And while the city's eventual $15 rate is all but inevitable, one question is generating debate on the council: How soon should Palo Alto get there?
The plan, which the City Council's Policy and Services Committee endorsed this week, would gradually bring the local minimum wage to $15 by 2019. It would also align Palo Alto with other Santa Clara County cities that are pursuing a similar agenda. In June, the Cities Association of Santa Clara County and various local officials co-signed a letter calling for a regional minimum-wage proposal. Among the co-signers was Palo Alto Vice Mayor Greg Scharff, who serves on the Cities Association's Minimum Wage Subcommittee.
On Tuesday, Scharff was joined in his support for $15 an hour by 2019 by his three colleagues on the council's Policy and Services Committee: Chairman Tom DuBois, Liz Kniss and Marc Berman. The only disagreement was over the best way to get to that goal.
The plan endorsed by the Cities Association, and ultimately approved by the committee, would raise minimum wage to $12 in 2017, to $13.50 in 2018 and to $15 in 2019. This timetable is considerably faster than the one used by the state, which is increasing the minimum wage to $15 by 2022 for large businesses and by 2023 for small businesses. It lags, however, behind the timeline established by Mountain View and Sunnyvale, which are aiming to get to $15 by 2018.
During Tuesday's discussion, Councilman Marc Berman strongly favored swifter action. He proposed raising the minimum wage to $13 starting next year and then moving to $15 on July 1, 2018, which would give businesses a year and a half to adjust to the new norm. Though Berman joined his colleagues in the vote, he indicated that he intends to lobby for the "15 by '18" timeline once the issue gets to the full council.
Berman expressed no qualms about following a timeline different from the city's regional partners, noting that while he supports working with partners on the common goal, there are already "two huge cities in the region that are moving at a different pace, that signed on to this letter but are not moving at the letters' schedule."
The committee was more united when it came to a broader question about the wage proposal: Should it include tipped workers? Several local restaurateurs Tuesday made the case that it should not. Wait staff, many noted, get paid up to $40 an hour because of tips, while the kitchen staff makes considerably less. Because California has a law that prohibits the sharing of tips between front- and backroom staff, if the restaurants had to pay more in wages to waiters, it would keep the restaurateurs from fairly compensating dishwashers, cooks and other employees who don't benefit from tips.
Local chef Jesse Cool said half of the staff at her restaurants in Palo Alto and Menlo Park receive the minimum wage but net between $18 and $40 an hour. To pay higher wages, she said, the restaurants are forced to raise prices for food, which brings even more in tips.
"It all goes to the servers, and we cannot pay our kitchen staff any more," Cool said.
Meanwhile, employee costs are rising and profit margins are getting slimmer, she said.
"In general, in the restaurant business, if we can make 5 to 10 cents on a dollar, we're doing really well," Cool said. "I'm down to 2 percent."
Peter Katz, owner of The Counter on California Avenue, also called for an exemption for tipped workers. Like other restaurateurs, he said he fully supports a $15 minimum wage. But he also noted that the benefiting servers "are unconcerned with the daily paychecks because they're getting paid $30 to $40 in tips."
"That wouldn't be a problem either, if it didn't impact our ability to pay the rest of the folks who work in the restaurant," Katz said. "The losers in all of this will probably be the folks who most need it and, frankly, the restaurant owners."
Dan Gordon, founder of the Gordon Biersch (which was recently shuttered and re-opened as Dan Gordon's), suggested that the wage increases -- without an exception for tipped employees -- will severely hurt the city's restaurant industry and trigger a "panic attack" thanks to rising costs.
"The majority of the restaurants in the industry will go to a rapid loss, and you'll go to decimations of all the restaurants you like, except for some power players," Gordon said.
The committee, however, agreed that exempting tipped workers would be a dubious proposition. Other cities -- including Sacramento and Los Angeles -- have considered doing so but ultimately opted not to, in some cases because of heavy lobbying from labor groups and the fear of a lawsuit, said Cara Silver, the city's senior assistant city attorney.
Similarly, Palo Alto council members showed little interest Tuesday in becoming California's test case for such an exemption. While they all expressed sympathy with the restaurant owners, they argued that this is an issue for the state to resolve.
"I really feel that we in the city here have our hands tied on this issue," Scharff said. "We can make a bold statement in favor of the restaurant issue and take on litigation. I don't think it's the right thing to do."
Kniss and Berman both agreed.
"We wouldn't be doing our duty as stewards of the city and its resources if we walked ourselves into a lawsuit where the odds were heavily stacked against us," Berman said.