HomeMy WebLinkAboutStaff Report 7283
City of Palo Alto (ID # 7283)
City Council Staff Report
Report Type: Action Items Meeting Date: 9/26/2016
City of Palo Alto Page 1
Summary Title: Minimum Wage Recommendation from Policy and Services
to Council
Title: Policy and Services Committee Recommends Adoption of an Ordinance
Amending the City's Minimum Wage Ordinance to Align With the Santa Clara
Cities Association Recommendation to Increase the Minimum Wage to $15
per Hour in Three Steps: $12 on 1/1/2017; $13.50 on 1/1/2018, $15.00 on
1/1/2019, and a CPI Increase After 2019 Indexed to the Bay Area CPI With a 5
Percent Cap and No Exemption
From: City Manager
Lead Department: Administrative Services
RECOMMENDATION
The Policy and Services Committee recommends that the City Council adopt the attached
Ordinance (Attachment B) amending the City’s Minimum Wage ordinance to align with the
Cities Association recommendation to increase the minimum wage to $15 per hour in three
steps: $12 on 1/1/2017; $13.50 on 1/1/2018, $15 on 1/1/2019, and a CPI increase after 2019
indexed to the Bay Area CPI with a 5 percent cap and no exemptions.
Discussion
On August 16, 2016 the Policy and Services Committee reviewed the status of Palo Alto’s
minimum wage and considered changes (Attachment A). The minutes of the meeting are
included as Attachment C.
Committee discussion largely focused on the Cities Association of Santa Clara County
recommendation (Attachment A) along with possible changes.
Comments from members of the public in attendance at the meeting were primarily a mix of
those in support of increasing the minimum wage to $15 per hour and some businesses
recommending an exemption for wait staff in restaurants. The City Attorney noted that
California is one of just a few states prohibiting tip credits as follows:
“No employer or agent shall collect, take, or receive any gratuity or a part thereof that is
paid, given to, or left for an employee by a patron, or deduct any amount from wages
City of Palo Alto Page 2
due an employee on account of a gratuity, or require an employee to credit the amount,
or any part thereof, of a gratuity against and as a part of the wages due the employee
from the employer. Every gratuity is hereby declared to be the sole property of the
employee or employees to whom it was paid, given, or left for…. .” (Labor Code 351.)
Whether this State law applies only to the state minimum wage or also to a local minimum
wage has not been decided in court.1
From a policy standpoint, the Cities Association’s research shows that the restaurant industry
accounts for 20.2% of the County’s lower end wages and that 71% of restaurant employees
would be impacted by a local minimum wage.
Policy & Services Committee Recommendation
After public comment and Committee discussion the following motion was passed by the
Committee on a 4-0 vote.
MOTION: Vice Mayor Scharff moved, seconded by Council Member Kniss to recommend the
City Council approve the Cities Association recommended minimum wage increase without the
off-ramp triggers and direct Staff to prepare related Ordinance amendments to increase the
minimum wage to $15 in three steps: $12 on 1/1/2017, $13.50 on 1/1/2018, $15 on 1/1/19,
and a CPI increase after 2019 indexed to the Bay Area with a 5% cap and no exemptions.
The Committee also directed staff place the report on the agenda as an action item
A draft ordinance is attached, which incorporates the Committee’s recommendation. Should
the Council accept the Committee’s recommendation without changes the ordinance is
provided to facilitate timely approval. If the Council proposes a more aggressive phase in
schedule, staff recommends the ordinance be re-agendized for another first reading.
Noticing for the upcoming minimum wage rate must take place in October and be officially
posted in December.
Restaurant Association Outreach
Following the Committee’s meeting the Restaurant Association requested a meeting with staff
prior to the full Council review of the ordinance. The meeting is currently scheduled for
September 16 and staff will summarize the discussion at the Council meeting.
ENVIRONMENTAL IMPACT
An ordinance to increase the minimum wage is not a project for purposes of the California
Environmental Quality Act.
Attachments:
Attachment A: CMR ID# 7161 (PDF)
1 The City Attorney has provided further legal analysis to the City Council in a confidential memorandum.
City of Palo Alto Page 3
Attachment B: Ordinance Amending Citywide Minimum Wage (PDF)
Attachment C: Excerpt Minutes from Policy and Services Committee 08-16-16 (PDF)
City of Palo Alto (ID # 7161)
Policy and Services Committee Staff Report
Report Type: Action Items Meeting Date: 8/16/2016
City of Palo Alto Page 1
Summary Title: Update on Minimum Wage and Possible Options for
Increasing the Local Minimum Wage
Title: Consider Options for Changing the Palo Alto Minimum Wage, Currently
$11 Per Hour, By Further Increasing the Rate and Considering Exemptions
and Direct Staff to Take Related Action or Maintain the Existing Rate and
Rate Increase Scheduled for January 2017
From: City Manager
Lead Department: Administrative Services
RECOMMENDATION
Staff recommends that the Policy and Services Committee (P&S) review options for changing
the Palo Alto minimum wage, currently $11.00 per hour, and that P&S recommend to the full
Council to direct staff (1) to prepare ordinance amendments and take related actions or (2) to
maintain the existing rate; publish the October 2016 announcement of the new rate, and
implement the new rate increase scheduled for January 2017.
BACKGROUND
In 2015, the Council approved an ordinance establishing a local Palo Alto minimum wage
(Attachment A). The ordinance structure was modeled after other Santa Clara cities, but the
wage rates were slightly different. Palo Alto’s local minimum wage went into effect on January
1, 2016, with an initial hourly wage rate of $11.00 per hour. Under the current ordinance the
minimum wage is set to increase on January 1, 2017 by an amount equal to the consumer price
index. The City is required to announce the upcoming change by October of each year.
There have been several developments since Palo Alto’s adoption of its minimum wage
ordinance. First the Governor signed SB-3 a new statewide law which increases minimum
wages to $15 an hour by 2022 for large businesses and 2023 for small businesses. Starting in
2024, the minimum wage will be indexed to the cost of living. The State minimum wage is
currently $10.00 and under the new legislation will increase to $10.50 on January 1, 2017.
Second, the Cities Association of Santa Clara County recently voted to encourage all Santa Clara
cities to consider a regional effort to increase the minimum wage to $19.00 by 2019. The Cities
Association also recommended some refinements to local minimum wage ordinances to better
City of Palo Alto Page 2
align with the State’s new minimum wage legislation. In light of these developments, Council
may want to review Palo Alto’s minimum wage and consider options for changing it.
DISCUSSION
Palo Alto’s minimum wage is $11.00 per hour and is set to increase to approximately $11.11 on
January 1, 2017 as established by the current City of Palo Alto ordinance. The ordinance also
requires the new minimum wage to be announced in October, 2016 and every October
proceeding the annual January increase.
Since Council adopted the minimum wage in 2015, a regional minimum wage effort has been
proposed by the Cities Association of Santa Clara County (Attachment B). Vice Mayor Scharff
represents Palo Alto at the Cities Association. In April and June, the Cities Association discussed
minimum wage and a related presentation (Attachment C), and subsequently issued a joint
press release with other stakeholders (Attachment B). The Cities Association proposal would
increase the minimum wage to $15 per hour by 2019, earlier than the State plan to reach $15
per hour by 2022. Minutes of the Cities Association meetings are included (Attachments D and
E).
The table below shows the current Palo Alto minimum wage along with the Cities Association
proposed regional effort and state minimum wages. The Palo Alto minimum wage is shown
with the current national CPI inflator along with the regional CPI inflator for comparison.
Current Palo Alto Minimum Wage with Projections and Comparisons to the Proposed
Regional Minimum Wage and the State Minimum Wage
Calendar
Year
Current Palo Alto
Min Wage
Ordinance (based
on national CPI)
Palo Alto
Minimum Wage
with Bay Area CPI
Proposed Regional
$15 in 2019; then
Bay Area CPI (fixed
increases until
2019)
State $15 in 2022
for large businesses
and 2023 for small*;
then National CPI
(fixed increases until
2022)
2016 $11.00 $11.00
2017 $11.11 $11.30 $12.00 $10.50
2018 $11.23 $11.62 $13.50 $11.00
2019 $11.34 $11.95 $15.00 $12.00
2020 $11.46 $12.28 $15.43 $13.00
2021 $11.58 $12.63 $15.86 $14.00
2022 $11.71 $12.99 $16.31 $15.00
2023 $11.83 $13.36 $16.77 $15.16
2024 $11.95 $13.74 $17.25 $15.32
2025 $12.08 $14.13 $17.74 $15.48
*Small businesses are defined as 25 or fewer employees.
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Under the current projected increases for the Palo Alto minimum wage the rate wouldn’t
increase to $15 until after 2025. This is in contrast to the State minimum wage hitting $15 in
2022 (for large employers) and the proposed regional minimum wage getting to $15 in 2019, as
highlighted above.
Exceptions
The Cities Association voted not to make recommendations on exceptions, instead deferring to
local cities to act on exceptions. The Council asked the Policy and Services Committee to
consider two exceptions: a youth/learners exception and a wait staff exception. The City’s
ordinance is designed to complement State minimum wage law. Structurally, this is
accomplished by incorporating the State’s minimum wage law in the City’s definition of
“employee.” This reference also serves the purpose of incorporating the State’s standard
minimum wage exemptions. One such exemption is the State’s learner exemption. Under this
exemption, learners may be paid not less than 85% of the minimum during their first 160 hours
of employment in occupations in which they have no previous similar or related experience.”1
The Santa Clara County cities with minimum wage ordinances (including Palo Alto) have not
gone beyond the learners exemption. On the other hand, cities with active job training
programs (Berkeley, Richmond and San Francisco) have adopted expanded youth/learner
exemptions. Berkeley makes an exception for trainees up to 25 years of age in youth job
training programs operated by non-profits or governmental agencies. Richmond makes an
exception for the 15 to 21-year-old employees in its Youth Summer Employment Program. And
San Francisco allows employers to pay a slightly lower minimum wage to youth under the age
of 18 employed as an after-school or summer employee in a bona fide training/apprenticeship
program and in a government-subsidized position. As an exception to its Minimum
Compensation Ordinance (which applies to contractors), San Francisco has a youth exception
for an after-school or summer employee under the age of 18 who is claimed as a dependent for
federal income tax purposes. (See Attachment C.) This is largely a policy call for the Council.
Consideration of a wait staff exception is more complicated. Thus far, no other city has adopted
such an exception. California, unlike other states, has a unique state law (California Labor Code
Section 351) which prohibits tip credits as follows:
“351. No employer or agent shall collect, take, or receive any gratuity or a part thereof
that is paid, given to, or left for an employee by a patron, or deduct any amount from
wages due an employee on account of a gratuity, or require an employee to credit the
amount, or any part thereof, of a gratuity against and as a part of the wages due the
employee from the employer. Every gratuity is hereby declared to be the sole property
of the employee or employees to whom it was paid, given, or left for…. .” (Emphasis
added.)
1 The State defines “learners” as: “Employees during their first 160 hours of employment working in occupations in
which they have no previous similar or related experience. A learner may be of any age.”
http://www.dir.ca.gov/dlse/faq_minimumwage.htm.
