed at ending a standoff between the industry and labor unions over wages and working conditions. About 455,000 health care workers — not doctors and nurses, but the people who do everything else at hospitals, dialysis clinics and other facilities — will see their salaries rise to at least $25 per hour over the next 10 years in a separate bill.

Both proposals must first pass the state Legislature and be signed into law by Gov. Gavin Newsom. But the proposals have the blessing of both labor unions and industry groups, clearing the path for passage this week before lawmakers adjourn for the year.

An added bonus for voters: The November 2024 ballot will be a little less crowded. The fast food industry has agreed to withdraw its referendum on a fast food law that Newsom signed last year.

The bills, both introduced Monday, are just some of the impressive run of results for labor unions in the state Legislature this year. Also on Monday, the state Assembly voted to advance a proposal to give striking workers unemployment benefits — a policy change that could eventually benefit Hollywood actors and writers and Los Angeles-area hotel workers who have been on strike for much of this year.

“I think fast food cooks and cashiers have fundamentally changed the politics of wages in this country and have reshaped what working people believe is possible when they join together and take on corporate power and systemic racism,” said Mary Kay Henry, international president of the Service Employees International Union.

California’s minimum wage is already among the highest in the country at $15.50 per hour. The fast food bill would increase that minimum wage to $20 per hour for workers at restaurants in California that have at least 60 locations nationwide — with an exception for restaurants that make and sell their own bread, like Panera Bread.

The bill will affect about 500,000 fast food workers in California, according to the Service Employees International Union, which has been working to unionize fast food workers in the state. They include Ingrid Vilorio, who works at a Jack In The Box in the San Francisco Bay Area. She said the raise will help her family, who until recently was sharing a house with two other families to afford rent.

“A lot of us (in the fast-food industry) have to have two jobs to make ends meet. This will give us some breathing space,” said Vilorio, who also works as a nanny.

The $20 hourly wage would be a starting point. The nine-member Fast Food Council, which would include representatives from the restaurant industry and labor, would have the power to increase that minimum wage each year by up to 3.5% or the change in the U.S. consumer price index for urban wage earners and clerical workers, whichever is lower.

The wage increase for health care workers is more complicated. Their salaries will rise gradually over the next decade, depending on where they work. Workers for large health care facilities and dialysis clinics will see their pay jump to at least $23 per hour next year, increasing to $25 per hour by 2026. Workers at rural hospitals with lots of Medicaid patients would have their salaries increase to at least $18 per hour next year, with 3.5% increases each year until it reaches $25 per hour in 2033.

Workers at community clinics will see their salaries rise to at least $21 per hour in 2024 before peaking at $25 per hour in 2027. Salaries at all other covered health care facilities will increase to at least $21 per hour next year before reaching $25 per hour by 2028.

“Everyone in the healthcare sector understands that we have a workforce crisis, and that wages are the essential prerequisite for any solution,” said Tia Orr, executive director of the Service Employees International Union-California. “With this increase, more workers will join and stay in the healthcare workforce, and as a result Californians will be safer and better cared for.”

It’s unusual, but not unprecedented, for states to have minimum wages for specific industries. Minnesota lawmakers created a council to set wages for nursing home workers. In 2021, Colorado announced a $15 minimum wage for direct care workers in home and community-based services.

In California, most fast food workers are over 18 and the main providers for their family, according to Enrique Lopezlira, director of the University of California-Berkeley Labor Center’s Low Wage Work Program. Just over 75% of health care workers in California are women, and 76% are workers of color, according to a study published earlier this year by the UC Berkely Labor Center.

Hospitals support the bill in part because it “ensures that wages for health care workers are set by the state, creating greater equity for all of California’s health care workforce,” said Carmela Coyle, president and CEO of the California Hospital Association.

The fast food industry benefits by stopping two proposals they say would have made it much harder for restaurants to operate in California. Labor unions agreed to withdraw a bill that would have held big fast food corporations like McDonald’s liable for the misdeeds of their independent franchise operators in the state.

