News

Palo Alto raises minimum wage

City Council approves $11-an-hour wage starting in January 2016; targets $15 by 2018

Eleven dollars per hour probably isn't the type of wage that would allow anyone to afford a living in Palo Alto, but the City Council agreed on Monday night that it's a great place to start.

By a unanimous vote, an enthusiastic council approved an ordinance to institute a local minimum wage of $11 an hour, effective Jan. 1, 2016. For Palo Alto, which has never had a local minimum wage, this move is a significant first step in a multiyear march toward a $15-per-hour wage. The council agreed that this should be the city's goal, possibly as part of a coordinated effort with neighboring cities.

The council's vote places Palo Alto in the midst of a regional movement to raise the minimum wage, with Mountain View and Sunnyvale passing their own minimum-wage ordinances last October and San Jose adopting its minimum wage in 2013 through a voter initiative. It also goes further than the other ordinances. Mountain View, Sunnyvale and San Jose currently have a minimum wage of $10.30 an hour, with future increases tied to the consumer price index (CPI).

Without local minimum-wage requirements, cities are subject to the state standard, which is set to rise from $9 to to $10 an hour on Jan. 1, 2016.

In adopting the minimum wage, council members acknowledged its limitations. A person earning $11 an hour is unlikely to afford housing within 15 miles of the city, much less within Palo Alto, said Councilman Marc Berman.

"It's something that might allow them to move a little closer and commute not as far. It's something that will make their quality of life a little bit better. But it isn't something that will drastically change the way people live," Berman said.

Councilman Tom DuBois said his position on the minimum wage is "simple." Palo Alto is an expensive place and the minimum wage hasn't kept up with the rising cost of living here. He called $11 an hour a "reasonable compromise."

"We don't want to hurt businesses by moving too far, too fast," DuBois said.

The push toward the minimum-wage ordinance proceeded with little resistance. Like in prior discussions of the topic, most speakers at Monday's meeting spoke in favor of the change.

Business owners, however, were less thrilled. While the Chamber of Commerce has not taken an official position on the new law, the council heard Monday from a handful of critics from the restaurant industry.

Nancy Coupal, owner of Coupa Cafe, made the point that in the restaurant business, wages don't tell the full story. Tipped employees, she said, often earn more than managers, she said. She also said she doesn't think anyone in Palo Alto currently pays minimum wage.

"You can't get anybody," Coupal said. "It's hard enough to get staff to come here because there's nowhere to park and it's too expensive to live here."

Michael Ekwall, owner of the California Avenue restaurant La Bodeguita de Medio, also urged the council to take tipping into consideration. The city's minimum-wage ordinance would be better, he said, if the council considered total compensation, rather than just wage.

Ekwall told the council that his staff of 40 includes 15 employees who earn minimum wage, though their total compensation is more like $22 an hour.

"The more money we have to pay our minimum-wage earners, the less we have for other staff members who don't receive tips," Ekwall said.

But most of the speakers at Monday's meeting focused on the effect that the higher wage would have on local workers. Many urged the council to move ahead with the recommendation of its Policy and Services Committee and to pursue the "$15 by '18" goal. Meghan Fraley noted that Palo Alto is one of the most affluent places in the world and called the proposed increase "conservative."

"It's fundamentally a moral imperative that hard-working families can earn something close to a living wage," Fraley said.

Palo Alto resident Carol Lamont recalled her jobs in day care and as a waitress, gardener, house cleaner and clerk. She said she took the jobs "just to survive with my little baby" and had to choose between paying the rent, paying a phone bill, transportation costs, phone, utilities and food."

Often, the household was without electricity, she said. "We need to do better for ourselves and the people who work for us," Lamont said. "We need to pay $15-an-hour minimum wage now."

Larry Moody, a member of the East Palo Alto City Council, said he was speaking "on behalf of the hundreds and thousands of East Palo Alto residents who work in Palo Alto and commute every day" when he urged the council to move forward with the ordinance.

"Many of the residents who work in this community are from East Palo Alto. All they want is an opportunity to have hope," Moody said. "The hope that they can work hard, earn a wage that allows them to raise their sons and daughters in the community; the hope that the employers they're working with believe in them enough to help them."

