Palo Alto explores two paths toward higher minimum wage

City Council to decide how fast to get to $15 per hour; committee rejects exemption of tipped workers

The goal is clear and undisputed: enacting a minimum wage of $15 per hour.

But as Palo Alto officials prepare to plot on Monday night their route toward this destination, they will have to choose between two separate paths, each with its own advantages and drawbacks.

One path, which is supported by the council's Policy and Services Committee, would raise the minimum wage from the current level of $11 per hour to $12 in 2017, to $13.50 in 2018 and to $15 in 2019. The increases would be consistent with the recommendation from the Cities Association of Santa Clara County, which in June released a letter calling for a "common path" by various cities toward a higher minimum wage.

Sunnyvale Councilman Jim Griffith, president of the Cities Association, wrote in the letter that the group "encourages cities to take a regional approach to protect our most vulnerable residents and to work in concert toward a uniform solution that will best benefit Silicon Valley's employees and employers." The group of mayors and council members who co-signed the letter, includes San Jose Mayor Sam Liccardo and Palo Alto Vice Mayor Greg Scharff, who also sits on the council's Policy and Services Committee. Last month, Scharff and his committee colleagues voted 3-1 to adopt the schedule proposed by the Cities Association.

The second path would get Palo Alto to $15 faster, though the city would probably have fewer companions along the way. Under this proposal, which is being pursued by Mountain View and Sunnyvale, the city would go to $15 by July 1, 2018. If Palo Alto chooses to follow suit, the local minimum wage would move to $13 starting next year and then $15 on July 1, 2018, giving businesses 18 months to adjust to the higher rate.

The question of how fast to proceed is the only factor on which there's no clear consensus in Palo Alto, where the entire council supports a higher wage. In February 2015, councilmen Marc Berman, Pat Burt, Tom DuBois and Cory Wolbach co-wrote a memo that called for the city to explore a higher wage.

"Our lowest-wage workers perform valued services in Palo Alto and often have to work multiple jobs with long commutes to barely make ends meet," the memo stated. "A local minimum wage would be a modest step in supporting these workers who are vital to maintaining the services we value and that are essential to our local economy."

Some progress has already been achieved. Last year, the council passed an ordinance raising the local minimum wage to $11, effective Jan. 1 of this year. And while the Policy and Services Committee agreed on Aug. 16 that the city should continue to work toward a higher wage, there was some disagreement in the committee about the best route. While the committee voted to support the Cities Association plan, Berman indicated at the meeting that he would prefer the timeline being used by Mountain View and Sunnyvale.

In supporting the timeline from the Cities Association, committee members stressed the importance of working regionally. Having the minimum wage go up at the same time in various regional jurisdictions creates a "level playing field" for businesses in different cities, Scharff argued at the committee meeting.

"I want to make sure that we get in sync with the neighboring cities," Scharff said.

Councilwoman Liz Kniss also supported the Cities Association schedule and said she is in favor of "regionalism" when it comes to minimum wage. Berman argued that while different cities are committed to raising the minimum wage, there isn't a clear consensus on a timetable.

"There are 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 letter's schedule," Berman said.

On other matters pertaining to the minimum-wage ordinance, the committee was in complete accord. All four members rejected an idea proposed by local restaurants to exclude tipped workers from the minimum-wage requirement. In making the case, several local restaurateurs told the committee that requiring businesses to pay a higher wage to their wait staff (whose actual wages, because of tips, often exceed $20 an hour), will keep them from raising compensation for cooks, dishwashers and other non-tipped workers. Because California law prohibits employers from pooling tips, the workers in the "back of the house" would be at a disadvantage when it comes to a higher wage.

Rob Fischer, whose downtown businesses include Reposada and Gravity, told the committee that restaurateurs are not looking to avoid the $15-an-hour requirement, but merely to have the ability to pay adequate wages to "people who work harder than anybody else in our restaurants."

"It's really important for us to be able to pay our people in the back of the house more money," Fischer said. "And we want them to have as good of a life as the people in front of our restaurants do. That's what we're asking for and nothing more."

But the committee, following the example of other cities that have explored this topic (including Los Angeles and Sacramento), agreed that exempting tipped workers would place the city at a risk of a lawsuit. While council members said they were sympathetic to the restaurant operators' concerns, they argued that this is an issue of state law and it would have to be addressed by Sacramento legislators.

