A growing movement to adopt local minimum-wage ordinances is gaining momentum on the Peninsula and elsewhere in California, and with a City Council committee's vote this week an ordinance now appears headed toward adoption in Palo Alto.
Establishing city minimum-wage levels that are greater than California's current $9 per hour is a natural reaction to the soaring cost of living in Silicon Valley, San Francisco and other cities where housing costs are making it all but impossible for low-income workers to live nearby.
The Palo Alto City Council's Policy and Services Committee voted 4-0 Tuesday to recommend adopting an $11 per hour minimum wage effective Jan. 1, 2016, the same date the state minimum wage is set to increase to $10. And while it would make future increases a matter to be decided each year by the City Council, the committee wants to set a target of reaching $15 per hour by 2018 through annual bumps.
There was no meaningful debate of the proposal because the committee, made up of council members Pat Burt, Marc Berman, Tom DuBois and Cory Wolbach, was preaching to the choir. The same four had proposed the idea to the full City Council in a February memo, so only the details of the proposal were in question. An audience of supporters rallied to encourage them with impassioned arguments lamenting the increasing income disparity between those who can afford to live in Palo Alto and the thousands of employees in low-skill jobs that serve residents in restaurants, retail stores and by providing other services for low pay.
Palo Alto is hardly leading the way on the local minimum-wage movement. San Jose adopted a voter-passed initiative in early 2013 that set a current minimum wage of $10.30. Sunnyvale and Mountain View made increases last October to the same level, with cost-of-living bumps each year. Berkeley set a rate that is currently $11, and San Francisco voters passed an initiative last November that sets $12.25 (which takes effect today) and rises to $15 in mid-2018.
The drawback of all these local ordinances is that a dollar an hour more in pay will do nothing to enable low-paid workers to afford housing in these communities. And in Palo Alto and other Peninsula cities, market forces have already forced most employers of service workers to pay more than minimum wage. Most of these lower-paid workers are commuting into Palo Alto from more affordable communities, and employers have no choice but to attract them with higher wages.
But with no data collected or requested, the City Council is operating almost entirely from emotion and out of compassion for low-wage earners. We share their instincts that a city like Palo Alto has a moral obligation to join with other cities to acknowledge the problem, but caution that no one has any idea how many workers and employers will be affected and what unintended consequences there may be.
With the proposed initial level of $11 to be implemented next January, just a dollar above the state minimum wage, it is unlikely that any employer will be significantly impacted or have difficulty passing along the cost to customers. The absence at the committee meeting of many representatives from the business community or individual employers suggests that the proposal is either not a concern or that the city's outreach about the proposal was poor.
For the same reasons as the four council members, we think adopting a local minimum-wage ordinance acknowledges that our area's cost of living is much higher than elsewhere in the state and that the state minimum wage isn't close to a living wage.
The greatest risk lies in decisions to be made on future increases to a local minimum wage, and in the possible unintended consequences for teens seeking summer and after-school employment.
Without any data or input from retailers that employ them, it is impossible to know whether a higher minimum wage will diminish opportunities for teens.
The benefit of adopting such a modest initial city minimum wage, and to not put it into effect until next January, is that it provides time for employers to prepare, and it will allow for a needed analysis as to how further increases will impact employers and the employment of students.
It is too early to fully evaluate the impacts of San Jose's ordinance, but a UC Berkeley study estimated that since San Jose's $10.15 minimum wage took effect at the beginning of 2014 the operating costs for restaurants has increased by less than 1 percent.
Palo Alto should move forward with adopting the minimum-wage ordinance, but in doing so should make sure it gathers the data it will need to make a better-informed decision about future increases so that they don't hurt vulnerable local retailers or teens looking for work experience.