S.F., Oakland at forefront of U.S. minimum wage movement

In 2003, during the aftermath of the dot-com crash, San Francisco led the country as the first city in the nation to adopt a higher minimum wage than required by the federal government.

Now, with the city in a second tech boom and facing the nation’s fastest-growing income gap, Proposition J on the November ballot would propel San Francisco to similar high ground, raising the minimum wage from $10.74 an hour to $15 by July 2018.

The San Francisco measure and one on the ballot in Oakland to raise the minimum wage to $12.25 are seen as a spearhead in the nationwide push by labor to raise the pay of low-wage workers.

“If we can raise the minimum wage in San Francisco and Oakland, and the whole Bay Area, we can help set a better standard for everyone,” said Alysabeth Alexander, vice president of politics for Service Employees International Union Local 1021, a Northern California chapter of the union that has been pushing for higher minimum wage laws across the country. “The idea is that our momentum here will help us win a higher minimum wage around the state and the nation.”

Labor action

The union, the second largest in the country, helped organize fast-food workers in a series of protests to raise the wage floor that started in November 2012 in New York. The issue rose all the way to the White House, with President Obama calling for the national minimum wage to rise from $7.25 to $10.10 an hour in his 2014 State of the Union address. That proposal stalled in Congress, but Seattle became the first city in the country to adopt a $15 minimum wage when its City Council decided in June to gradually raise it to that level.

San Francisco’s Prop. J, though, gets to $15 faster than Seattle’s law, which phases it in over seven years for small businesses. It covers nearly all workers in the city, only exempting youths under 18 in government-subsidized training programs or people over 55 at some government-subsidized nonprofits, making it much more comprehensive than a requirement the Los Angeles City Council approved last week to pay workers at large hotels $15.37 an hour.

Prop. J would gradually raise the minimum wage from the current $10.74 an hour to $15 by July 2018, boosting the paychecks of at least 60,000 restaurant, retail and other minimum-wage workers by $75 to $197 a week, according to an analysis by the San Francisco controller’s office.

“That’s 60,000 people who are going to be a little better off after this ballot measure passes than they are today,” said Jason Elliott, a senior adviser to Mayor Ed Lee who brought together business and labor leaders to agree on Prop. J after SEIU Local 1021 initially proposed a rival ballot measure. “The principle is that we need to do something about affordability and income inequality in this city.”

Rents in San Francisco, where nearly two-thirds of the population don’t own their home, have increased at twice the rate as of minimum wage since 2005, according to the controller’s analysis. The average market rent for a two-bedroom apartment is about $3,900 a month, well beyond the means of two full-time minimum-wage earners currently making a combined $44,700 a year.

“Raising the minimum wage isn't going to solve our problem of economic inequality,” Alexander said, “but it’s a good start.”

Wide impact

A UC Berkeley study in August projected that 142,000 workers — or 23 percent of San Francisco's workforce — would get a raise by the time the minimum wage hits $15 an hour in 2018 if voters approve Prop. J.

“It’s not just the folks who fall under that $15 waterline who stand to benefit,” said Sean Clegg, a consultant for the Yes on J campaign. “When you raise the minium wage, it has a buoyant effect on everyone at the lower end of the wage scale.”

That’s exactly what worries some small-business owners in San Francisco, who say raising the minimum wage for their most junior employees will mean the rest of their workforce will demand higher pay. While larger businesses may be able to absorb some of the extra costs, for corner stores or cafes, that’s going to result in higher prices, said Henry Karnilowicz, president of the San Francisco Council of District Merchants Associations.

“You have a ripple effect,” Karnilowicz said. “Prices are going to have to go up. Small businesses are going to have to make a reasonable profit.”

Prop. J has no exception for workers like servers or bartenders, who in California are paid at least minimum wage but make most of their money from tips. Restaurant owners are concerned that their narrow profit margins — and viability — are going to be hurt by hiking compensation to already well-paid workers.

“Servers who make well in excess of $20 an hour, sometimes in excess of $40 an hour, are getting a raise,” said Gwyneth Borden, executive director of the Golden Gate Restaurant Association. “We’re not against an increase in the minimum wage, we just thought that tipped workers aren’t low-wage workers, and they don’t need an increase.”

Many lower-compensated dishwashers and other kitchen staff are already making more than minimum wage as the city’s restaurant industry is booming right along with tech and tourism.

'Labor shortage’

“We have a labor shortage,” Borden said. “Back-of-house workers are already making more than minimum wage.”

The city controller found that as of 2013, the latest data available, the average hourly wage in the food services industry was between $13.10 and $13.80 an hour.

Despite misgivings, the Golden Gate Restaurant Association is officially neutral on Prop. J, as is the San Francisco Chamber of Commerce. Citizens Initiative for Technology and Innovation, San Francisco’s largest tech company advocacy organization, is supporting Prop. J.

The merchants council, while opposed to the measure, is not raising any money to campaign against it.

“What’s the point?” said Karnilowicz. “At the end of the day, everybody realizes this is going to pass.”

Polls have shown the measure with well over 70 percent support.