City of Palo Alto Page 4
Whether section 351 applies only to the state minimum wage or also to a local minimum wage
has not been decided in court. The City Attorney will provide further analysis to the Council in a
confidential memorandum.
From a policy standpoint, the Cities Association’s research shows that the restaurant industry
accounts for 20.2% of the County’s lower end wages and that 71% of restaurant employees
would be impacted by a local minimum wage.
Other Ordinance Changes
In addition to the exceptions, the Cities Association also recommended cities consider the
following additional issues:
• Ramp in 3 steps
$12.00 on 1/1/17, $13.50 on 1/1/18, $15.00 on 1/1/19
• “Off-ramp” triggers during ramp phase
• Index to Bay Area CPI-W after 2019, capped at 5%
Local Economic Study
The City of San Jose sponsored a study through the University of California at Berkeley to
estimate the impact of a $15.00 minimum wage on businesses and the local economy. The
study concluded that there would be an overall net positive impact for workers with the
implementation of the minimum wage. The study is available in Attachment H.
Local Outreach
Two Palo Alto organized surveys have been conducted over the past year collecting input from
employees and business owners regarding minimum wage. The results of those surveys
indicate some support for increasing the minimum wage. The summaries of the survey
responses are included (Attachments F and G).
Update on Enforcement
The City contracts with the City of San Jose for minimum wage enforcement services. San Jose
has received one complaint since January 2016 and is currently investigating the matter.
FISCAL IMPACT
The City of Palo Alto increased the minimum pay rate for its employees in 2015 to match the
$11.00 minimum wage starting in 2017. This rate will have a negligible impact on the City’s
budget. The City will raise the minimum rate in January 2017 at either the current level inflated
by CPI, or at another level as approved by Council. This will have a negligible impact on the
budget as there is only one current employee paid near the minimum wage level of $11.24 per
hour. The proposed regional minimum wage, if enacted in Palo Alto, also will have a similar
City of Palo Alto Page 5
negligible effect on the City’s budget since few employees are currently paid less than $15 per
hour.
ENVIRONMENTAL IMPACT
An ordinance to increase the minimum wage City-wide, if adopted, is exempt from CEQA per
Guidelines Section 15061(b)(3), because it can be seen with certainty that there is no possibility
that the action may have a significant effect on the environment.
Attachments:
Attachment A: Staff Report Minimum Wage August 24 2015 (PDF)
Attachment B: Cities Assoc Press Release June 16 2016 (PDF)
Attachment C: Cities Assoc Presentation Min Wage June 9 2016 (PDF)
Attachment D: Cities Association Meeting Minutes June 2016 (PDF)
Attachment E: Cities Assoc Minutes April 2016 (PDF)
Attachment F: Survey Employees Individuals 2015 (PDF)
Attachment G: Survey Managers Businesses 2015 (PDF)
Attachment H: San Jose Memo on Sponsored Study and Links to Findings and Study
Report (PDF)
CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY
August 24, 2015
The Honorable City Council
Palo Alto, California
Recommendation to Adopt an Ordinance Implementing a Local
Minimum Wage Requirement of $11.00 by January 1, 2016 and
Discussion of Collaborating With Other Cities to Implement a
Regional Minimum Wage of $15.00 Per Hour by 2018
RECOMMENDATION
The Policy and Services Committee and Staff recommend that the City Council:
1. Adopt an Ordinance Adding Chapter 4.62 to Title 4 of the Palo Alto Municipal Code to
Require the Payment of a City-Wide Minimum Wage (Attachment A), to take effect on
January 1, 2016;
2. Establish a base wage of $11.00 to commence of January 1, 2016;
3. Discuss collaborating with other cities to implement a regional minimum wage of $15.00
by 2018; and
4. Provide input on an outreach plan.
EXECUTIVE SUMMARY
On February 9, 2015, the City Council considered a Colleagues memo recommending the
adoption of a city-wide minimum wage ordinance modeled after those recently adopted in
Mountain View and Sunnyvale. (Attachment B.) The Council voted to refer the matter to the
Policy and Services Committee for further consideration and for recommendation on a near-
term base wage, inflationary adjustments and long term goals. Council also requested the
Committee make a recommendation to Council regarding a strategy for outreach/education,
investigation and enforcement of violations.
On April 28, 2015, the Policy and Services Committee reviewed a draft ordinance modeled after
the cities of Mountain View and Sunnyvale. The draft ordinance applies to all employees in Palo
Alto who work more than 2 hours per week. The Committee recommended that the base wage
be increased to $11.00, rather than the $10.30 currently in place in Mountain View and
Sunnyvale. The Committee reasoned that the $11.00 rate would ultimately align with
neighboring cities and provided an enhancement to State minimum wage which is scheduled to
increase to $10.00 in 2016. The ordinance also contains an annual adjustment based on the US
Department of Labor’s Regional Consumer Price Index. To provide regional consistency and to
reduce costs of enforcement it permits Palo Alto to contract with the City of San Jose for
complaint driven enforcement.
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BACKGROUND
Effective July 1, 2014, State law required a minimum wage of $9.00 per hour. The State law
minimum wage will increase to $10.00 per hour on January 1, 2016. The Federal minimum
wage for covered nonexempt employees has been $7.25 per hour since July 24, 2009. The
Federal minimum wage applies to States and cities without their own minimum wage
requirements.
Given the high cost of living in the Bay area, many northern California cities are beginning to
enact local wage ordinances. On November 6, 2012, City of San Jose voters approved a
minimum wage ordinance by ballot initiative. It required employers to pay their employees a
minimum wage of $10.00 per hour as of March 11, 2013 for work performed within the City of
San Jose and required the minimum wage to increase annually by the cost of living, beginning
on January 1, 2014. The current minimum wage under the San Jose ordinance is $10.30 per
hour, and it will increase by an annual Consumer Price Index (CPI) adjustment every January 1.
The City of Berkeley adopted a minimum wage ordinance on June 27, 2014 of $10.00 per hour
effective October 1, 2014, and the City of Richmond adopted an ordinance on May 6, 2014 of
$9.60 per hour effective January 1, 2015. Most recently in October 2014, the City of Sunnyvale
adopted a minimum wage of $10.30 effective January 1, 2015 and Mountain View adopted a
$10.30 minimum wage effective July 1, 2015. Like San Jose’s ballot initiative, both Sunnyvale
and Mountain View’s ordinances included annual cost of living adjustments. In addition, the
Mountain View Council directed staff to come back with a plan to raise the minimum wage to
$15.00 by 2018 (coining the phrase “15 by 18”). Attachment C summarizes cities that have
recently adopted a local minimum wage ordinance.
DISCUSSION
Legal Framework of Ordinance
As directed by Council, the framework of the proposed minimum wage ordinance follows the
Sunnyvale and Mountain View model. It is also similar to San Jose’s ordinance and the
ordinance that Santa Clara is considering. Because San Jose’s ordinance was adopted by
initiative, the San Jose Council may not amend it in any substantive manner without voter
approval. As Mountain View and Sunnyvale were not constrained by voter initiative governing
San Jose, they added helpful clarifications such as defining organizations that are exempt
because of sovereign immunity, which include State, Federal, and County agencies, as well as
school districts. The proposed Palo Alto ordinance includes similar legally required exemptions
and also authorizes the City to adopt administrative guidelines to retain flexibility in developing
implementation and enforcement procedures and responding to specific instances.
As drafted, the ordinance requires covered employers who are either subject to the City’s
business registry requirements, conduct business in Palo Alto1 or maintain a business facility in
1 This phrase was inserted into Palo Alto’s draft following the Policy & Services Committee meeting to capture
employees who worked for a business not having an office in Palo Alto. Since Palo Alto’s business registry only
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the City to pay the minimum wage to covered employees. Covered employees are those who
perform at least two (2) hours of work in a calendar week within the geographic boundaries of
the City. For ease of administration, like neighboring cities, Palo Alto’s draft incorporates State
minimum wage law exemptions. These exemptions include independent contractors as well as
other employees exempt by statute or wage order (for example minor babysitters who are
babysitting in an employer’s home). The ordinance, as drafted, would go into effect on January
1, 2016 as directed by the Policy and Services Committee, although that date could easily be
changed if the Council desired additional outreach. The City’s minimum wage would be slightly
higher than Sunnyvale, Mountain View and San Jose’s 2015 rate of $10.30 per hour and
likewise would be adjusted by the US Department of Labor’s Regional Consumer Price Index
annually thereafter on January 1 of each year.
In addition to the payment of the minimum wage, other significant terms of the ordinance
require covered employers to:
• Post a notice at the workplace of the current and prospective minimum wage rates and
the employees’ rights under the local law;
• Maintain payroll records for a period of four years; and
• Provide the employer’s name, address, and telephone number in writing to each
employee at the time of hire.
The ordinance also prohibits retaliation or discrimination against any person seeking to enforce
its terms. The enforcement provisions of the ordinance include the right for employees to
pursue a civil action to recover back wages and to seek reinstatement. The ordinance also
authorizes the City to issue administrative citations and monetary fines, conduct administrative
hearings, and seek injunctive relief against noncompliant employers.
Compliance and Enforcement
If Palo Alto adopts an ordinance substantially the same as San Jose’s, compliance and
enforcement under the ordinance could be a coordinated effort with the City of San Jose Office
of Equality Assurance (OEA). Staff recommends that, at least initially, certain functions be
performed by the OEA because: (1) the OEA has dedicated staff who are well-versed in the
workings of the ordinance which would offer efficient enforcement for the City; and (2) through
initial assistance from the OEA, the City will learn from San Jose’s experience in administering
the ordinance.
Legal staff has had preliminary discussions with OEA staff who indicated they are willing to
contract with the City to handle early enforcement functions such as initial complaint intake
requires businesses having a physical office in Palo Alto to register, this additional language is needed to protect
transitory employees working in Palo Alto. For instance, the ordinance would apply to a gardening service having a
home office in Los Altos, and employing gardeners who perform work in Palo Alto. The ordinance, of course, would
only apply to the hours worked by such employees in Palo Alto.
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and investigation, and informal resolution of complaints. This arrangement would be
memorialized by contract between the City and OEA, with fees likely to be set as flat fees per
task. Based on the relatively low number of enforcement cases handled by San Jose to date,
staff estimates the annual cost of OEA enforcement assistance to be low, not exceeding several
thousand dollars annually. Both Sunnyvale and Mountain View have similar contracts with OEA.
Update on Regional Efforts
The Cities Association has formed a subcommittee on minimum wage. On June 6, 2015, the
subcommittee issued a report recognizing Silicon Valley’s particularly high cost of living and
urging cities to prioritize a regional approach to the minimum wage. (See Attachment F.) Also,
following the Policy and Services Committee meeting, the Mayors of Sunnyvale and Mountain
View sent a letter to Palo Alto requesting collaboration on a regional approach to raise the
minimum wage to $15.00 by 2018. The letter suggested the following potential phasing
schedule:
The letter and related press release are attached as Exhibits G and H. Staff requests the Council
to provide input on this request. Implementation of a regional program or an additional
increase in minimum wage in Palo Alto would require an ordinance and would remain within
the authority of Council to determine at a future time.