And Democrats in the state Legislature agreed to strip funding for the Industrial Welfare Commission, an agency that has the power to set wage and workplace standards for multiple industries.

Click here to read the full article in AP News

California Governor Signs Landmark Law for Fast Food Workers

California Gov. Gavin Newsom on Monday signed a nation-leading measure giving more than a half-million fast food workers more power and protections, despite the objections of restaurant owners who warned it would drive up consumers’ costs.

The landmark law creates a 10-member Fast Food Council with equal numbers of workers’ delegates and employers’ representatives, along with two state officials, empowered to set minimum standards for wages, hours and working conditions in California.

Newsom said he was proud to sign the measure into law on Labor Day.

“California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity,” he said in a statement. “Today’s action gives hardworking fast food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry.”

The law caps minimum wage increases for fast food workers at chains with more than 100 restaurants at $22 an hour next year, compared to the statewide minimum of $15.50 an hour, with cost of living increases thereafter.

The state legislature approved the measure on Aug. 29. Debate split along party lines, with Republicans opposed.

Sen. Brian Dahle, the Republican nominee for governor in November, had called it “a steppingstone to unionize all these workers.”

Supporters had said they hoped the measure would inspire similar efforts elsewhere.

The measure’s author, Assemblyman Chris Holden, D-Pasadena, said it would “a new way to ensure marginalized workers have a voice in the workplace.”

Restaurant owners and franchisers opposed the law, citing an analysis they commissioned by the UC Riverside Center for Economic Forecast and Development saying that the legislation would increase consumers’ costs.

The International Franchise Association called it a “fork in the eye” of people who run restaurant franchises and said it could raise consumer prices as much as 20%.

“This bill has been built on a lie, and now small business owners, their employees, and their customers will have to pay the price,” IFA President and CEO Matthew Haller said in a statement. “Franchises already pay higher wages and offer more opportunity for advancement than their independent counterparts, and this bill unfairly targets one of the greatest models for achieving the American Dream and the millions of people it supports.”

Click here to read the full article in AP News

Inflation Triggers California Minimum Wage Increase in 2023

California’s minimum wage will jump to $15.50 per hour next year, Gov. Gavin Newsom’s administration announced Thursday, an increase triggered by soaring inflation that will benefit about 3 million workers.

The increase is required by a state law passed in 2016. But it comes at a good time for Democrats in the nation’s most populous state as they rush to find ways to boost taxpayers’ bank accounts in an election year marked by rising prices that have diluted the purchasing power of consumers.

Thursday, in a preview of his upcoming budget proposal, Newsom doubled down on his plan to send up to $800 checks to car owners to offset this year’s record-high gas prices despite opposition from Democrats in the Legislature. And he revealed a new proposal to send at least $1,000 checks to 600,000 hospital and nursing home workers in recognition of their dangerous work throughout the pandemic.

It’s part of a new spending proposal to put $18.1 billion into taxpayers’ pockets through a combination of rebates and assistance with rent, health insurance premiums and utility bills.

“We’re still overall having a very strong economic recovery in the state from the COVID-19 recession,” California Department of Finance spokesman H.D. Palmer said. “But it’s clear that we face a lot of headwinds: gas prices remain high, food prices are high because of inflation.”

California lawmakers voted to increase the minimum wage to $15 per hour in 2016, but the increase was phased in over several years. Today, the minimum wage is $15 per hour for companies with 25 or more workers and $14 per hour for companies with 25 or fewer employees.

The law says the minimum wage must increase to $15.50 per hour for everyone if inflation increased by more than 7% between the 2021 and 2022 fiscal years. Thursday, the California Department of Finance said they project inflation for the 2022 fiscal year — which ends June 30 — will be 7.6% higher than the year before, triggering the increase.

Official inflation figures won’t be final until this summer. But the Newsom administration believes the growth will be more than enough to trigger the automatic increase.