The council agreed to further refine the ordinance in the months to come and directed its Policy and Services Committee to consider possible exceptions to the minimum-wage requirements. This would include, but not limited to, tipped employees and teens who get hired for seasonal jobs.

The committee will also chart the city's path toward a $15 wage in 2018, which may or may not look like the paths taken by neighboring cities. In June, Mountain View Mayor John McAlister and Sunnyvale Mayor Jim Griffith co-signed a letter to Palo Alto Mayor Karen Holman that advocated a "joint approach to reaching $15 per hour."

The council generally supported looking beyond the city borders in considering further changes. Councilman Cory Wolbach said he supports an approach where Palo Alto doesn't mimic other cities but seeks to coordinate with them.

Councilman Greg Scharff agreed, saying "I think it's important to think regionally and be on same page."

Comments

25 people like this
Posted by Perspective
a resident of Greater Miranda
on Aug 25, 2015 at 6:15 am

Great!! Even harder for a teen to get that first training job near home!! First, run the small businesses out of town, next, make it even harder for those who stay to hire. Good job, Palo Alto!


4 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Aug 25, 2015 at 8:01 am

Many local businesses use teens, eg. Winter Lodge, swim clubs, movie theaters, look for increases in costs to use these facilities as we don't want less lifeguards at our pools


14 people like this
Posted by For Palo Alto?
a resident of Another Palo Alto neighborhood
on Aug 25, 2015 at 8:05 am

Considering the cost of living in Palo Alto ( or parking here if one works here), $11/ hour is wholly insufficient


1 person likes this
Posted by musical
a resident of Palo Verde
on Aug 25, 2015 at 8:39 am

Is this the beginning of the end for tipping?
Are tips a loophole that should be eliminated?
Looks like we can simply mandate a wage.


22 people like this
Posted by Real American
a resident of Menlo Park
on Aug 25, 2015 at 10:20 am

If you're trying to pay your rent or raise your "sons and daughters in the community" with a minimum wage you're a massive failure. Minimum wage jobs are entry level jobs for entry level employees - i.e., employees with little to no skills who learn on the job. These people are typically just starting out in the workforce and are younger and poorer. Raising the minimum wage hurts them the most because it makes hiring them more expensive. Making it more expensive to hire someone makes it less likely that someone will do so. We've seen many businesses close up in places, like Seattle, where they raised the minimum wage. Other industries are moving to more automation meaning these jobs simply won't exist. You simply can't repeal the law of economics.

Thus, raising the minimum wage in Palo Also will result in (a) fewer minimum wage jobs in Palo Alto and (b) higher prices for the goods and services provided in Palo Alto. Good job, City Council. Whatever your intentions were, the results will likely be the opposite.


18 people like this
Posted by Business Owner
a resident of Downtown North
on Aug 25, 2015 at 11:02 am

We saw this coming a few years ago and automated like crazy - we'll be done by the end of this year. A full time job paying $45,000 with full benefits - the employee paid absolutely nothing, including no deductible for dental benefits - we paid from the very first dollar, now requires a single part time employee of two, that's right, two, hours per week, with no benefits at all other than state mandated sick leave.At $15 per hour, that's $1500 per year, so I literally don't care.

[Portion removed.]

Finally, to those believing that this will benefit the workers, who will now be able to live closer to their jobs, what do you think this will do to rents as now EVERYONE in the same financial situation has more money to spend. Of course, rents will go up. So 60% of the money lost by everyone else in the form of higher prices to pay for all this just goes in the pockets of slum lords. Good for them, bad for everyone else.

But of course, the smart business owners are automating. $45,000 per year plus generous benefits has been replaced by $1500 per year and no benefits. If you call that a win for the workers, good for you, but I call that $53,500 more in my pocket, including the cost of medicare, social security, health insurance, etc. Instead of going into the economy and getting spent, it goes into my retirement fund. That's all this did, at least for my business. I didn't really have the motivation to spend the time and money automating, but seeing the minimum wage doubling made it finally worth my time.

Is that a win for workers? Nope. Big loss for workers. If you want to high five, go ahead, but the reality is quite different.


7 people like this
Posted by sea reddy
a resident of College Terrace
on Aug 25, 2015 at 11:03 am

Great first step.

