Title
Discuss and Provide Direction for the Continued Implementation of the Minimum Wage Ordinance
Body
Date: March 19, 2020
To: Members of the Mayor’s Economic Development Advisory Panel
From: Lois Butler, Economic Development Manager
BACKGROUND
On October 16, 2018, the Alameda City Council adopted a Minimum Wage Ordinance that raises the minimum wage to $15.00 per hour by July 1, 2020. The Minimum Wage Ordinance increases the minimum wage in three (3) increments.
• On July 1, 2019, the minimum wage increased to $13.50 per hour for all employees and employers, regardless of size.
• On July 1, 2020, the minimum wage increases to $15.00 per hour for all employees and employers.
• On July 1, 2022, and every July 1st thereafter, the minimum wage rate will be adjusted based on the increase in cost of living, however the adjusted increase shall not be greater than five percent (5%) per year.
Staff discussed a draft minimum wage ordinance with the Economic Development Advisory Panel (EDAP) at its June 21, 2018 meeting. At that time, some panel members highlighted that paying $15 per hour is going to happen, it is just a question of when. These panel members said that businesses would want to be ahead of the trend-and not be the last ones to raise wages-in order to attract talented workers. They also pointed out that Silicon Valley has a much more expensive labor market than Alameda; therefore, a fairer comparison is to Oakland and San Leandro. Finally, some Panel members favored a cap on the CPI adjustments. This would build predictability and certainty into cost estimates and budget models by being able to anticipate the maximum amount of wages in future years.
DISCUSSION
There has been concern from small businesses, particularly restaurants, regarding the Minimum Wage Ordinance. Some restaurant owners said that the Ordinance will increase the wage disparity between restaurant servers (tipped employees) and the rest of the kitchen staff. Many restaurants recommended excluding tipped employees from the ordinance, since they already make substantially more than the minimum wage rate. However, state law does not allow restaurants to differentiate between tipped and non-tipped employees.
Also, the City heard from some restaurant owners, before the ordinance was approved, that they would like to increase their minimum wage, but it would result in prices higher than their competition. Consequently, they favored a minimum wage ordinance because it would provide a “level playing field” among similar types of businesses.
As part of its implementation of the Ordinance, the City coordinated a “buy local” campaign to highlight the community benefits of supporting local shops and restaurants that pay competitive wages. The City also amplified its marketing campaign with local media and continued to support a dedicated website for last January’s expanded Alameda Restaurant Week. Over 35 restaurants, bars and eateries participated across the island. The dedicated website registered nearly 95,000 hits from 10,000 unique users, and directed over 6,000 users directly to restaurant websites and reservation systems. In an after-event survey, 57 percent of participating restaurants reported an increase in business, and over 80 percent plan on participating again next year.
The City staff is asking the EDAP for direction for the continued implementation of the Minimum Wage Ordinance.
RECOMMENDATION
Discuss and provide direction for the continued implementation of the minimum wage ordinance.
Respectfully submitted,
Lois Butler, Economic Development Manager
By,
Eric Fonstein, Development Manager