California has about 3 million minimum wage workers, according to a conservative estimate from the state Department of Finance. The increase in the minimum wage will be about $3 billion, or less than 0.1% of the $3.3 trillion in personal income Californians are projected to earn.

California Department of Finance Director Keely Martin Bosler said the increase could cause prices to jump for restaurants, which have low-profit margins. But overall, she said the minimum wage increase is “expected to have a very minimal impact on overall inflation in the state’s economy.”

The increase will impact smaller companies the most, which will see the minimum wage jump $1.50 in January. Kerry Jackson, a fellow at the conservative-leaning Pacific Research Institute’s Center for California Reform, said the increase could cause some employees at smaller companies to work fewer hours.

“It may be very painful for them,” he said.

Inflation has been a problem everywhere, as consumer prices jumped 8.3% nationally last month from a year ago. A labor shortage throughout the pandemic has prompted many companies to increase pay sometimes beyond the minimum wage just to attract and retain workers.

In California, average gas prices hit a record high in March of $5.91 per gallon. Newsom and Democratic legislative leaders have pledged to return some of the states’ record-breaking budget surplus to taxpayers. But so far, despite being from the same political party, they haven’t agreed on how to do it.

Newsom’s plan would send up to $800 checks to car owners — $400 per car for a max of two cars per owner — plus another $750 million to give everyone free rides on public transportation for three months.

Democratic leaders in the Legislature have rejected that plan, instead favoring one that would send $200 checks to low-to-moderate-income taxpayers and their dependents.

“Senate Democrats do not believe a rebate tied to car ownership does the job,” Senate President Pro Tempore Toni Atkins said. “That plan leaves out non-car owners, including low income and elderly Californians, who are also impacted by the current high costs of consumer goods and are also deserving of relief.”

Republicans favor temporarily suspending the state’s gas tax, which at 51.1 cents per gallon is the second-highest in the nation. But Newsom and Democratic leaders have rejected that plan, arguing it’s better to send relief directly to taxpayers.

Newsom’s plan to send checks to health care workers would apply to anyone who works inside a hospital or a nursing home — including doctors, nurses and other support staff. Workers would be guaranteed a $1,000 check. But if companies agree to add in another $500, the state will match it for a total of $2,000.

Click here to read the full article at AP News

California Is Beginning To Feel The Negative Side Of Minimum Wage Hikes

After Massachusetts and New York, California is beginning to experience the negative side of minimum wage hikes, too; job losses.

That’s according to a recent University of California Riverside study, which shows that California’s minimum wage hikes have slowed job growth in the state’s booming restaurant industry.

California was among the first states to launch minimum wage hikes towards the “living wage” of $15 per hour by 2022—a 50% hike over 2012.

“Data analysis suggests that while the restaurant industry in California has grown significantly as the minimum wage has increased, employment in the industry has grown more slowly than it would have without minimum wage hikes,” the study says. “The slower employment is nevertheless real for those workers who may have found a career in the industry.”

The gloomy findings of the study are published at a time the US and the Californian economy are booming, near full-employment.

And the situation could become worse, according to the study. “When the next recession arrives, the higher real minimum wage could increase overall job losses within the economy and lead to a higher unemployment rate than would have been the case without the minimum wage increases.“

Recession or no recession, Phil Kafarakis, President of the Specialty Food Association and former Chief Innovation & Member Advancement Officer at the National Restaurant Association, sees minimum wage hikes undermining job growth in the industry through 2020. “The minimum wage increases could have major ramifications for California restaurants and more broadly, the state’s economy,” says Kafarakis. “There are some 1.83 million restaurant jobs in the state (National Restaurant Association) that represent about 11% of California’s employment base. Given that labor is one of the restaurant industry’s biggest costs, there’s a real danger that the higher minimum wage will stifle job growth, currently projected at 9% through 2020 and adding 164,000 new jobs.”

Worse, Kafarakis sees “the implications to California reach beyond restaurant tables given that for every dollar spent in table-service restaurants provides a $2.03 impact to state revenue compared to the same dollar spent in limited-service outlets, that contribute $1.75 to state revenue per dollar spent.”

