Business Leaders Come Out in Opposition to Sacramento Minimum Wage Hike

Local Supports in June at City Hall lobby for minimum wage hike
Local supporters in June at City Hall lobby for minimum wage hike

A coalition of business groups, including The California Restaurant Association, the California Retailers Association and the Sacramento Hispanic Chamber of Commerce, along with the Sacramento Metro Chamber, announced they would oppose the proposed $12.50 minimum wage proposal as bad for the city.

The group, in a letter to Mayor Kevin Johnson, said that raising the the minimum wage to $12.50 an hour “would undermine our capital city’s economic momentum.”

Metro Chamber President and CEO Peter Tateishi said, “The exemptions have not materialized in the way we were expecting them to.” The move comes after the chamber decided it would not aggressively lobby against the proposal, however, on Monday, the fine print of the ordinance was unacceptable to business.

One key part was that small businesses were promised a slower phase-in to the wage increases, but this proposal only gives them six extra months.

Back in September, the task force appointed by Sacramento’s Mayor Kevin Johnson made the recommendation that the minimum wage be raised to $12.50 an hour by 2020.   This is significantly lower than minimum wage increases in Los Angeles and San Francisco that will be phased in over five years to take them to $15 an hour – the goal of many activists.

Adding to the controversy is an exemption for “total compensation,” which would allow employers to pay a lower hourly wage if their employee’s total pay is at least $15 an hour. Naturally, that exemption allows restaurants, and other businesses that have employees who earn tips, to pay less.

While restaurant owners spoke favorably of the exemption, unions and groups representing low-income families said it would take advantage of some low-wage earners. Labor groups questioned the legality of the exemption, arguing that no other California city has enacted a total compensation clause in their minimum wage increases.

While labor has its own reason for opposing the program, the Sacramento Bee wrote that “their combined opposition could weaken the plan’s chances of being enacted.”

“It’s not often that you see business and labor agree on an issue of this importance,” Mr. Tateishi said in an interview with the Bee.

The Bee notes, “Opposition is growing largely due to questions about a controversial ‘total compensation’ clause. The clause would excuse businesses from paying the higher wage if they could prove their employees make at least $15 an hour including tips, commissions or other forms of compensation. The clause was designed to unite business and labor around the higher minimum wage. Now, however, that compromise looks like it’s in danger of unraveling.”

The business groups argued that the total compensation clause buffers certain sectors of the economy against the increase.

“Without total compensation protection, the retail, restaurant and hospitality sectors, which have dominated job growth in the region, will suffer,” the business group said in the letter.

Labor groups believe they have the support of the voters at 58 percent for a $15 an hour minimum wage raised over a three-year period, with support of $13.50 an hour at 70 percent, according to a poll commissioned by those labor groups.

Minimum wage increases have been a somewhat mixed bag. San Francisco increased their minimum wage to $15 in 2018 while LA’s will hit $15 in 2020. The UC system will raise its to $15 by 2017. But other cities have lower increases. Oakland will raise its rate to $12.25 with annual cost of living adjustments, and San Diego will raise its to $11.50 by 2017.

As we have reported in the past, local leaders have been pushing for a $15 an hour minimum wage in Sacramento and Davis. The question now is whether they will go to ballot box.

There is also the belief that eventually the state of California will act on a $13 an hour minimum wage. Prior to the task force decision, California State lawmakers for a second year in a row declined to take up a bill that would have raised California’s minimum wage statewide to $13 and tie future increases to inflation.

The Assembly Appropriations Committee did not take up Senate Bill 3 by Sen. Mark Leno. Assemblymember Jimmy Gomez, who chairs the committee, indicated that they will look at a range of options, including setting regional minimum wages.

Senator Leno’s bill seeks to raise the minimum wage to $11 in 2016 and $13 in 2017, then tie it to inflation starting in 2019.

“Any further study or delay of such an increase undermines working Californians who deserve to be paid a living wage. It should not be legal to pay sub-poverty wages in our state, and we must act soon to lift our communities out of poverty and to boost our economy,” Senator Mark Leno said in a statement. “Our intent is to pass our amended version of the bill to the governor’s desk in January.”

In the meantime, Assembly Speaker Toni Atkins indicated that California’s minimum wage should go higher. However, she is not sold on the Assembly Bill, stating instead, “We need a path to $15 and beyond.” She is looking toward the Legislative Analyst’s Office to help develop options for increasing the minimum wage.

Despite the setbacks regionally and statewide, the issue of minimum wage and income inequality appears to have legs.

Recently a number of UNITE HERE! representatives lobbied the Davis City Council on the issue of wages for hotel workers at a proposed Embassy Suites site.

As Francisco Garcia put it, “I’ve seen the difference between non-union jobs with minimum wage and the good union job I have today.”

He explained, “All we’re asking for is workers at this future Embassy Suite have the right to choose. We just want the owner to agree to not run a campaign of intimidation against them and to respect the majority choice of whether to have a union or not.” He said he was not asking the council to vote yes or no on the project, just to think about the employees to ensure they have labor peace.

While the council could not tie an approval of land use considerations to wages, the council made it clear that they were supportive of labor agreements.

Mayor Dan Wolk stated, “I found what has been said very compelling.” He continued, “The issue of poverty and income inequality are major issues, not just in our state and region, but locally.”

Mayor Wolk made it clear that “all the folks are asking for is the card-check neutrality, the ability to organize. We cannot condition this project tonight on requiring the applicant (to negotiate), but we can send a strong signal.”

“It seems very reasonable to me,” he said. “I’m very supportive of the project but I am very cognizant of the concerns that are being brought up about what the workers are going to earn. These are some of the lowest paid jobs in our society – and we as a council need to be cognizant of that.”

In the meantime, activists continue to push for a local ordinance on minimum wage – and, while they had a setback last year, the momentum continues to grow. In June, a number of speakers pushed for the city to follow the leads of Seattle, San Francisco, and Los Angeles and implement a gradually rising minimum wage to reach $15 per hour.

The speakers argued that increases in the minimum wage paid in Davis would bring many working poor out of poverty, in addition to stimulating the local economy.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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2 thoughts on “Business Leaders Come Out in Opposition to Sacramento Minimum Wage Hike”

  1. Davis Progressive

    this is a useless exercise on behalf of everyone – the state at somepoint will get its act together and pass a $13 minimum wage rendering this one moot

  2. tribeUSA

    phasing up to $12-$13 by 2020 & then tying to inflation sounds entirely reasonable and balanced (not too low or high). I hope one such proposal gets enacted into law soon.

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