Public Outreach and Input
Most cities who adopted minimum wage ordinances conducted some form of outreach prior to
their council’s formal consideration of the ordinance. The most common forms of outreach
were community input meetings and online surveys.
On March 25, 2015, the City posted the question, “Should the City of Palo Alto adopt an
ordinance setting a local minimum wage that is higher than the State minimum wage?” on
Open City Hall (an online engagement tool).
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A total of 197 individuals visited the topic on Open City Hall with 52 posting responses to the
question. Approximately two-thirds of those responding indicated they were in support of
raising the local minimum wage to a level higher than California’s. For those who indicated
they were opposed, there were a number of similar reasons including: minimum wage jobs are
not designed to support a family but are designed to pay unskilled workers; minimum wage
should be used for entry level jobs for teenagers; minimum wage hike will impact local small
businesses; federal and state should set regulations; those needing hike in minimum wage
cannot afford to live in Palo Alto; the cost of labor should be consistent with the task not the
location.
Those in support of raising the local minimum wage above California’s noted the high cost of
living in Palo Alto, and in some cases, indicated that even raising the minimum wage level
would not help people to live in Palo Alto. However, a number of posters suggested that raising
the minimum wage was a good idea to help with living expenses, and also to align with similar
actions in nearby cities.
Staff has conducted additional outreach to the business and greater community by utilizing a
variety of methods including Survey Monkey (an online survey tool), Nextdoor and Facebook
(social media) and by attending meetings with various business groups including the Chamber
of Commerce, the Downtown Business & Professional Association, and the California Avenue
Area Business Association/ Merchants of California Avenue. Additionally, staff attended a forum
hosted by the Chamber that included several Council Members. Input from Open City Hall,
Nextdoor, and Facebook is included as Attachment D and E, respectively.
General feedback through the variety of channels outlined above was mixed, with many in
support of raising the minimum wage, including the regional approach of $15 by 2018.
Some concerns expressed included the unknown economic impacts that a $15 minimum wage
by 2018 could cause, whether student job opportunities might be harmed, and the impacts to
non-profits. Restaurant owners/ managers generally opposed the idea of including tipped
employees within the ordinance. The reasoning noted was that effect of not excluding tipped
employees who often make $30/hr or more would have the effect of increasing their wage
while taking limited funds away from kitchen and janitorial staff who live off minimum wage.
Other concerns had to do with questions about which businesses were covered, as well as the
connection between those subject to the Business Registry and to the Minimum Wage
Ordinance. Staff has attempted to clarify these questions within the attached ordinance.
Currently, there are two active surveys to gauge opinions, especially as they relate to the
potential of a regional effort, from business owners, employees, and the greater community.
The surveys are available at https://www.surveymonkey.com/r/F9T56B5 and
https://www.surveymonkey.com/r/FNMKX72. Results are anticipated to be included in further
discussion at subsequent Policy & Services and/or Council meetings.
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Potential Business and Economic Impact
Although Council did not direct staff to perform a detailed economic analysis of the potential
impacts of a minimum wage increase in Palo Alto, the results of local surveys and studies were
gathered in order to provide a general overview. Two predominant viewpoints on the impact of
a minimum wage increase are whether an increase would stimulate the economy, boost
spending, and reduce employee turnover versus whether it would create increased business
costs, higher prices on goods and services, and job losses.
In 2012, during the City of San Jose minimum wage deliberations, a study was released by
Beacon Economics on behalf of the California Restaurant Association, which concluded that
minimum wage ordinances have a large impact on the restaurant industry, where profit
margins are generally slim. The report suggested that San Jose’s minimum wage ordinance
would lead to a loss of 900 to 3,100 jobs, and would cost San Jose employers $88 million to $96
million in increased wages and payroll expenses, which would be partially offset from increased
spending by workers of $26 million to $28 million.
A subsequent report issued by the Institute for Research on Labor and Employment at the
University of California, Berkeley, differed from the Beacon Economics findings. In contrast,
Berkeley economists found that increasing the minimum wage would increase business
operating costs by an “average of less than 2.5 percent,” and would create cost savings due to
lower employee turnover rates and higher worker productivity. Further, with more income,
minimum wage workers would have more spending power and inject more money into the
local economy, which would benefit both businesses through increased sales and the
government through increased sales tax revenue. Finally, the report asserts that gainful
employment of low-wage workers does not change after a minimum wage increase, and any
negative outcomes typically affect teens, not adults.
Since the San Jose minimum wage increase took effect on January 1, 2014, the Institute for
Research on Labor and Employment estimates that operating costs for restaurants rose by
approximately 0.25 percent to 1.0 percent over the past year and prices for customers rose less
than 1.0 percent on average. These cost increases coincided with a booming economy and
increased consumer spending throughout Silicon Valley.
Employers also reported experienced employees staying longer at their jobs. Overall, minimum
wage ordinances may create tangible impacts to the business community and consumers. The
magnitude of these impacts is difficult to assess and would likely vary by city.
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FISCAL IMPACT
The adoption of a minimum wage ordinance is anticipated to have a minimal fiscal impact on
the City in terms of both wages paid by the City and anticipated enforcement costs. The City
currently pays the State minimum wage of $9.00 per hour or above to all City employees. No
employee is currently paid at minimum wage. The lowest City hourly wage paid is $9.89. Based
on a payroll census from August, 64 hourly positions are paid below $11.00 per hour. If Council
adopts an hourly wage of $11.00 the ongoing increased cost to the General Fund would be
approximately $7,000 annually. Seven classifications: Instructor Aide, Recreation Aide,
Recreation Leader, Arts & Sciences Aide, General Laborer, Staff Specialist and Journey Level
Laborer all have their beginning rate below the $11.00 hourly rate. All of these classifications
are in the Limited Hourly or SEIU Hourly groups. If Council chooses to increase the minimum
wage, staff will return to Council with a recommendation for existing positions and the detailed
fiscal impact to the General Fund.
The State minimum wage will increase to $10.00 per hour on January 1, 2016, and the City
would similarly pay that wage rate if it does not adopt it’s own minimum wage ordinance. In
addition, all City contractors are also required to pay their employees the State minimum wage.
If adopted, the City minimum wage would be $11.00 per hour on January 1, 2016, adjusted
annually thereafter by CPI increases on January 1 of each following year.
In terms of enforcement costs, the ordinance as drafted allows delegation of preliminary
investigation and informal resolution tasks to the San Jose OEA, which staff recommends. Based
upon a relatively low volume of complaints received in San Jose since the adoption of its
ordinance, the cost for this delegated work is estimated to not exceed several thousand dollars
per year. The Administrative Services Department (ASD) would take a lead on minimum wage
issues for the City and oversee the agreement with the City of San Jose. ASD staff will monitor
the level of activity and budget accordingly in future years.
If a complaint advances to the formal administrative hearing stage, the ordinance provides that
the City will handle such proceedings in accordance with already established procedures in the
City Code. Based on San Jose’s experience to date, staff anticipates that few formal
administrative proceedings will be needed, and therefore City costs for formal enforcement are
likely to be nominal. If formal proceedings are required, however, City costs could be
considerable. In that case, depending on the other demands for legal work of this nature, it may
be necessary to return to Council for additional funding.
Depending on the date of the ordinance becoming effective, if approved by City Council, staff
may bring forward an amendment to the General Fund budget to cover the costs of
enforcement.
ENVIRONMENTAL IMPACT
Adoption of an ordinance to increase the minimum wage City-wide is exempt from CEQA per
Guidelines Section 15061(b)(3), because it can be seen with certainty that there is no possibility
that the action may have a significant effect on the environment.
Page 8
ATTACHMENTS:
x A: Citywide Minimum Wage Ordinance (PDF)
x B: Colleagues Memo to City Council re Citywide Minimum Wage (PDF)
x C: Minimum Wage Comparison City Chart (PDF)
x D: Community Feedback from Open City Hall (PDF)
x E: Community Feedback from Nextdoor and Facebook (PDF)
x F: Cities Association Recommendation on Minimum Wage (PDF)
x G: 2015 Regional Letter Minimum Wage Palo Alto (PDF)
x H: Joint News Release Mtn View and Sunnyvale Community Feedback (PDF)
Department Head: Molly Stump, City Attorney
Page 9
Not Yet Approved
Ordinance No. ____
Ordinance of the Council of the City of Palo Alto Adding Chapter 4.62 to Title 4
(Business Licenses and Regulations) of the Palo Alto Municipal Code to Adopt a
Citywide Minimum Wage for Palo Alto Employees
RECITALS
1. The Bay area in general and Palo Alto in particular are becoming increasingly
expensive places to live and work.
2. Payment of a minimum wage advances the interests of the City as a whole,
by creating jobs that keep workers and their families out of poverty.
3. A minimum wage will enable a worker to meet basic needs and avoid economic
hardship.
4. This ordinance is intended to improve the quality of services provided in the
City to the public by reducing high turnover, absenteeism, and instability in the workplace.
5. Prompt and efficient enforcement of this Chapter will provide workers with
economic security and assurance that their rights will be respected.
The City Council of the City of Palo Alto does ORDAIN as follows:
SECTION 1. Chapter 4.62 (Citywide Minimum Wage) of the Palo Alto Municipal Code is
added to read as follows:
CHAPTER 4.62
CITYWIDE MINIMUM WAGE
Sections:
4.62.010 Purpose.
4.62.020 Definitions.
4.62.030 Minimum Wage.
4.62.040 Exempt organizations.
4.62.050 Waiver through collective bargaining.
4.62.060 Notice, posting and payroll records.
4.62.070 Retaliation prohibited.
4.62.080 Implementation.
150311 jb 0131322 1 Rev. August 10, 2015
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4.62.090 Enforcement.
4.62.100 Relationship to other requirements.
4.62.010 Purpose.
This ordinance shall be known as the “Minimum Wage Ordinance.”
4.62.020 Definitions.
The following words, terms and phrases, when used in this chapter, shall have the meanings
set forth in this section, except where the context clearly indicates a different meaning:
a. “City” shall mean City of Palo Alto or any agency designated by the City of Palo
Alto to perform various investigative, enforcement and informal resolution functions pursuant
to this article.
b. “Employee” shall mean any person who:
1. In a calendar week performs at least two (2) hours of work for an employer as
defined below; and
2. Qualifies as an employee entitled to payment of a minimum wage from any
employer under the California minimum wage law, as provided under Sec. 1197 of the
California Labor Code and wage orders published by the California Industrial Welfare
Commission, or is a participant in a welfare-to-work program.
c. “Employer” shall mean any person, including corporate officers or executives, as
defined in Sec. 18 of the California Labor Code, who directly or indirectly through any other
person, including through the services of a temporary employment agency, staffing agency, or
similar entity, employs or exercises control over the wages, hours, or working conditions of
any employee and who is either subject to the city’s business registrylicense requirements,
conducts business in Palo Alto or maintains a business facility in the city.
d. “Minimum wage” shall have the meaning set forth in Sec. 4.62.030 of this article.
e. “Welfare-to-Work Program” shall mean the CalWORKs program, and the Santa
Clara County Works Program (SCC Works) employment assistance program, and any successor
programs that are substantially similar to them.