To be fair, minimum wage hikes aren’t the only challenge the California restaurant Industry is facing these days. “For Quick Service Restaurants (QSRs), labor challenges have been brewing for some time,” says Corey Chafin, a principal in global strategy and management firm A.T. Kearney. “Though minimum wage hikes only deepen these challenges, it is not their sole challenge. Low unemployment has created cutthroat “labor wars” as QSRs compete to maintain a full workforce amongst a shrinking pool of available labor. (Just this week one QSR announced a partnership with AARP in an effort to hire older workers.).”

The problem, of course, is a strong economy, which gives workers more job options. “As individual workers have more options, restaurant turnover remains high and subsequently operational risks are plentiful from ensuring consistent service levels, product quality, and food safety.”

The solution? Technology, according to Chafin.“Battling these headwinds requires QSRs to adopt a long-term view to reduce labor reliance through technology. Kiosk ordering, kitchen automation, central prep, smarter scheduling, and automated delivery are in various phases of the R&D cycle and expected to ease labor risks in the years ahead.”

The pressure to replace technology with labor will differ across industry segments. “Near-term wage hikes may shift where QSRs prioritize the roll-out of these labor optimization programs,” adds Chafin. “Notably, delivery-based QSRs (e.g., pizza) will face higher long-term pressures from wage hikes than brick and mortar QSRs due to limited options to automate delivery; these QSRs can be expected to trim operations where automated delivery remains uncertain and wage increases extinguish favorable profitability.”

While it’s unclear how far technology will go to ease the burden of higher labor costs in the restaurant industry, one thing is clear: the debate over the positive and the negative side of minimum wage hikes will continue.

2019 Brings Yet Another Minimum Wage Hike

Minimum wage1Just like earlier this year, because of the enactment of SB 3 (Leno) in 2016, California’s minimum wage is going up again. On January 1, 2019, the state’s minimum wage will be increased for all sizes of businesses as “small employers” will see their second wage hike in recent years.

Under prior state law, the minimum wage for all industries increased to $10 per hour on January 1, 2016. Pursuant to SB 3, the minimum wage for all industries will be increased to $15 per hour by January 1, 2022 for businesses employing 26 or more employees and by January 1, 2023 for businesses employing 25 or fewer employees (referred to as “small employers”).

The law does provide that the scheduled increases may be temporarily suspended by the Governor based upon him or her making certain determinations. Additionally, the law requires the Director of Finance, after the last scheduled minimum wage increase, to annually adjust the minimum wage under a specified formula. In the meantime, the wage will go up incrementally each year.

The following lists the scheduled minimum wage increases for any business that employs 26 or more employees:

* On January 1, 2019 to $12 per hour
* On January 1, 2020 to $13 per hour
* On January 1, 2021 to $14 per hour
* On January 1, 2022 to $15 per hour

The following lists the scheduled minimum wage increases for any business that employs 25 or fewer employees:

* On January 1, 2019 to $11 per hour
* On January 1, 2020 to $12 per hour
* On January 1, 2021 to $13 per hour
* On January 1, 2022 to $14 per hour
* On January 1, 2023 to $15 per hour

In February 2014, the Congressional Budget Office issued a report regarding the impact of the proposal to raise the federal minimum wage to $10.10 an hour. The conclusion was that, although some low-wage workers would receive a higher income through the increased minimum wage hike, “some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed, would probably fall slightly.”

To make matters worse here in California, these scheduled increases in the state’s minimum wage not only increase hourly employees’ wages, but also salaried employees’ compensation. In order for employees to qualify as “exempt” under any of the six exemptions in this state, they must meet the salary-basis test, which is two times the monthly minimum wage (as well as the duties test that is not impacted by the wage hike).

With the enactment of SB 3, there will be an increase of over $15,000 in wages per exempt employee in just a few short years. And, businesses will see their workers’ compensation premiums go up, as well as increased costs for uniform/tool reimbursements and overtime.