Truly, we need a $20/hour wages to afford living/eating in our town.

It can't just be high rents and low wages.

Regards


2 people like this
Posted by Johnny
a resident of Midtown
on Aug 25, 2015 at 11:04 am

I am in awe of our great and magnanimous leaders. Thank you for divinely imparting fairness and equality upon a town blighted by greed. How else shall we fight corruption without the unadulterated goodwill of the Elect.


8 people like this
Posted by Garden Gnome
a resident of Crescent Park
on Aug 25, 2015 at 11:15 am

If we wanted to be truly fair, we would increase the minimum wage to at least $50/hour.

Yes, I know that a lot of businesses will go out of business, even at $11/hour, but that's a small price to pay for fairness. As it is, there are too many restaurants and cafes in town.

Fortunately, basic economics don't apply in our little town.


12 people like this
Posted by AboutTime
a resident of Another Palo Alto neighborhood
on Aug 25, 2015 at 12:12 pm

It's about time and hopefully just the beginning. $15 per hour is nothing in the Bay and small business owners should be charging the millionaires in Palo Alto more for their services so they can pay their employees a living wage. The millionaires of Palo Alto are making so much money from the global economy, driving housing prices up, and need to put more money into our local economy. The unfortunate thing isn't raising minimum wage. What's unfortunate is the city had to step in to get business owners to do the right thing. I'm not a millionaire but do make six figures a year and have no problem with paying an extra buck for my starbuck's if it helps a working person pay their rent.


7 people like this
Posted by Joseph E. Davis
a resident of Woodside
on Aug 25, 2015 at 12:14 pm

The minimum wage is a cruel policy that makes it hard for teenagers and other low-skilled people to start gaining employment experience. By locking the low-skilled out of the workforce, it actually exacerbates the very inequality that advocates claim to be addressing.

The correct value for the minimum wage is zero.


8 people like this
Posted by Midtowner
a resident of Midtown
on Aug 25, 2015 at 12:14 pm

@Business Owner: So you view many potential employees as pot smoking slackers? You should have stated the name of your business so everyone can remember not to apply there.


2 people like this
Posted by Wondering
a resident of Another Palo Alto neighborhood
on Aug 25, 2015 at 12:21 pm

Why did the Chamber of Commerce not take a position on this important issue that will affect so many small to medium sized businesses?

It sounds like when councilmen/women avoid having to vote on a sensitive issue, so they arrange to be out of town on the evening of a big decision.


6 people like this
Posted by Annette
a resident of College Terrace
on Aug 25, 2015 at 12:26 pm

I watched the meeting last night and found this discussion rather sad. It's a shame the Council didn't exempt teens and tip earners. Regardless, whether $11 or $15, paying a higher minimum wage will not change the fact that Palo Alto becomes exponentially more unaffordable every year. Market forces rule and we all know what that means here. Without other complementary actions such as rent control for residents and voluntary reasonable rents for businesses "iconic" Palo Alto will eventually be more an odd industrial park with only high-end houses and nice trees than a community with the usual mix of businesses and services. Think Atherton with lots of business parks. I doubt that's what is really wanted, but it seems to be the direction we are headed.


Like this comment
Posted by mhardi01
a resident of Downtown North
on Aug 25, 2015 at 12:41 pm

Love the post from 'Business Owner'. Shows how rational people think and act. The good news is that this behavior will fuel more tech automation and robotics, which a lot of the businesses here in the valley produce. That's a long-term win for our region. Sure, manual work will continue to get eliminated or off-shored but this shouldn't be the basis of our economy. And yes I'm also expecting that my kids will not find part-time jobs outside of occasional baby-sitting or dog-watching. Plan ahead.


9 people like this
Posted by @Joseph E. Davis
a resident of another community
on Aug 25, 2015 at 12:56 pm

[Post removed.]


9 people like this
Posted by Chris
a resident of University South
on Aug 25, 2015 at 1:53 pm

If a business in Palo Alto cannot or will not pay $11/hour they deserve to go out of business.
There is no constitutional right to exploit labor.
The $50 minimum wage is red herring. No serious person is proposing even $20/hour. Of course, Palo Alto has a lot of people who think they are serious, but in reality have very ridiculous ideas.