4.62.030 Minimum wage.
a. Employers shall pay employees no less than the minimum wage set forth in this
section for each hour worked within the geographic boundaries of the City of Palo Alto.
150311 jb 0131322 2 Rev. August 10, 2015
Not Yet Approved
b. The minimum wage shall be an hourly rate of $10.30 $11.00. To prevent inflation
from eroding its value, beginning on January 1, 2016, and each year thereafter, the
minimum wage shall increase by an amount corresponding to the prior year’s increase, if any,
in the cost of living. The prior year’s increase in the cost of living shall be measured by the
percentage increase, if any, as of August of the immediately preceding year over the level as
of August of the previous year of the Consumer Price Index (Urban Wage Earners and
Clerical Workers, U.S. City Average for All Items) or its successor index as published by the
U.S. Department of Labor or its successor agency, with the amount of the minimum wage
increase rounded to the nearest multiple of five (5) cents. The adjusted minimum wage shall
be announced by October 1 of each year and shall become effective as the new minimum
wage on January 1 of each year.
c. A violation for unlawfully failing to pay the minimum wage shall be deemed to
continue from the date immediately following the date that the wages were due and payable
as provided in Part 1 (commencing with Sec. 200) of Division 2 of the California Labor Code, to
the date immediately preceding the date the wages are paid in full.
4.62.040. Exempt organizations.
State, federal and county agencies, including school districts, shall not be required to pay
minimum wage when the work performed is related to their governmental function.
However, for work that is not related to their governmental function, including, but not
limited to: booster or gift shops, non-K-12 cafeterias, on-site concessions and similar
operations, minimum wage shall be required to be paid. Minimum wage shall also be
required to be paid by lessees or renters of facilities or space from an exempt organization.
Any organization claiming “auxiliary organization” status under California Education
Code Sec. 89901 or Sec. 72670(c) shall not be required to pay minimum wage. The
organization, upon request of the city, shall provide documentary proof of its auxiliary
organization status.
4.62.050. Waiver through collective bargaining.
To the extent required by federal law, all or any portion of the applicable requirements
of this article may be waived in a bona fide collective bargaining agreement, provided that
such waiver is explicitly set forth in such agreement in clear and unambiguous terms.
4.62.060. Notice, posting and payroll records.
a. By December 1 of each year, the city shall publish and make available to
employers a bulletin announcing the adjusted minimum wage rate for the upcoming year,
which shall take effect on January 1 of each year. In conjunction with this bulletin, the city shall,
by December 1 of each year, publish and make available to employers, in all languages spoken
by more than five (5) percent of the work force in the City, a notice suitable for posting by
150311 jb 0131322 3 Rev. August 10, 2015
Not Yet Approved
employers in the workplace informing employees of the current minimum wage rate and of
their rights under this article.
b. Every employer shall post in a conspicuous place at any workplace or job site where
any employee works the notice published each year by the city informing employees of the
current minimum wage rate and of their rights under this article. Every employer shall
post such notices in any language spoken by at least five (5) percent of the employees at
the workplace or job site. Every employer shall also provide each employee at the time
of hire with the employer’s name, address and telephone number in writing.
c. Employers shall retain payroll records pertaining to employees for a period of four
(4) years, and shall allow the city access to such records, with appropriate notice and at a
mutually agreeable time, to monitor compliance with the requirements of this article. Where
an employer does not maintain or retain adequate records documenting wages paid or does
not allow the city reasonable access to such records, the employee’s account of how much he
or she was paid shall be presumed to be accurate, absent clear and convincing evidence
otherwise.
4.62.070. Retaliation prohibited.
It shall be unlawful for an employer or any other party to discriminate in any
manner or take adverse action against any person in retaliation for exercising rights
protected under this article. Rights protected under this article include, but are not limited
to: the right to file a complaint or inform any person about any party’s alleged noncompliance
with this article; and the right to inform any person of his or her potential rights under this
article and to assist him or her in asserting such rights. Protections of this article shall
apply to any person who mistakenly, but in good faith, alleges noncompliance with this article.
Taking adverse action against a person within ninety (90) days of the person’s
exercise of rights protected under this article shall raise a rebuttable presumption of having
done so in retaliation for the exercise of such rights.
4.62.080. Implementation.
a. Guidelines. The city manager or designee shall be authorized to coordinate
implementation and enforcement of this article and may promulgate appropriate guidelines
or rules for such purposes. Any guidelines or rules promulgated by the city shall have the force
and effect of law and may be relied on by employers, employees and other parties to
determine their rights and responsibilities under this article. Any guidelines or rules may
establish procedures for ensuring fair, efficient and cost effective implementation of this
article, including supplementary procedures for helping to inform employees of their rights
under this article, for monitoring employer compliance with this article and for providing
administrative hearings to determine whether an employer or other person has violated the
requirements of this article.
150311 jb 0131322 4 Rev. August 10, 2015
Not Yet Approved
b. Reporting Violations. An employee or any other person may report to the city in
writing any suspected violation of this article. The city shall encourage reporting pursuant to
this subsection by keeping confidential, to the maximum extent permitted by applicable laws,
the name and other identifying information of the employee or person reporting the
violation, provided, however, that with the authorization of such person, the city may disclose
his or her name and identifying information as necessary to enforce this article or other
employee protection laws. In order to further encourage reporting by employees, if the city
notifies an employer that the city is investigating a complaint, the city shall require the
employer to post or otherwise notify its employees that the city is conducting an investigation,
using a form provided by the city.
c. Investigation. The city shall be responsible for investigating any possible
violations of this article by an employer or other person. The city shall have the
authority to inspect workplaces, interview persons and request the city attorney to
subpoena books, papers, records or other items relevant to the enforcement of this
article.
d. Informal Resolution. The city shall make every effort to resolve complaints
informally, in a timely manner, and shall have a policy that the city shall take no more than
one (1) year to resolve any matter before initiating an enforcement action. The failure of
the city to meet these time lines within one (1) year shall not be grounds for closure or
dismissal of the complaint.
SEC. 4.62.090. Enforcement.
a. Where prompt compliance is not forthcoming, the city shall take any appropriate
enforcement action to secure compliance. In addition to all other civil remedies, the city
may enforce this ordinance pursuant to Title 1 of the Palo Alto Municipal Code. To secure
compliance, the city may use the following enforcement measures:
1. The city may issue an administrative citation with a daily fine for each day
or portion thereof and for each employee or person as to whom the
violation occurred or continued.
2. The city may issue an administrative compliance order.
3. The city may initiate a civil action for injunctive relief and damages and civil
penalties in a court of competent jurisdiction.
b. Any person aggrieved by a violation of this article, any entity a member of which
is aggrieved by a violation of this article or any other person or entity acting on behalf of the
public as provided for under applicable state law may bring a civil action in a court of
competent jurisdiction against the employer or other person violating this article and, upon
prevailing, shall be awarded reasonable attorneys’ fees and costs and shall be entitled to such
legal or equitable relief as may be appropriate to remedy the violation including, without
150311 jb 0131322 5 Rev. August 10, 2015
Not Yet Approved
limitation, the payment of any back wages unlawfully withheld, the payment of an
additional sum as a civil penalty in the amount of fifty dollars ($50) to each employee or
person whose rights under this article were violated for each day that the violation occurred
or continued, reinstatement in employment and/or injunctive relief; provided, however, that
any person or entity enforcing this article on behalf of the public as provided for under
applicable state law shall, upon prevailing, be entitled only to equitable, injunctive or
restitutionary relief to employees, and reasonable attorneys’ fees and costs.
c. This section shall not be construed to limit an employee’s right to bring legal action
for a violation of any other laws concerning wages, hours or other standards or rights, nor shall
exhaustion of remedies under this article be a prerequisite to the assertion of any right.
d. Except where prohibited by state or federal law, city agencies or departments may
revoke or suspend any registration certificates, permits or licenses held or requested by the
employer until such time as the violation is remedied.
e. Relief. The remedies for violation of this article include, but are not limited to:
1. Reinstatement, and the payment of back wages unlawfully withheld, and
the payment of an additional sum as a civil penalty in the amount of fifty dollars ($50) to
each employee or person whose rights under this article were violated for each day or portion
thereof that the violation occurred or continued, and fines imposed pursuant to other
provisions of this code or State law.
2. Interest on all due and unpaid wages at the rate of interest specified in
subdivision (b) of Sec. 3289 of the California Civil Code, which shall accrue from the date
that the wages were due and payable as provided in Part 1 (commencing with Sec. 200) of
Division 2 of the California Labor Code, to the date the wages are paid in full.
3. Reimbursement of the city’s administrative costs of enforcement and
reasonable attorney’s fees.
f. Posted Notice. If a repeated violation of this article has been finally determined,
the city may require the employer to post public notice of the employer’s failure to comply in
a form determined by the city.
4.62.100. Relationship to other requirements.
This article provides for payment of a local minimum wage and shall not be
construed to preempt or otherwise limit or affect the applicability of any other law,
regulation, requirement, policy or standard that provides for payment of higher or
supplemental wages or benefits, or that extends other protections.
SECTION 2. CEQA. The City Council finds that this ordinance is exempt from the
provisions of the California Environmental Quality Act pursuant to Section 15061(b)(3) of the
150311 jb 0131322 6 Rev. August 10, 2015
Not Yet Approved
California Environmental Quality Act Guidelines, because it can be seen with certainty that there
is no possibility of significant environmental effects occurring as a result of the adoption of this
ordinance.
SECTION 3. Severability. If any provision or clause of this chapter is held to be
unconstitutional or otherwise invalid by any court of competent jurisdiction, such invalidity shall
not affect other provisions of this chapter, and clauses of this chapter are declared to be
severable.
SECTION 4. Effective Date. This ordinance shall become effective on January 1,
2016.upon the commencement of the thirty-first day after the date of its adoption. [Or delayed
implementation per City Council direction.]
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _____________________________
Senior Asst. City Attorney City Manager
150311 jb 0131322 7 Rev. August 10, 2015
CITY OF PALO ALTO OFFICE OF THE CITY CLERK
February 9, 2015
The Honorable City Council
Palo Alto, California
Colleagues Memo from Council Members Berman, Burt, DuBois, and
Wolbach Regarding a City-Wide Minimum Wage Ordinance
RECOMMENDATION
We ask our Council Colleagues to refer this colleague’s memo to the Policy and Services
Committee, supported by appropriate staff as determined by the City Manager, to analyze and
make recommendations to the City Council on a City-Wide Minimum Wage Ordinance.
BACKGROUND
State law currently requires a minimum wage for all industries of not less than $9.00 per hour,
which will increase to $10.00 per hour after January 1, 2016. In response to our higher regional
cost of living and growing gap between minimum wages and the cost of living in Silicon Valley,
the cities of Mountain View, Sunnyvale and San Jose have recently adopted local minimum
wage ordinances. If minimum wages were adjusted based on local costs of living, they would be
considerably higher in Palo Alto and the peninsula than most elsewhere in the state. Recently,
the Santa Clara County Cities Association made minimum wage issues one of their 2015
priorities. Despite our general affluence, along with high costs of living and working in Palo Alto,
we currently have the same minimum wage as low cost regions of California and lower
minimum wages than some neighboring cities.