While the business community had argued that SB 3 should contain a regional minimum wage, this proposal was rejected. Some can appreciate that certain cities and counties in California may be able to afford an increased minimum wage, but other cities and counties are still struggling with high levels of unemployment. Employers in these areas will find it much more difficult to sustain such a dramatic increase in their labor costs.

Chris Micheli is a legislative advocate with the Sacramento governmental relations firm of Aprea & Micheli, Inc.

This article was originally published by Fox and Hounds Daily

$15 minimum wage goes into effect for all businesses in San Francisco

Minimum wage1San Francisco this week enacted its $15 minimum wage, making it the first major U.S. city to mandate a $15 wage floor for all businesses.

It’s the last phase of Proposition 14, which voters passed in 2014 and raised the wage in increments of $1.00 through 2018.

“Those who say we have to choose between economic growth and fair pay are wrong,” City Administrator Naomi Kelly said in a statement. “We in San Francisco have proven that these elements aren’t exclusive of each other and, in fact, they compliment each other.”

And while “Fight for 15” advocates are cheering the move, the increase does little to address the cost of living concerns in the Bay Area, a region which continues to see a heavy exodus to neighboring states.

For example, a recent analysis by the National Low Income Housing Coalition found that someone would have to work around 160 hours per week at $15 per hour to be able to afford an average 2 bedroom apartment in San Francisco.

Furthermore, the income level for a family of four to qualify to low income assistance is now over $117,000 in the region, according to findings from the U.S. Department of Housing and Urban Development.

Across all of California, the median rent for a one-bedroom apartment is $1,750 and a two-bedroom averages $2,110. Average home prices in the state have surpassed $500,000 – and in places like Santa Clara County it’s well over $1 million.

Additionally, experts are noting that the wage hike may actually hurt low-wage workers, arguing that such an increase comes with trade-offs for poor residents. While the hourly wage may increase, it’s also likely to force businesses to cut prices – and possibly the hours of their workers.

“San Francisco already has a major problem facing low wage workers,” George Mason economist Michael Farren explained on C-SPAN. “So the additional cost of $15 hour minimum wage and the effect it’s going to have on prices isn’t going to help low-wage workers very much.”

This article was originally published by

Will City Voters Roll Back Minimum-Wage Hike?

Minimum wage fight for 15California voters apparently aren’t the only ones who believe that wealth can be created by government edict and income inequality fixed by approving ever-higher minimum-wage rates.

In the 72,000-population northern Arizona city of Flagstaff, voters in November 2016 approved a measure that raises the minimum wage to $12.50 an hour this year — and to $15 an hour by 2021. The City Council slowed implementation, but boosted the wage to $15.50 by 2022. That the local economy might not sustain such raises isn’t much of a concern to supporters.

Fortunately, a recent court ruling will allow local voters in the November 2018 election to consider a repeal of the wage hikes. But the fracas gained national attention shortly after the law was passed because, in the words of one resident quoted by the Associated Press, it had set the community “at each other’s throats.” Tensions are still high as the matter continues to dominate local politics. That’s what happens when economic opportunity is viewed as a zero-sum game, and when government decides what private businesses must pay their employees.

“We’ve already seen prices of goods and services increase and entry level positions being eliminated,” explained a fact sheet from the Greater Flagstaff Chamber of Commerce, which helped place the Sustainable Wages Act on the coming ballot. If that rollback measure passes, Flagstaff’s minimum wage will top out at $12.50 an hour.

That’s 50 cents higher than what the statewide minimum wage will reach (which was increased by voters in November 2016, also) but $3 lower than it would be under the current Flagstaff wage schedule, so the initiative will mitigate the worst problems. The “sustainable wages” initiative, which qualified for the ballot after its backers secured 9,000 local signatures, would also eliminate a particularly obnoxious aspect of 2016’s local initiative — a provision that requires a vastly higher minimum wage for employees who receive tips.