At least City Council showed there are in the ballpark of the mainstream.


7 people like this
Posted by Chris
a resident of University South
on Aug 25, 2015 at 1:57 pm

Joe Davis,

Maybe you could propose a training wage for teenagers. Your current position just makes you look ridiculous to the vast majority of people. There is no preponderance of evidence that a reasonable minimum wage hurts jobs and economic growth.


4 people like this
Posted by restaurant owner
a resident of Downtown North
on Aug 25, 2015 at 2:15 pm

You cannot have a high minimum wage AND a tipping system in the restaurant industry. It distorts wages internally because servers end up getting paid much much more than the kitchen employees; and it leads to higher prices for the consumer to make up for the high minimum wage in the kitchen. The government won't be able to legislate a minimum wage that includes tips because it is very difficult to manage, and thus regulate.

If the government insists on regulating minimum wage, then the restaurants will need to annul the tipping system altogether, just like the very high-end restaurant do. It shouldn't be up to the government to ban this behavior. It is up to the restaurants to do this!


8 people like this
Posted by Jennifer
a resident of Green Acres
on Aug 25, 2015 at 2:17 pm

I watched last night's counsel meeting on TV. I understand the law exempts companies with union contracts (collective bargaining agreements). Nobody explained why the council created that loophole. I heard a labor leader tell council that the minimum wage was a great idea. But I wish somebody would have asked him why labor wants to be exempted from a law it is promoting. The only conclusion I can draw is that labor wants the minimum wage to pass so that it can go to businesses and say, "If you don't want to pay the minimum wage, allow the union to come in." That way the union boosts the amount of dues it gets, regardless of what the workers are paid. I know that sounds awfully cynical. Somebody correct me if I'm wrong.


6 people like this
Posted by Hmmm
a resident of East Palo Alto
on Aug 25, 2015 at 3:29 pm

Hmmm is a registered user.

AboutTime - and let's not forget the tax avoidance garbage that goes on with the rich.


1 person likes this
Posted by musical
a resident of Palo Verde
on Aug 25, 2015 at 3:46 pm

Palo Alto gets 14% of everything hotel workers make.


Posted by Longtime Resident
a resident of Leland Manor/Garland Drive

on Aug 25, 2015 at 4:44 pm


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1 person likes this
Posted by ndn
a resident of Downtown North
on Aug 25, 2015 at 4:48 pm

Well Restaurant Owner, you don't need the government to abolish tipping. You can do that yourself.


3 people like this
Posted by Robert
a resident of another community
on Aug 25, 2015 at 4:49 pm

Despite so many business owners being against imposing and increasing a minimum wage, there is silence when it comes to imposing a minimum cost of living through highly restrictive housing policies. Not that its very shocking that they want to have it both ways...


4 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Aug 25, 2015 at 4:52 pm

Target is remodeling and halving the number of checkouts, the remainder will be self checkouts. Walmart and Safeway have already done this.

Business is becoming more automated and part of the reason is the high cost of labor. Remember when all gas stations pumped your gas, washed your windows? When costs are high and competition matters, labor intensive jobs will be cut either by numbers of employees or the numbers of hours they work.

There used to be several banks in Midtown, now there is one. People will reduce their housekeeping services and gardening services to twice a month instead of once a week. We will lose our cheaper restaurants, particularly ones with table service.

Expect less lower paid service jobs as a result of this.


Posted by Reader
a resident of another community

on Aug 25, 2015 at 8:45 pm


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5 people like this
Posted by Klara
a resident of Charleston Meadows
on Aug 25, 2015 at 10:47 pm

Working for minimum wage is hurting workers dignity.

It is humiliating not to be able to pay rent out of your full time work and have a decent life.


Like this comment
Posted by Garden Gnome
a resident of Crescent Park
on Aug 26, 2015 at 12:00 pm

Fortunately, after restaurants and cafes raise their prices to provide increase wages to their employees, we'll still be forced to frequent our local establishments.

Oh, wait - it turns out that we can go to similar establishments in nearby towns!

Sorry about those job losses, though. Maybe these former employees will be able to seek employment in those nearby towns.


Sorry, but further commenting on this topic has been closed.

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