"I really feel that we in the city here have our hands tied on this issue," Scharff said.

Berman agreed, saying, "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."

Related content:

Palo Alto raises minimum wage

Palo Alto looks to raise minimum wage to $15 by 2018


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4 people like this
Posted by Oh, now we're concerned about lawsuits
a resident of Midtown
on Sep 22, 2016 at 9:30 am

So the city council does not want to endorse the exemption for tipped workers (many of whom already make far in excess of $15/hour) because it might incur a lawsuit. Where was this type of thinking from our city leaders during the Buena Vista fiasco?

30 people like this
Posted by obvious solution
a resident of Crescent Park
on Sep 22, 2016 at 10:16 am

Simply do away with tipping and have restaurant owners, etc pay their employees adequate wages and increase the base prices of the meal items accordingly.

7 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Sep 22, 2016 at 11:09 am

This is going to be a very hard situation for small businesses. I can see them reducing staff as well as reducing their hours. Not good for workers who have to pay rent, feed a family, etc.

I would also be in favor of having a lower minimum wage for teenagers. A 16 year old bagging groceries at Safeway after school and weekends should not expect to be paid this increase.

11 people like this
Posted by NoMoPa
a resident of Another Palo Alto neighborhood
on Sep 22, 2016 at 11:12 am

I'm very sad for all people who will lose their jobs because of this. But least we are killing them with kindness.

19 people like this
Posted by Restaurant owner
a resident of Downtown North
on Sep 22, 2016 at 11:17 am

There should be no exemptions for tipped workers. Other than the obvious arguments about the injustice and the problems associated with tipping in the industry; tipping also allows restaurant owners/employees to skirt paying taxes on the tips to the government. This loophole will hopefully finally be closed.

Like this comment
Posted by NoMoPa
a resident of Another Palo Alto neighborhood
on Sep 22, 2016 at 11:21 am

@Restaurant owner - Do you allow tipping in your restaurant? No one is forcing your to.

Like this comment
Posted by SteveU
a resident of Barron Park
on Sep 22, 2016 at 1:02 pm

SteveU is a registered user.

Since the Restaurant knows the 'tables' waiter, a minimum Tip opportunity (table sales) per each hour should be guaranteed to meet the minimum wage for that hour. (No averaging)
This permits the reasoning behind Tips: Better service, to reward the wait staff, while guaranteeing an minimum PER hour wage for those slow periods.

No tipping (expected) pays at least the minimum (Typically fast food)

Lets also do something about really short shift assignments.
'Come in for an hour' just does not cut it when you have a commute outsid your neighborhood. CA guarantees 1/2 your scheduled shift (if you report), but there is no specification on what a 'shift' is.
'crummy shifts still need coverage' Both parties need to Win, not just the Employer or Employee.

Also, there is no 'On Call' pay for those at home waiting for a call in(if required to report in less than 8 hours).

8 people like this
Posted by Me
a resident of Old Palo Alto
on Sep 22, 2016 at 3:19 pm

"increase the base prices of the meal items accordingly."

Right. Spoken like someone who's never ever run a small business.

This will just result in the hollowing out of the "middle" restaurant. Restaurants will either be small mom and pops (or robotized fast casual like Eatsa) or expensive destination places. SF used to be known as a great place for a mid-range restaurant. That's gone now thanks to the "progressives." I guess people in Palo Alto want the same thing.

I wonder if it's the same folks who lament the changes in SF retail and restaurants are the same ones pushing for a higher minimum wage. Cost drivers are the strongest impetus for change. And that's what will happen.

Ironic, eh?

Like this comment
Posted by Me
a resident of Old Palo Alto
on Sep 22, 2016 at 3:20 pm

"who lament the changes in *Palo Alto retail and restaurants"

Prehistoric commenting system...

3 people like this
Posted by Restsirateir
a resident of Downtown North
on Sep 22, 2016 at 6:01 pm

43 states have a reduced min wage for tipped employees
No consideration of this fact was made in the behind doors discussions by the cities association nor were the economic studies supporting a tip credit ever considered . A true sham and a disgraceful tactic of our elected Santa Clara county city council members and mayors to unite behind closed doors without letting constituents present the facts

Tipped income in restaurants is reported on employees pay stubs as most tips are paid by credit cards. Not only is this income reported, but the restaurant also has to pay payroll taxes on this money that isn't even even part of restaurant payroll. The old days of pocketing cash tips and not reporting them as income is gone. Servers and bartender incl e is easily documented and runs well over $30 per hour in an average restaurant.