PURPOSE
Our lowest wage workers perform valued services in Palo Alto and often have to work multiple
jobs with long commutes to barely make ends meet. A local minimum wage would be a modest
step in supporting these workers who are vital to maintaining the services we value and that
are essential to our local economy. In addition, the strength of our community and society
relies on maintaining a level of economic fairness and opportunity for all. This measure will be a
modest but constructive step towards providing adequate income for all workers.
PROPOSAL
The Council is being asked to:
1) Refer the matter to the Policy and Services Committee. Direct the City Manager and City
Attorney to provide adequate staff support for the analysis and recommendations,
modeled after ordinances in Sunnyvale and Mountain View.
2) Request the Policy and Services Committee to recommend to the City Council terms of a
local minimum wage ordinance that would set a near term base wage, inflationary
adjustments and long term goals.
Page 2
3) Request the Policy and Services Committee to explore with the City Manager and City
Attorney and make recommendations to Council regarding a strategy for
outreach/education, investigation and enforcement of violations.
RESOURCE IMPACT
Staff impacts to develop an ordinance are anticipated to be low based upon reliance on similar
ordinances in Mountain View and Sunnyvale as models. If Council adopts an ordinance,
resources will be required to educate businesses and workers, investigate complaints and bring
enforcement actions. Resources and strategies should be explored by the Policy and Services
Committee, with recommendations to Council.
Department Head: Beth Minor, Acting City Clerk
Carnahan, David
From:
Sent:
To:
Subject:
Steve Rock <rockjs@sbcglobal.net>
Monday, January 26, 2015 12:42 PM
Council, City
Minimum Wage Increase
CITY OF PALO ALTO. GA GITY CLERK'S OFJiHjE
15 JAN 26 PM 3: 97
I urge you to vote for a minimum wage in Palo Alto significantly higher than the state minimum wage.
1) The cost of living in Palo Alto is much higher than the state average
2) The state minimum wage has not kept up with inflation.
3) People who work should be able to live on their wages and not need govt. subsidies
4) The increased costs to employers is very small. $1/hr is 1.6 cents/minute. A 6 minutes of service would
thus cost about 10 cents more. This is a trivial amount in Palo Alto. Who would go to a neighboring city,
with all the time and expenses of travel to "save" a few cents?
5) It is the just and moral thing to have more equality in our society.
-Steve
Stephen Rock
3872 Nathan Way
Palo Alto CA 94303
ser84@columbia.edu
MINIMUM WAGE ORDINANCES (Updated 08-6-15)
City/
County/
State
Ordinance
Adoption Date
Current Minimum
Wage/Hr. All
Cities Future
Increases Tied to
CPI
Notable Aspects
San Jose 3/11/13 $10.00 on 3/11/13
$10.15 on 1/1/14
$10.30 on 1/1/15
Voter-initiated ordinance. Annual
increase tied to CPI. Applies to any
worker who works 2 or more hours per
week.
San Francisco 11/4/14 $12.25 on 5/1/15
$13.00 on 7/1/16
$14.00 on 7/1/17
$15.00 on 7/1/18
Voters approved City initiated ballot
measure on November 4, 2014 which
raises minimum hourly wage to $15.00 in
2018. Following 2018, annual increase tied
to CPI.
Sunnyvale 10/28/14 $10.30 on 1/1/15 Annual increase tied to CPI.
Santa Clara Pending $11.00 on 1/1/16 Annual increase tied to CPI.
Council meeting scheduled for
August 18, 2015/
Mountain View 10/9/14 $10.30 on 7/1/15 Annual increase tied to CPI.
Berkeley 6/27/14 $10.00 on 10/1/14
$11.00 on 10/1/15
$12.53 on 10/1/16
Richmond 5/6/14 $9.60 on 1/1/15
$11.52 on 1/1/16
$12.30 on 1/1/17
$13.00 on 1/1/18
Several exemptions negotiated late in
the adoption process. Small business
employers who pay less than 800 hours
of employee wages over a two-week
period are exempt. Employers who
derive more than 50 percent of their
income where the point of sale is outside
the city must pay intermediate wage
halfway between the city and state
minimum wage. Deduction for
medical benefits is included. Increases
after 2018 will be based on CPI.
Oakland 11/4/14 $12.25 on 3/2/15 Voter-initiated ordinance. Voters
approved ballot measure on
November 4, 2014 increasing the
minimum wage to $12.25. Annual
increase tied to CPI. Hospitality workers
to keep all wages and tips. Five or nine
days of sick leave are required based
upon the size of the employer.
San Diego 7/28/14 $9.75 on 1/1/15
$10.50 on 1/1/16
$11.50 on 1/1/17
Wage tied to
inflation after
1/1/19
.
Mayor vetoed minimum wage increase
on 8/8/14. Council overrode Mayor’s
veto on 8/19/14. Ordinance stayed
pending referendum vote in June 2016
election. Includes 10 days of paid leave
and 10 days of unpaid leave for workers
per year.
Los Angeles 06/13/15
$9.00 on 7/1/15
$10.50 on 7/1/16
$12.00 on 7/1/17
$13.25 on 7/1/18
$14.25 on 7/1/19
$15.00 on 7/1/20
Applies to all businesses, but grants an
additional year for small businesses to
comply. Once both small and large
businesses reach $15 in 2022, CPI
adjustments will be used.
San Leandro 9/1/07 $13.07 on 7/1/14
w/benefits
$14.57 on 7/1/14
w/o benefits
Benefit contribution must equal $1.50 or
more to count. Provides 12 days paid leave
and 10 days unpaid leave. CPI adjustments
on July 1.
State of California 1/1/14
_______________
Pending
Currently
$9 on 7/1/14
$10 on 1/1/16
_________________
Proposed SB 3
$11 on 1/1/16
$13 on 7/1/17
__________________________________
Under Proposed SB 3, on 7/1/18 CPI
adjustment and annually thereafter.
All Statements sorted chronologically
As of April 15, 2015, 9:31 AM
As with any public comment process, participation in Open City Hall is voluntary. The statements in this record are not necessarily
representative of the whole population, nor do they reflect the opinions of any government agency or elected officials.
All Statements sorted chronologically
As of April 15, 2015, 9:31 AM http://peakdemocracy.com/2596
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State
minimum wage?
As of April 15, 2015, 9:31 AM, this forum had:
Attendees:189
All Statements:52
Hours of Public Comment:2.6
This topic started on March 25, 2015, 4:48 PM.
All Statements sorted chronologically
As of April 15, 2015, 9:31 AM http://peakdemocracy.com/2596 Page 2 of 12
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State
minimum wage?
Name not available (unclaimed)April 12, 2015, 9:08 PM
No, I don't believe the minimum wage should be raised. Minimum wage jobs are not designed to support a
family or provide adequate income to live in Palo Alto (or anywhere in the Bay Area), they are designed to pay
unskilled workers who then gain experience and move up. They are also designed to provide work experience
and spending money for teens living at home and some college students. I think we should protect small
business owners who are being run out of town much too often because of the high costs of doing business in
Palo Alto. Raising the minimum wage will only exacerbate the problem.
Name not shown in Palo Verde (on forum)April 12, 2015, 4:44 PM
No, I don't support an increased local min wage.
Many people have already provided very good arguments against. Min wage jobs do not have to be "living
wage" jobs. They can and should be "starter" positions.
Name not shown in Crescent Park (on forum)April 10, 2015, 7:48 PM
Minimum wage laws are immoral. These laws mandate that if a prospective employee is not worth a certain
amount, it is illegal to hire them.
The arguments in favor of a minimum wage are all nonsense - for one thing, if it made good business sense to
pay least-skilled workers more, you could make a fortune doing it yourself rather than getting a politician to
order someone else to do it. If there was a benefit in morale, productivity, or retention, then savvy employers
would catch on fast and do it without being told.
Entry level jobs give teenagers their introduction to the adult world. Such jobs provide essential training and
social skills. High minimum wages destroy those job opportunities. The Affordable Care Act has already
turned many low-wage jobs into part-time gigs. Don't eliminate even those small, crucial opportunities by
pricing those workers out of the market.
Recent careful studies of increases in the minimum wage demonstrate that they reduce employment - see
Clemens and Wither, NBER Dec.2014; and Hanson and Hawley, Journal of Labor Research, Dec.2014.
European countries with no minimum wage laws have half the unemployment of countries with the highest
minimum wage laws (Trading Economics, "Youth Unemployment Rate - Countries - List. 4/11/2015"). With
teenage unemployment in the US well over 20%, the last thing we need to do is to saw off the bottom rungs on
the career ladder.
It is no coincidence that while a round of minimum wage boosts takes shape, McDonald's has announced a
rollout of robotic order-taking devices, and White Castle, Chili's, and Applebees are all testing ordering kiosks to
reduce labor costs.
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
All Statements sorted chronologically
As of April 15, 2015, 9:31 AM http://peakdemocracy.com/2596 Page 3 of 12
A decent job at any wage is better than no job. You might even know someone - an "intern" - who offered to
help out for free just to learn a trade. Minimum wage laws generally make that arrangement illegal.
Palo Alto should eliminate any minimum wage requirement, and be proud to offer job opportunities to the least
skilled - those most in need of jobs.
1 Supporter
Name not shown in Greenmeadow (on forum)April 9, 2015, 11:06 PM
I support raising the minimum wage to $15. It's not about paying people enough to live in Palo Alto. It's about
paying a living wage. It's the right thing to do.
Some say that businesses will have to lay off people or go out of business. If the wage was increased $2/hour
immediately, that would increase expenses by $16 per employee per day. Is that really going to force a business
to close? Are you even going to notice the price increase needed to cover that?
Name not available (unclaimed)April 9, 2015, 11:00 PM
It won't matter. No matter what the minimum wage is, it is definitely not enough to live in Palo Alto. I have a
family member who works in Palo Alto making almost $50/hr who is married with children and is renting a tiny 2
bedroom/1 bath piece of crap house in Palo Alto for almost $4,000. After paying for rent, utilities, bills, and other
necessities every month, there is no money left to put away for savings. Even though their family has no debt
and are very thrifty, they are having a very hard time living in this area. Every year their rent goes up a lot, but
his income stays the same. Even though it seems like he makes a lot, just remember that taxes takes a huge
chunk of his paycheck. Palo Alto is not meant for low wage workers, let alone the hard working middle class.
Name not shown in Charleston Terrace (on forum)April 9, 2015, 10:58 PM
No, i do not agree with increasing the minimum wage, i support the local business owners. PA does not have
very many small businesses, I do not want to see them disappear.
June Loy in Palo Verde (on forum)April 9, 2015, 8:18 PM
I am not at all sure that mandating a higher minimum wage than the federal standard will have the beneficial
effect that people are assuming. However, I would support programs that provide businesses in Palo Alto
incentives (such as tax credits) if they provide a higher standard of employee benefits, which might include
payment above the minimum for jobs that would otherwise qualify as minimum wage, as well as better health
insurance or paid medical leave. This could be attractive to businesses and to employees.
Dedra Hauser in Evergreen Park (on forum)April 9, 2015, 3:45 PM
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
All Statements sorted chronologically
As of April 15, 2015, 9:31 AM http://peakdemocracy.com/2596 Page 4 of 12
I think we should. The minimum wage costs the government billions of dollars for food stamps and other
programs for the poor. Businesses should bear these costs, not the taxpayer. And local areas with high living
costs, such as us, should set a minimum living wage for people who work here.
