Council passes minimum-wage hike ordinance

San Diego workers to see pay raise next January

Citizens packed council chambers for the vote

Hundreds of San Diegans packed city-council chambers downtown on Monday evening, July 14, to weigh in on a scaled-back proposal from council president Todd Gloria to raise the minimum hourly wage within city limits.

By 5:30, a half-hour before the council was scheduled to meet, a line snaked through the city administration building's lobby and into the plaza outside, as both backers and detractors of the proposal scrambled to get through metal detectors and up to the 12th-floor council chambers. Still, hundreds were turned away at the door and instead congregated in one of two overflow areas to watch the proceedings on video monitors.

By the time Gloria introduced the proposal, nearly 100 people had signed speaker slips indicating an intention to appear before the council. Of those, 71 were in favor of the wage hike, 26 were opposed. Another 125 slips in support of the provision were later turned in by those who chose not to speak. Gloria said the numbers were roughly equal to contacts his office had received in the six months since the subject was first broached – of over 750 calls and letters, he said, 82 percent were supportive of a higher minimum wage.

"This proposal reflects a great deal of input and a good amount of compromise," offered Gloria. "The modified proposal before us today sets San Diego's minimum wage at $11.50 per hour, implemented over a three-year time period every January 1."

Minimum wage, currently $9, would rise to $9.75 in January 2015, $10.50 in 2016, and $11.50 in 2017. After a one-year gap, the wage would then be adjusted for inflation beginning in 2019. Workers would also immediately begin earning paid sick leave of up to five days per year.

In contrast, Gloria's original proposal had called for wages to rise to as high as $13.09, an amount determined by a recent study to be the minimum necessary for a single adult working full-time to live independently without relying on government assistance.

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Jeff Kawar, with the city's independent budget analyst, broke down the expected cost to the city — while city workers already make more than minimum wage, the cost of extending sick-pay benefits to part-time workers and adding a proposed four staff members to investigate complaints about employers refusing to follow the new law could cost as much as $1.2 million annually. Kawar offered that a portion of this money could be recovered by imposing fines or penalties on employers caught violating wage laws, though he stopped short of speculating as to how much revenue this could generate.

Chanelle Hawken, public policy director at the local chamber of commerce, spoke first to lead the opposition once public comment commenced.

Hawken warned of a "competitive disadvantage" San Diego businesses would face if the wage law were enacted, especially those at the city's extreme limits where employers might be tempted to move a short distance to relocate to a neighboring city or a spot on unincorporated county land. District 5 councilmember Mark Kersey later echoed the same concerns in a speech justifying his dissenting vote.

"We're already seeing and hearing from our members that they're raising prices and cutting jobs in response to the current increase in minimum wage," continued Hawken, referring to a one-dollar bump that brought the statewide minimum to $9 on July 1, the first state hike in six and a half years. She instead suggested that the state wage, which will rise to $10 next January, along with a sick-pay bill providing workers with three days off per year — championed at the state level by local assemblywoman and former labor leader Lorena Gonzalez — should be sufficient for San Diegans.

Gonzalez’s bill, AB1522, actually provides one hour of sick leave for every 30 hours worked, meaning a full-time employee could earn as many as nine paid days off per year, though it has a provision that allows an employer to prevent employees from using more than three days' worth of leave in any given calendar year, regardless of how much earned leave has accrued.

Hawken was followed by business owners and managers. They warned that increasing the minimum wage would force seniors with limited mobility to go without needed in-home caregivers and create an accounting nightmare for employers who shift employees between locations, and give an unnecessary raise to employees who receive other forms of compensation in addition to wages, such as tips, commissions, or performance bonuses.

"The most recent survey of restaurants in San Diego, conducted by National University, shows that, on average, directly tipped servers earn $28.74 per hour, including their tips," said hospitality-industry veteran Chris Kramer. "That's not minimum wage. These tipped employees are not living in poverty."

A handful of other employers echoed the need to break off tipped employees and subject them to a lower minimum, as is common in many parts of the country. The city attorney's office, however, cautioned that creating the multi-tiered wage system employers sought could run afoul of state wage laws.

One common refrain among the opponents was that if the pared-down measure couldn't be killed completely or revamped further, that any proposal should be put before voters as a special election measure, rather than enacted as an ordinance with only a city council stamp of approval.

Nearly an hour in, backers of the boosted pay rate got their say.

One of the first speakers on the “pro” side to make a big splash was longtime local and basketball legend Bill Walton, who called on the council for "leadership" to implement what he called "good economics and good public policy."

"You will hear scare tactics, you will hear people trying to spread fear. But you people today, as our leaders, have the chance to inspire hope," Walton lectured the council, going beyond his allotted one-minute speech time, encouraged by the crowd to repeatedly refuse to yield the floor to Gloria.

"I trust that there are no other NBA champions in the crowd?" asked Gloria after Walton's final remarks. "Only NBA champs get to tell the council president they're not going to stop talking."

Peter Brownell, research director at the Center on Policy Initiatives, the labor-backed think tank that produced the living-wage figures that drove the initial minimum-wage proposal, went on the offensive against the home-care providers who insisted the additional wage hike would deny seniors access to care.

"We've investigated the claims made by private home-care providers, and I think we have some insight as to why we're hearing so insistently from them and not so much from their clients and family members," opined Brownell. "Private home care is one of the most profitable industries in this economy...what they're not telling you is that seniors and their families are already paying the providers in the neighborhood of $20 per hour for basic care. Only about half of that is paid in wages to the providers themselves."

Though the workers he represents would not be affected by the proposal, union leader Mickey Kasparian was on hand to take shots at the council members who opposed the increase.

"Councilmember Sherman mentioned than $1.50 per hour will not take San Diegans out of poverty," noted Kasparian. "I agree. I thought he was going to advocate for a higher increase, but instead he's voting against it."

Public comment continued until nearly 9 p.m., with supporters ranging from students to small-business owners to seniors who've returned to the workforce after exhausting their retirement savings during the recession. At the conclusion, councilmember David Alvarez moved, despite the objections of most of the business community, to pass an ordinance making the minimum-wage hike effective without placing the issue before the general public in a special election.

Despite hours of testimony, it appears none of the councilmembers were moved — as expected, the ordinance passed 6-3, with Gloria, Alvarez, Marti Emerald, Myrtle Cole, District 2 stand-in Ed Harris, and Sherri Lightner in favor; Mark Kersey, Scott Sherman, and Lorie Zapf opposed.

Although the increase isn't set to take effect until January 1, 2015, Jeff Kawar's office requested that staffing be allocated immediately in order to ensure as smooth a transition as possible and to have an agency in place once the law takes effect in order to enforce its provisions.