There is no suspense about whether the Palo Alto City Council will approve a more expedited increase in the local minimum wage to $15 an hour when it meets Monday night, only how fast we want to reach that level.
After adopting a more conservative approach a year ago, the rising cost of housing and actions by other cities have made a $15 target a forgone conclusion. The only question is how quickly the increases from the current $11 minimum wage will take place and whether any exceptions should be adopted for teen workers, nonprofits and restaurants.
The proposal to be considered Monday, recommended by the council's four-person Policy and Services Committee, would raise the minimum wage to $12 in 2017, to $13.50 in 2018 and to $15 in 2019, and contains no exemptions.
That step-up schedule is the plan endorsed by the Cities Association of Santa Clara County, which adopted its recommendations in June to help achieve as much regional consistency as possible. But some cities, including Mountain View and Sunnyvale, have already opted for a quicker timeline, and there will be an effort made Monday to accelerate the increases so that the $15 level is reached earlier, in 2018.
We support the 2018 date, but to a great extent in Palo Alto this is a symbolic exercise. The competition for employees has long ago required even smaller Palo Alto employers to pay in excess of minimum wage, so the number of employers or employees that will be impacted is expected to be quite small. That accounts for how little opposition to the increase has surfaced, with the notable exception of restaurant owners.
The new wage requirements will likely have an undesirable impact in the restaurant industry, where it will primarily help the already very well-compensated wait-staff rather than the lowest-paid kitchen workers. This is because California is one of only a few states in the country that prohibits tip-sharing, meaning that tips cannot legally be pooled and distributed among wait-staff and kitchen and other workers. The entire tip a customer leaves at a California restaurant must go to the server or others who have interaction with the customer.
The typical restaurant pays its wait-staff minimum wage, because tips generally double or triple the effective hourly pay. So any increase to the minimum wage will bump up waiters' base pay and, according to restaurant owners, will soak up dollars that could otherwise go to increase kitchen wages.
Whether that is a likely outcome is difficult to judge, but restaurateurs have made a strong case that without the ability to create tip-sharing systems, the minimum-wage increase will disproportionately benefit the wrong workers.
To remedy this, the restaurants are proposing that tipped workers be specifically exempted from the minimum-wage increase as long as their total pay is in excess of the minimum wage.
While this is a reasonable approach, we agree with the council's policy committee that this is a fix that needs to take place with state legislation, not through special exceptions granted by individual cities.
Many cities have already confronted this issue and have decided that to attempt an end-around of the current state law would invite a legal challenge that would be costly and difficult to defend. It would be irresponsible for Palo Alto to become the one city that adopts such an exemption and then winds up needing to defend the practice in a long and expensive legal battle.
The place for restaurants and their trade association to get relief from California's odd prohibition on tip-sharing is in Sacramento, and the Palo Alto City Council should adopt a resolution supporting a repeal of that provision in the law and encourage other cities to do likewise. Restaurants should be able to establish tip-pooling practices that allow for the "back of the house" employees to benefit from tips.
And while we share the concerns about the impact of increasing the minimum wage on teens seeking summer or after-school jobs and nonprofits, we agree that the best approach is one that is simple to understand and simple to enforce. With no significant opposition having emerged from employers concerned about these sub-groups, it is best to not grant any exceptions. Like the tip-sharing issue, other possible exceptions should be established on a statewide, not local, basis.
As for the timing of the incremental increases and the date set to achieve the $15 minimum wage, we support the earlier, mid-2018 date. The local employment and housing markets have pretty much already pushed even low-paid worker wages above the minimum-wage level. Palo Alto should join its neighbors in Mountain View and Sunnyvale in acknowledging that even a wage floor of $15 an hour is hardly a livable wage in our communities, and by mid-2018 this will be even more the case.