2 Supporters
Name not available (unclaimed)April 9, 2015, 2:34 PM
No - let Fed/State governments set regulations.
Elliott Bloom in Midtown/ Midtown West (on forum)April 9, 2015, 1:03 PM
I believe this would be a good way of lowering traffic in Palo Alto by discouraging businesses to locate in Palo
Alto. Better yet, make it $15/hr.
Name not available (unclaimed)April 9, 2015, 12:52 PM
Palo Alto should not further raise the minimum wage. It would prevent some businesses from being competitive,
and many customers would take their business elsewhere.
A raise would also make the cost of living in Palo Alto higher, and it may push out the already struggling lower
earning families in Palo Alto.
People who work for minimum wage cannot live in Palo Alto anyway, so higher minimum wage would not benefit
Palo Alto residents.
If business owners believe that higher pay would help them retain top talent, they could always pay them over
the minimum wage.
Name not shown in Palo Verde (on forum)April 3, 2015, 10:52 AM
I'm against a local minimum. People supporting this argue the high living cost. What percentage of employees
on minimum wage can afford living in the city by themselves anyway? They are either working class from
remote less expensive area or part-time youth from local wealthy families. Even doubling the hourly rate
wouldn't change the situation much. It'd only penalize the small business owners.
2 Supporters
Becky Brewer in Duveneck/ St Francis (on forum)April 3, 2015, 9:27 AM
Yes. The cost of living in Palo Alto is exceedingly high and is making this community unaffordable for many
families.
Name not available (unclaimed)April 3, 2015, 3:19 AM
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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As of April 15, 2015, 9:31 AM http://peakdemocracy.com/2596 Page 5 of 12
No. Absolutely not.
Name not shown in Midtown/ Midtown West (on forum)April 2, 2015, 10:40 PM
An increase in the Palo Alto minimum wage is not going to help minimum wage workers live in Palo Alto. A $20
per hour minimum wage translates into $3600 per month. It is hard to afford housing in Palo Alto for $3600 (pre
tax) a month.
In these cases, higher minimum wages usually benefit the teenagers of Palo Alto and those of nearby
communities. Many (if not most) of these teenagers are from very wealthy families. It's not clear why we need a
policy that transfers wealth from small business owners (many of which do not live in Palo Alto) to children of
wealthy families.
Name not available (unclaimed)April 2, 2015, 10:33 PM
Yes! $15. It costs way more to live here than other parts of the state.
Name not available (unclaimed)April 2, 2015, 8:16 PM
if the minimum wage only applied to residents of Palo Alto I could be part of that discussion.
Name not available (unclaimed)April 2, 2015, 5:16 PM
Yes it should be higher, even double the minimum would not be living wages.
Name not shown in Southgate (on forum)April 2, 2015, 4:48 PM
I strongly support an increase to the minimum wage. The minimum wage hike to $10/hour in 2016 will lead to
an income of roughly $1600/month. It would be very difficult or impossible for someone in our city to pay for
rent, food, and other necessities on that, especially if they have children.
Name not shown in College Terrace (on forum)April 2, 2015, 4:08 PM
Yes 15.00 dollars !!
1 Supporter
Name not available (unclaimed)April 2, 2015, 4:03 PM
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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As of April 15, 2015, 9:31 AM http://peakdemocracy.com/2596 Page 6 of 12
Higher than the state minimum wage !!
Erin H in Palo Verde (on forum)April 2, 2015, 3:56 PM
Yes. According to the department of labor, the notion that increasing the minimum wage costs jobs is a myth:
http://www.dol.gov/minwage/mythbuster.htm Their statistics also show that most small businesses support
increasing minimum wage because of its benefits on consumer spending power and employee retention. The
argument that it "costs jobs" is a bullying tactic used by larger businesses who want to optimize large
workforces. Minimum wage has lagged behind for too long, and communities like Oakland (which voted to raise
its minimum wage to $12.25) are growing for a reason: they're smart and staying ahead of the curve in a
society increasingly concerned with income inequality. Palo Alto following suit would send a powerful message
that might even help salve its reputation as one of the most inequitable places in the country. It's a step in the
right direction.
2 Supporters
Name not shown in Midtown/ Midtown West (on forum)April 2, 2015, 3:32 PM
No, the cost of labor should be consistent with the task performed, not location. Families are struggling to live in
this already very expensive city, not to mention the Peninsula.
Alexandra Acker-Lyons in Palo Verde (on forum)April 2, 2015, 3:11 PM
YES! $15 minimum. Living in PA or anywhere near is prohibitively expensive. Transportation to/from is
expensive. Parking is expensive. Food is expensive. PA should tie minimum wage to cost of living.
1 Supporter
Cedric Chin in Palo Verde (on forum)April 2, 2015, 2:52 PM
No. I'd rather have the cost of living -- particularly utilities -- in Palo Alto go down.
4 Supporters
Name not shown in Community Center (on forum)April 2, 2015, 2:50 PM
I agree with one posting that we can't raise minimum wage enough to really support living in Palo Alto because
of the super high rents. We can't make it so difficult for small businesses that more will choose surrounding
cities like RC. This would leave our city with even less retail and locally owned businesses.it should do it more
often (yearly) by small increments to accommodate inflation plus a little extra. But I think minimum wage above
the State levels should not apply to people under age 18. This helps high school students to get jobs. Minimum
wages could be raised to be similar to nearby communities.
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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3 Supporters
Name not available (unclaimed)April 2, 2015, 2:32 PM
Absolutely not. People don't realize that raising the minimum wage will only increase costs broadly and
increase inflation. This will make the effective cost of living the same or worse, particularly for those on a fixed
income.
Name not shown in Charleston Meadows (on forum)April 2, 2015, 2:30 PM
Yes. Of course they should. With the amount of money in Palo Alto, so what if it costs an extra nickle to buy a
latte.
1 Supporter
Name not shown in Midtown/ Midtown West (on forum)April 2, 2015, 1:35 PM
Palo Alto is an amazing place to live and one of the most beautiful towns in the bay area, however, as most
know, the cost of living in the bay is higher than the rest of the state. On top of that the cost of living in Palo Alto
is higher than the rest of the bay. The minimum wage should definitely be more than the rest of the state for the
very reason that it costs more to do the same things here.
3 Supporters
Name not available (unclaimed)April 2, 2015, 1:31 PM
No. There is no need. If a business wants to reduce turnover or compete with other employers it can certainly
pay its employees more after they've worked there a while. There is no need to mandate this from the
government! This will simply limit the ability of first time employees to gain work experience. Most longer term
employees get periodic raises if they work well--there are positive incentives to work hard and not leave your
job as your salary doesn't stay at minimum wage if your work ethic is good, even at fast food establishments
and other restaurants.
Name not shown in College Terrace (on forum)April 2, 2015, 1:00 PM
YES. Occupations like house cleaners, nannies, gardeners already command $20 or more per hour. You don't
see people firing these workers - they are more in demand than ever. Paying people in other low-skilled jobs -
groundskeepers at Stanford, Starbucks and retail workers, etc. - helps everyone by raising incomes at the low-
end, not just the high end.
2 Supporters
Shelton Ehrlich in Leland Manor/ Garland (on forum)April 2, 2015, 12:56 PM
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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No. Experience in other towns shows it costs jobs.
3 Supporters
jean Roth outside Palo Alto (on forum)March 31, 2015, 12:56 PM
I think Palo Alto should definitely raise the local minimum wage. Over half of minimum wage workers are
working full time. Many of them have families. Looking at San Jose, we can see that raising the minimum wage
did not affect the employment statistics. Many small businesses recognize that it helps to prevent turnover. It is
also clear that the more money in circulation, the more people spend, and the more the economy grows.
3 Supporters
Megan Fogarty in Midtown/ Midtown West (on forum)March 30, 2015, 8:02 PM
Follow our local cities who have already made this commitment and commit to a more just community in our
wage practices. Thanks!
3 Supporters
Darryl Fenwick in Downtown North (on forum)March 30, 2015, 11:16 AM
I'm sure most people in Palo Alto would like to find ways to help the low-skilled worker who cannot command
high wages live in such a high priced area as Palo Alto. I am certainly one of them. However, recent studies
show that raising the minimum wage hurts many of the same low-skilled workers it aims to help, by either
denying them employment opportunities, reducing work hours, or being dismissed from employment (see works
by MaCurdy, Stanford University, Meer & West, Texas A&M and MIT, and Clemens & Wither, UCSD). The main
conclusion is that although raising minimum wage may help some, it will hurt others. And really, these
conclusions make common sense - employers react to price signals. In essence, they see a raise in minimum
wage as equivalent to a tax on low-skilled workers.
I am not willing to help some to the detriment of others, especially since the others are suffering the same plight
as those we are trying to help. Fortunately, there are other solutions other than the overly-simplistic solution of
raising the minimum wage. For example, increasing the EITC is one. On a local level, I'm sure that Palo Alto
can come up with clever solutions to help those low-skilled workers we are trying to help. Why not subsidize
their salaries with city money? This has no impact on employment, yet the result is the same. If we can spend
$8 million for Buena Vista, we certainly can spend some $$ to help those in need.
3 Supporters
Name not shown in Charleston Meadows (on forum)March 28, 2015, 5:09 PM
Yes
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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2 Supporters
Name not available (unclaimed)March 28, 2015, 10:02 AM
Yes, of course we should adopt an ordinance setting a higher minimum wage than that of the state. It is terribly
expensive to live here. And it is the right thing to do.
Name not shown in Palo Verde (on forum)March 27, 2015, 4:13 PM
Small businesses have choices - Increase prices. Reduce worker hours. Reduce the wages of higher paid
workers including owners. Relocate. At a higher wage, a worker with fewer hours may still be earning more.
Even with a $15 minimum wage, it will take a lot of roommates and overtime to live in Palo Alto or anywhere on
the peninsula. While I'm sure there are consequences I am not imagining, both good and bad, I am confident
that far more lives will be improved rather than hurt by raising our city minimum wage to $15.
3 Supporters
Name not shown in Duveneck/ St Francis (on forum)March 27, 2015, 4:04 PM
Yes, we should. San Jose has raised theirs and has not experienced problems with losing jobs.
1 Supporter
Name not shown in Evergreen Park (on forum)March 27, 2015, 10:45 AM
As the Operations Manager of a small Business in Palo Alto I’ve struggled greatly with my thoughts on
increasing Minimum Wage. Philosophically I support this idea, people should be paid enough to live near where
they work.
However, I do know that if these increases raises to minimum wage happen too fast I will be forced to lay-off
employees, it is difficult to deal with rapidly increased cost when your sales are flat or in a decline (perhaps
because of an unwanted streetscape construction project). As I look at our budget and wonder where this
money to pay for this increase will come from. We have already cut every other cost. I’m left with reducing labor
and jobs to find the money.
Let our small business deal with the increases we already have to deal with from the state. Then if the state
does not continue to raise the minimum wage then Palo Alto should consider raising the City’s minimum.