Typically, waiters, hairdressers and other tipped employees receive a significantly lower minimum wage based on the obvious fact that much of their income comes from gratuities. Eventually requiring the full minimum wage for these workers will wreak havoc on a college and tourist city where restaurants and other services are the backbone of the economy.

A recent survey of the chamber’s members confirmed the predictable ways that many businesses are dealing with these higher mandated costs: reductions of other employee benefits, cutbacks in hours, higher prices, and delays in expansion plans. Members also report pressure for higher wages for other employees who now earn above the minimum wage. And the full brunt of the city wage increase still is three years away, unless voters turn back the tide.

Flagstaff’s wage-hike law also is unnecessarily punitive. “The most egregious part of the new law is the new Office of Labor and Standards, which allows a city employee access to the books of any business, any time,” the Chamber explains. The law empowers the Arizona Industrial Commission to conduct myriad audits and impose penalties on businesses accused of underpaying workers. The law even allows employees to keep their names confidential “as long as possible” as any complaint they file winds its way through the adjudication process. The rollback measure would address this problem, too.

For insight into the thinking behind the wage mandate, consider the views of the activist group, Flagstaff Needs a Raise. The group’s website is filled with the usual hysteria about right-wing boogeymen: “After Flagstaff voters approved Proposition 414, the Greater Flagstaff Chamber of Commerce and a Phoenix-based ‘dark-money’ group … financed a petition campaign using paid out-of-town circulators to gather signatures to ‘amend’ Flagstaff’s Minimum Wage Act with a title misleadingly named ‘the Sustainable Wages Act.’”

The “need a raise” folks also display their economic illiteracy by claiming that “higher wages lead to more money circulating in the local economy which means more revenue for businesses.” The minimum-wage hike also will mean “less stress for families, better health, and less domestic violence among other positive social outcomes,” according to the group.

Well, higher real incomes do create better social outcomes — but higher minimum wages only end up impoverishing more people by destroying job opportunities and raising prices. This is no surprise to Spectator readers, but higher minimum wages hurt the poor in other ways. The idea that higher mandated wages result in more money percolating in the economy is similar to the idea that moving water from a pool’s deep end will help raise the shallow end.

In a column last month in the Flagstaff Business News, Mayor Coral Evans noted the futility of raising minimum wages without adjusting federal poverty guidelines, which was a refreshing dose of common sense in that city government. “A 50-cent raise does little for someone who loses his or her rent voucher,” she argued. Furthermore, she wrote that the wage hikes are depleting resources for social-service providers and the school system, which also must pay the higher wages. That also creates pressure for tax increases, of course.

I typically write about California’s approach to politics, which is why the Flagstaff initiative grabbed my attention. It’s always disturbing to see the ideas that fester here gain traction in other, presumably more sensible parts of the nation. California has the highest poverty rate in the nation, based on the Census Bureau’s cost-of-living-adjusted metric. Driving up the cost of living, and shuttering small businesses, is a recipe for failure wherever it’s tried.

The Flagstaff minimum-wage hike is part of a union-backed national campaign, so don’t be surprised if you see ballot initiatives coming to a city near you. Conservatives need to do a better job combating such economic foolishness and explaining why less government intrusion and freer markets are the only way to help the working poor — before it’s too late.

Steven Greenhut is Western region director for the R Street Institute. Write to him at

This article was originally published by the American Spectator

California’s minimum wage rises again on Jan. 1

California’s minimum wage will increase another 50 cents per hour on Jan. 1. The new minimum rate for workers at larger businesses – those with 26 or more employees – will be $11 per hour. Smaller firms will have to pay $10.50.

The Monday pay raise is part of the state’s plan to raise the minimum wage for all workers to $15 per hour by 2023.

Minimum wage workers are already making more than that in Emeryville, where the minimum wage is $15.20 – reportedly the highest rate in the country. At least 19 other California cities will have higher rates than the state as 2018 starts, and two Bay Area cities – Sunnyvale and Mountain View – will bump their minimum to $15 on Monday. …

Click here to read the full story from the Sacramento Bee