4 people like this
Posted by R Wray
a resident of Palo Verde
on Sep 22, 2016 at 7:21 pm

There are no valid economic or moral reasons for government-forced wages.
It's cronyism.
The unions get their exemption from paying minimum wage, and the politicians get the union votes.

Like this comment
Posted by Theodore
a resident of another community
on Sep 23, 2016 at 10:11 am

Well, if this is supposed to alleviate difficulties with cost of living, then it is failing miserably. If you have a minimum-wage income, then your cost of living is dominated by housing cost, and housing is in self-inflicted short supply, rising in cost much faster than minimum wage is.

But the actual effect is hard to say. More jobless homeless? More minimum-wage employed homeless? More jobs available for high school and college students? All those reviled highly-paid employees need meals and groceries and stuff, so there will be low-paid job positions, but how many and who will get them?

2 people like this
Posted by NoMoPa
a resident of Another Palo Alto neighborhood
on Sep 23, 2016 at 10:22 am

@Theodore - No, the actual effects are easy to predict. There will be fewer minimum wage jobs, they will be filled by higher skilled people, because they pay more, and they will be provided by larger corporations who are better able to absorb the wage increase. Perversely, the main benefactor can be big corporations because it drives out competition by small business.

4 people like this
Posted by Garden Gnome
a resident of Crescent Park
on Sep 23, 2016 at 11:01 am

C'mon guys, $15/hour? Why are we thinking so small.

If $15/hour is better, why not $100/hour?

Bummer about all the lost jobs. But at least we can feel good about ourselves, and that's what counts.

Like this comment
Posted by Joseph E. Davis
a resident of Woodside
on Sep 23, 2016 at 1:24 pm

It's sad that so many are so ill-informed as to support this cruel and unethical wage policy. The correct value for the minimum wage is zero.

Like this comment
Posted by @Woodside
a resident of Mountain View
on Sep 23, 2016 at 1:28 pm

[Post removed.]

5 people like this
Posted by ex business owner in palo alto
a resident of Greenmeadow
on Sep 23, 2016 at 4:29 pm

$15 minimum wage will wipe out many independently owned small businesses in Palo Alto.

In spring of this year, I closed a small business in palo alto that I owned for a decade, due to high rent cost.
My store gave a work opportunity to young people who have never worked before.
With retail experience they gained at my store and a thumbs up reference from me as store owner,
they eventually move up to a higher paying job elsewhere requiring more responsibility and skills.

So, why kill both small businesses and jobs that are invaluable to starters? a bad idea.

8 people like this
Posted by low-wage
a resident of Evergreen Park
on Sep 23, 2016 at 11:16 pm

$15/hour comes out to just over $31,000/year for a 40-hour work-week. That is barely enough for someone to afford shared housing in even EPA and still have some money left for food and transportation. It's hard for me to imagine someone surviving on the area on less than this.

Posted by Alex
a resident of Barron Park

on Sep 24, 2016 at 5:07 pm

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2 people like this
Posted by Me
a resident of Old Palo Alto
on Sep 24, 2016 at 9:41 pm

"$15/hour comes out to just over $31,000/year for a 40-hour work-week. That is barely enough for someone to afford shared housing in even EPA and still have some money left for food and transportation. It's hard for me to imagine someone surviving on the area on less than this."

Then let the market sort this out. There is no need for government intervention here.

Like this comment
a resident of College Terrace
on Sep 26, 2016 at 2:08 am

SEA_SEELAM REDDY is a registered user.

There is a lot of inequity in cost of owning a business.

When the rent goes up for a business lease, no one to complain to. Property owners have full right to increase to whatever they deem right based on supply and demand.

When a minimum wage is planned to be increased, we have a lot of scrutiny.
A lot of inequity.

It is time for us to pay a $ or more for hamburgers and let minimum wage earners take more money home to pay for increased cost of renting. Only fair.


2 people like this
Posted by NoMoPa
a resident of Another Palo Alto neighborhood
on Sep 26, 2016 at 10:59 am

@SEA_SEELAM REDDY - The extra dollar to buy a hamburger is salt in the wound of the minimum wage employee who loses his job.

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

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