Jumping my expenses suddenly by a huge percentage would most likely result in us going out of business. I
can’t believe that we are alone in this.
4 Supporters
Name not shown in Old Palo Alto (on forum)March 27, 2015, 10:20 AM
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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As a small business owner, the minimum wage does not affect my employees who all make more than
mandated levels. The law prevents businesses from hiring our kids as part time workers and seems to result in
lower employment. If this is the case, the minimum wage actually hurts those people rather than helping them.
You cannot create a minimum wage high enough that these people will suddenly be able to afford housing in
Palo Alto, so I would not support an additional minimum wage ordinance in Palo Alto for something that is
already covered by other ordinances. Spend your time on more important issues, such as business zoning and
parking, providing space for more small businesses and hiring in our town.
4 Supporters
Name not shown outside Palo Alto (on forum)March 27, 2015, 8:07 AM
On the surface raising the minimum wage looks like a good idea, but it is extremely hard on small business
owners.
3 Supporters
Randy Mont-Reynaud in Greenmeadow (on forum)March 27, 2015, 7:57 AM
Yes, and it should be $15.00 hour. The people who work here should be able to commute and park here!
1 Supporter
Name not available (unclaimed)March 26, 2015, 10:05 PM
Palo Alto is an expensive place to live, so very few lower income people do live here. However they still need
income to enable them to work here and provide services and commercial support that we need, so they should
be paid fairly. I would suggest a minimum wage of $11.50/hour, increasing each year by the Cost Of Living
Index.
Paul Heft in Midtown/ Midtown West (on forum)March 26, 2015, 9:04 PM
Yes, a higher minimum wage makes sense, given the unaffordability of the Bay Area. But we know that many
businesses will minimize costs by eliminating positions or cutting benefits (e.g., through reducing full-time
work). What we really need is a federally-funded guaranteed income, especially since there are not enough
good jobs to go around--and automation and globalization make the situation worse and worse.
1 Supporter
gary fine in College Terrace (on forum)March 26, 2015, 1:03 PM
absolutely; its so hard to live in PA, so the higher it is the better chance we have of keeping "normal" people in
PA
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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2 Supporters
Name not available (unclaimed)March 26, 2015, 11:54 AM
Richard Placone
Barron Park
I will support an increase to $15 per hour minimum wage. This won't help workers to live in high priced PA, but
it may make it easier for workers to support themselves where ever they live.
Joel Davidson in Barron Park (on forum)March 26, 2015, 11:27 AM
I strongly believe that at least a $15 wage is necessary especially in this area of opulence and high rents and
prices.
3 Supporters
Name not available (unclaimed)March 26, 2015, 9:23 AM
Absolutely. This is an extremely expensive area in which to live.
Name not shown in Crescent Park (on forum)March 26, 2015, 9:06 AM
I do not think we should adopt a higher minimum wage than the state, but do favor increasing wages as
appropriate to the work provided at any wage level.
Name not shown in University South (on forum)March 26, 2015, 8:37 AM
I believe the minimum wage itself is misguided and results in marginally (depending of the minimum wage level)
lower overall employment. If this is the case, the minimum wage actually hurts those people with the lowest
marginal productivity rather than helping them. So, I would not support a minimum wage ordinance in Palo Alto.
2 Supporters
Judith Wasserman in Leland Manor/ Garland (on forum)March 26, 2015, 7:50 AM
Yes, we should. Palo Alto is a very expensive place to live, and the people who work here should be able to live
here.
2 Supporters
Local Minimum Wage
Should the City of Palo Alto adopt an ordinance setting a local minimum wage that is higher than the State minimum wage?
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Network Response Person Date
NextDoor No. See what happened in Seattle.Frank N. from Midtown 4/2
NextDoor Yes. Palo Alto is way pricier than average CA, and the minimum wage should be aligned. Otherwise, it's a de facto
exclusion of minimum wage workers from our economic community.Alex L. from Crescent Park 4/2
NextDoor
Bill M Walnut Grove
NO NO NO. Think of our seniors on fixed income. Minimum wage goes up, their
quality of life goes down. Simple economics .. wages go up-prices go up.
William M. from Walnut Grove 4/2
NextDoor
I agree.The minimum wages needs to be up anyways. If somebody can afford to live in Palo Alto, scrape by even, then it
is ok to pay more than the minimum wages. And if we can afford to buy Organic Orange juice for $8 for 8oz, then we
should we generous enough to pay our workers more than the cost of orange juice. We need more economic diversity in
Palo Alto, to raise our children in an empathetic community, that knows how to share their wealth.
Moitreyee C. from Midtown 4/2
NextDoor
Absolutely not. Palo Alto has more than enough regulations and taxes. Why make it more difficult for low income workers
to find jobs (and there will be fewer low income-entry level jobs with a higher minimum wage than the state requires)--not
to mention letting our privileged kids get real world work experience. I bet very few PA workers actually are at minimum
wage today!!
Bruce C. from Crescent Park 4/2
NextDoor
the de facto minimum wage in Palo Alto is already higher. PA Businesses paying the state minimum aren't retaining
workers. Knowing the city of palo alto you will probably spend a ton of money consultants and lots of CPA workers time
studying this 'problem'. The problem is bigger than the city can solve and this small city has no business addressing it.
Leave the social engineering to the state and feds. Please do not spend city tax dollars studying this problem and please
do not hire over priced outside consultants.
Greg G. from Ventura 4/2
NextDoor Majority of the workers are not from rich families and yes we should pay living wage for the individuals who travel to Palo
Alto to support their families.Samina S. from Evergreen Park 4/2
NextDoor I would like to see a higher minimum wage.Hamilton H. from Duveneck - St. Francis 4/2
NextDoor Don't mess with the free market.Richard C. from Duveneck - St. Francis 4/4
NextDoor
Starbucks CEO Howard Schultz says $15/hour minimum wage will hurt business but he rakes in $9,600/hour.
http://read.bi/1bvYCL2
It is criminal that is all I can say. Have you heard his latest plans? how he is planing to make Starbucks even in poor
areas. He does not care about them, only he wants share of that market too so he can make $12,000 an hour.
Samina S. from Evergreen Park 4/4
Post Question: Should Palo Alto adopt a higher local minimum wage than the State's minimum wage? Share your thoughts with city officials here: http://bit.ly/copa_opencityhall Post
Link: https://nextdoor.com/city/feed/?post=10412799
NextDoor
How would we know if raising minimum wage is better or worse? There have been some studies that show that there's
short term negative side effects but long term positives. Free market is great for many things but not perfect. Having
higher minimum wage could mean SMBs shed workers (since they run unsustainable, 5% margin businesses often) and
cause larger companies to hire more contractors. But it really depends on the industry, size of company, etc.
The city should release numbers on which groups of people, sectors, etc raising the minimum wage helps and those that
it hurts. Without data how on earth could we make this decision, city govt?
Srini K. from Professorville 4/6
NextDoor
Minimum wage laws are immoral. These laws mandate that if a prospective employee is not worth a certain amount, it is
illegal to hire them. The arguments in favor of a minimum wage are all nonsense - for one thing, if it made good business
sense to pay least-skilled workers more, you could make a fortune doing it yourself rather than getting a politician to order
someone else to do it. If there was a benefit in morale, productivity, or retention, then employers would do it anyway.
Better a minimum wage job than no job at all. There is unequivocal, indisputable evidence that increasing the minimum
wage reduces employment among the least skills, those most in need of taking the first step on the employment ladder.
Don Boudreax at cafehayek.com has extensive resources on the evils of the minimum wage. Palo Alto should eliminate
any minimum wage requirement, and be proud to offer job opportunities to the least skilled - those most in need of jobs.
Jonathan S. from Fulton Street 4/6
NextDoor Can you post the minimums of the neighboring cities? Fred K. from University South 4/6
NextDoor
Jonathan, thank you for your response. Finally, a comment based on logic rather than irrational and ridiculous arguments.
Proponents of minimum wage laws hurt those people most in need of a job -- namely the unskilled who can obtain new
skills by holding a job and working their way up through a career. The only people that benefit from minimum wage laws
are union members whose wages are tied to increases in minimum wages and who are the biggest supporters of
politicians that create and enforce minimum wage laws.
Furthermore, it is immoral to force business owners to pay someone more than they feel their employees' skills are worth.
Both employers and employees have the right to seek work at the rate they feel is fair.
Seavan S. from Midtown 4/6
NextDoor I literally see 0 numbers or real data in any of these comments. It's just hard to have an objective discussion honestly Srini K. from Professorville 4/6
NextDoor
There are ample sources of data. Unfortunately, because we have had minimum wage laws in place in the US for many
years, all that can be measured are the effects of small increases in the minimum employable skill level. These effects
are dominated by the fact that the least employable are already priced out of the market.
Jonathan S. from Fulton Street 4/6
NextDoor
Starbucks and Howard Schultz are one of the few companies that do seem to care about their workers. They have always
provided health care coverage for all their workers and family if employed 20 or more hours a week. I believe it is the
major cost of a cup of coffee. If he gave up his salary it would mean each employee would get around a few cents
cents/hour more. I suspect the figure is "realized" pay for last year, which in his case is from old stock options stretching
back 12 years. Starbucks is one of the few companies where shareholders can vote on pay. The fellow started a company
40 years ago that now employs 150,000. Even at this rate of pay it is similar to what the new CFO of Google is getting
and she has not created a job for anyone. Our government has all sorts of schemes to create jobs I doubt any come close
to the number created by an $100 million annual cost. If anyone thinks they can do better than Howard please go ahead. I
won't begrudge you your salary. I certainly will not think it criminal.
I don't own Starbucks stock and have been in a Starbucks very rarely and only when someone else wants to go.
Walter M. from Adobe Meadow 4/6
Here is the Washington Post, looking at a number of studies that ask whether minimum wages reduce poverty:
http://www.washingtonpost.com/blogs/wonk...
It looks like the answer is yes. I guess wages going up affects prices less than expected. I admit to being a bit surprised: I
thought that some of these jobs would end up moving to other places. Maybe some already have, such as manufacturing
jobs, which are now being done mostly in Asia. But service jobs are here to stay. For now, anyway. (Until robots take
over?)
I suppose a small number of people might decide they want to clean their own house instead of paying more to have it
done, but maybe not that many. Similarly for other service jobs: who is going to drive to another town to get their fix of fast
food? Or to save a couple of bucks on a haircut? If you're making a decent salary, a couple of extra bucks is no biggie,
you just pay it and get on with life.
Personally, I don't find it immoral to force businesses to pay people enough that they can feed themselves and keep a
roof over their heads. In fact, I consider it akin to theft to offer people less than a living wage.
Lottie P. from Charleston Meadows 4/6
NextDoor
It's immoral for government to tell someone that they can't hire someone whose productivity is less than some threshold.
As for robots taking over, McDonald's recently announced a rollout of robotic order-taking devices, replacing part of their
workforce with tablets.
The Washington Post article cited by Lottie P looks at minimum wage changes and poverty effects in 21-44 year old
family heads and individuals, rather than employment effects among teenagers. There are relatively few minimum wage
workers in this age range, and their poverty status is affected by AFDC, food stamps, Section 8 housing vouchers, ACA
health care subsidies or Medicaid, direct welfare, and other payments - such that they may be better off staying home
than getting a minimum wage job. By selecting for cases like this, the authors might have biased their study to favor fewer
jobs at a higher minimum wage. That's just one of the problems with that report.
