Richmond minimum wage proposal – with modifications – one step closer to reality

Minimum wage in Richmond to increase to $9.60 per hour on Jan. 1

Richmond City Council voted in favor of a modified minimum wage proposal Tuesday that would increase hourly rates from $8 to $12.30 by 2017 but would exempt younger workers and employees who receive tips.

The proposal would hike the wage to $9 on July 1, $9.60 in 2015 and $11.52 in 2016. After reaching $12.30 in 2017, the minimum would be adjusted annually to reflect the Bay Area’s Consumer Price Index.

The proposal returns to council in two weeks. Before then, council members asked city staff to re-draft the ordinance with several exemptions that they hope will mitigate impacts to local jobs and businesses.

The wage proposal received stern opposition from several local business owners, who warned they may be forced to slash staff and would consider moving their operations to cities with lower minimum wages. City staff estimated between 2,000 and 4,000 Richmond jobs pay minimum wage.

Supporters of the ordinance, however, say the current minimum wage is not adequate considering Bay Area’s high cost of living. They also argue that by increasing the minimum wage in stages, the 2017 proposed rate of $12.30 would be comparable to other local jurisdictions.

Minimum wage increases are also being debated in Oakland, Berkeley, and San Francisco.

Table courtesy of Councilman Tom Butt’s e-forum (typo alert: 2105 should read 2015)

Initially, council considered letting voters decide on the wage proposal in the November elections, but Mayor Gayle McLaughlin and her Richmond Progressive Alliance (RPA) colleagues decided they didn’t want to wait and gave council the power to enact wage increases through an ordinance.

Last month, however, the ordinance failed to pass after some councilmembers criticized the mayor and RPA for neglecting to consult with them and with the local business community, and for failing to properly study the impacts. City staff was then directed to study the proposal further, and their findings were not encouraging.

City staff advised delaying any decision on a wage hike until economists can fully vet its impacts on Richmond. If Richmond has a higher minimum wage than nearby cities, they warned, businesses might relocate or reduce staffs, and jobs for people under the age of 18 could be significantly reduced.

While proponents contend higher wages would increase spending in Richmond and benefit city businesses, staffers noted that city residents who work outside city limits would not have additional money to spend locally.

Studies on the impact of increasing the minimum wage on local jobs are mixed. Some experts say such wage hikes have little or no impact on a local economy. A study on the city of San Jose’s wage hike, however, found restaurants there cut jobs by 42 percent and reduced hours by 45 percent after the increase.

Councilmembers Tom Butt and Jim Rogers said they would not support the ordinance unless exemptions were added. Believing council is “playing with fire,” according to Rogers, the councilmembers had drafted the amendments before the city report was issued.

Among the requested exemptions –workers who are under 18 or who receive tips would not be subject to the increase.

The exemptions were not well received by members of the RPA and union leaders, who argued that businesses might hire fewer adult workers in order to pay younger workers a lower rate.

On Tuesday, however, McLaughlin and her supporters reluctantly voted in favor of the ordinance with exemptions included, noting they lacked enough votes on council to pass their original proposal.

“I have considerable problems with this, but I will vote for it because I believe it will move us forward,” the mayor said.

Correction: An original version of this story stated that councilmembers Jim Rogers and Tom Butt had crafted amendments to the minimum wage ordinance in response to the release of a city staff report that warned of the ordinance’s potential negative impacts. In fact, the councilmembers had drafted their amendments prior to the release of the report.