A decent job at any wage is better than no job. You might even know someone - an "intern" - who offered to help out for
free just to learn a trade. Minimum wage laws generally make that arrangement illegal.
Jonathan S. from Fulton Street 4/6
NextDoor
I add my strong endorsement for a higher minimum wage statute. This will stimulate business through consumer
spending and send a clear signal that our community cares for the well-being and sustainability of local employment and
employees.
Roland H. from South of Midtown 4/7
NextDoor
Three more careful studies showing that boosts in the minimum wage reduce employment:
- Clemens and Wither, National Bureau of Economic Research Dec.2014
- Hanson and Hawley, Journal of Labor Research, Dec.2014
- European countries with no minimum wage laws have half the unemployment of countries with the highest minimum
wage laws (Trading Economics, "Youth Unemployment Rate - Countries - List. 4/11/2015").
Jonathan S. from Fulton Street 4/7
NextDoor
I absolutely think Palo Alto should adopt a higher minimum wage. The cost of living here is much greater than in other
areas as you know. With the number of individuals who are working at minimum wage, there is no way they can afford
what is considered affordable housing here. It seems to be an obvious thing to do to increase the quality of life for them.
Dianna Z. from South of Midtown 4/10
NextDoor
I think a study needs to be done on how a higher minimum wage will affect small businesses. Anyone who is making
minimum wage in Palo Alto will NEVER be able to afford housing in the city. Unless your planning on making the
Minimum wage over $20.00 an hour and/or are living in subsidized housing. They commute into Palo Alto. You know what
would be a great idea, is minimum wage employees who work in Palo Alto, offer them free train/bus passes. Not only
would that offer immediate Financial relief, it might actually help with the parking problem DT.
Deanne D. from Stanford University 4/10
NextDoor Yes but a higher minimum should be adopted in cooperation with our neighboring communities Stephen L. from University South 4/10
(2nd Post - same wording) Post Link: https://nextdoor.com/city/feed/?post=10599697
NextDoor Bill C. South P..
Any auch rule must consider where worker lives and where he works.Smokey C. from Palo Verde 4/10
NextDoor Higher wages transfers the burden of living to employers, and doesn't fix the original issue of the cost of living. Cedric C. from Palo Verde 4/10
NextDoor
Yes. it has to be higher. Every body deserves living wages. Palo Alto takes the lead in many places in our society in terms
of education, communities, entrepreneurship, then why not this? We can only hope that the rest of the state would follow
up then. We must help our neighboring cities, from where the minimum wage workers are coming to Palo Alto, develop,
grow and flourish. If a single mother can actually come back home at a decent time, because she can live with one wage,
then her children will have better chances of becoming a productive member of the society. This will in the end, add on to
the value of PAlo Alto, its houses, its schools. There is nothing to lose in the long term.
Moitreyee C. from Midtown 4/10
NextDoor I am in favor of allowing market forces determine the minimum wage. Alan B. (inbox) 4/10
Facebook Yes Juliefe Rosete 4/1
Facebook (thumbs up) Maria Osorio 4/1
Facebook Post (same wording) Post Link: http://bit.ly/paminwagefb
To:$$Cities&Association&Board&of&Directors&
From:$$Cities&Association&Subcommittee&on&Minimum&Wage:&Jim&Griffith,&Rod&
&&Sinks,&John&McAlister&
Re:$$$Report/Recommendation$on$the$Minimum$Wage$
Date:$June&7,&2015$
Introduction*
&
Income&inequality&in&America&is&an&increasing&problem&that&is&encouraging&elected&
officials&to&take&a&hard&look&at&the&minimum&wage&as&one&tool&to&bring&relief&to&the&
problem.&&With&Congress¤tly&unwilling&to&examine&the&issue&at&the&federal&
level,&many&states&and&local&jurisdictions&have&already&approved&or&are&considering&
local& minimum& wage& increases.& &In& August& 2014,& the& US& Conference& of& Mayors’&
“Cities&of&Opportunity&Task&Force”&endorsed&higher&minimum&wages&as&a&key&tool&
for&addressing&income&inequality.&
&
Santa&Clara&County&is&no&exception&to&the&challenges&of&income&inequality,&with&the&
San&JoseVSunnyvaleVSanta&Clara&metropolitan&area&having&the&second&highest&cost&of&
living&index&in&the&state&of&California.&&Already,&the&cities&of&San&Jose,&Sunnyvale,&and&
Mountain&View&have&approved&minimum&wage&increases.&&The&cities&of&Palo&Alto,&
Santa& Clara,&Morgan& Hill,&and& Campbell&are& additionally& considering& a& minimum&
wage&increase.&
&
The&legal&and&policy&issues&with&a&minimum&wage&increase&are&lengthy.&Rather&than&
repeating& those& issues& in& its& report,& the& subcommittee& provides& the& Sunnyvale&
Report&To&Council&(RTC)&on&the&topic&as&an&overview.&
&
The&state&is&considering&the&issue,&and&CA&Senate&Bill&3&(Leno)&proposes&an&increase&
to&$11/hour&in&2016&and&$13&in&2017,&with&CPI&adjustments&starting&in&2019.&
&
San& Jose& and& Sunnyvale& have&already&established& a& $10.30/hour& minimum& wage&
with&annual&CPI&adjustments.&Mountain&View&has&adopted&an&identical&ordinance&
that& takes& effect&July& 1,& 2015.& & Mountain& View& and& Sunnyvale& have& additionally&
established&a&policy&goal&of&a&$15/hour&minimum&wage&by&2018.&&Mountain&View&is&
currently&discussing&a&possible&phased&increase&to&$15&by&2018,&and&Sunnyvale&is&
monitoring& Mountain& View’s& efforts&with& an&expressed&interest& in& adopting&
Mountain&View’s&schedule.&
&
However,&Palo&Alto&is&now&proposing&a&minimum&wage&that&matches&none&of&the&
other&three&increases&initially,&although&it&is&likewise&targeting&$15&by&2018.&&Santa&
Clara& has& proposed& a& minimum& wage& increases& that& matches& the& other& three&
jurisdictions& with& $10.30& and& a& CPIVbased& increase,& but& Santa& Clara& has& not& yet&
expressed&an&opinion®arding&the&$15&by&2018&goal.&&In&light&of&this,&Mountain&
View&and&Sunnyvale&have&sent&a&joint&letter&to&the&other&cities&in&Santa&Clara&County&
encouraging®ional&consistency&in&any&schedules&and°rees&of&a&minimum&wage&
increase.&
Priority*Consideration*
&
In&looking&at&this&issue,&the&subcommittee&asserts&that®ional$consistency$is$a$
paramount$consideration&for&jurisdictions&that&are&considering&adopting&a&higher&
minimum& wage.& A& lack& of& regional& consistency& in& minimum& wage& rates& creates&
serious& problems& for&jurisdictions,& locations,& and& employers.&&A& parallel& can& be&
drawn& with& local& jurisdictions’& efforts& to& adopt& singleVuse& bag& policies,& and& the&
confusion&and&competitiveness&issues&caused&when&jurisdictions’&requirements&vary.&
&
Jurisdictions&suffer&from&a&lack&of&consistency,&in&that&differences&in&minimum&wage&
requirements& can& affect& a& city’s& economic& competitiveness.& & Additionally,&
jurisdictions&have&already&received&reports&from&employers&in&Santa&Clara&County&
stating&that&cities&without&an&increased&minimum&wage&are&losing&quality&employees&
to&opportunities&in&cities&with&higher&minimum&wages.&
&
A&lack&of&consistency&can&even&impact&specific&locations&that&span&jurisdictions,&such&
as& Valley& Fair.& & A& business& in& the& lowerVwage& portion& of& the& location& has& a&
competitive&advantage&over&a&related&business&in&the&higherVwage&portion&of&the&
location.&&Similar&behavior&was&observed&in&Valley&Fair&when&San&Jose&adopted&a&
plastic&bag&ban&well&in&advance&of&any&effort&by&Santa&Clara&to&do&the&same.&
&
Employers&who&operate&locations&in&different&jurisdictions&encounter&payroll&and&
employment&challenges&when&the&locations&have&different&minimum&wage&rates.&
&
The& issue& of& regional& consistency& argues&strongly&for& either& a& national& or& state&
minimum& wage& increase.& & While& Congress& has& demonstrated& no& willingness& to&
examine&this&issue,&CA&Senate&Bill&3&(Leno)&proposes&an&increase&to&$11/hour&in&
2016&and&$13&in&2017,&with&CPI&adjustments&starting&in&2019.&&The&subcommittee&
considered& this& but& instead&suggests&the& SunnyvaleVMountain& View& goals&as& a&
starting&point&for&discussion,&since&they&surpass&SB&3&in&timing&and°ree.&&The&
considerably& higher& cost& of& living& in& Silicon& Valley& was& an& additional& factor& in&
recommending& efforts& beyond& those& that& might& be& achieved& by& SB& 3,& should& it&
eventually&be&approved.&&In&general,&significant&differences&in®ional&economies&
argue&for&minimum&wages&based&on®ions&smaller&than&the&State&of&California.&
&
At& the& last& Silicon& Valley& Leadership& CEO& Economic& Outlook& Conference,& the&
attendees&were&asked&“would&you&support&a&minimum&wage&of&$15/hour,&phased&in&&
through&2020”&85%&of&respondents&answered&in&the&affirmative.&
&
Accordingly,$ the$ subcommittee$ recommends$ that$ the$ Cities$ Association$
encourage$ jurisdictions$ to$ place$ particular$ emphasis$ and$ value$ on$
establishing$ minimum$ wage$ ordinances$ that$ promote$ regional$ consistency$
within$Silicon$Valley.$$While$not$willing$to$endorse$a$specific$minimum$wage$
requirement$or$timeline,$the$subcommittee$points$to$the$Sunnyvale/Mountain$
View$efforts$as$the$only$existing$effort$towards$regional$consistency,$and$the$
subcommittee$encourages$jurisdictions$to$take$a$close$look$at$these$efforts.$
Issues*
&
The&subcommittee&identified&three&specific&issues&that&jurisdictions&should&consider&
in&their&discussion&of&a&minimum&wage&increase,&namely&possible&exemptions&for&
youths,&for&restaurant&wait&staff,&and&for&nonVprofit&organizations.&
Exemption*for*Youths*
&
One&frequent&concern&is&the&impact&on&youth&hiring,&particularly&as&it&affects&summer&
and&holiday&hiring.&&When&contemplating&a&minimum&wage&increase,&jurisdictions&
often&consider&making&an&exception&for&youth&hiring.&&The&argument&in&favor&of&such&
an&exemption&asserts&that&without&such&an&exemption,&employers&tend&to&reduce&
youth& hiring.& & Early& employment& opportunities& can& have& a& significant& impact& on&
future& job& prospects,& so& cities& are& strongly& motivated& to& encourage& youth&
employment.& & The& argument& against& such& an&exemption& asserts&that& such& an&
exception&encourages&employers&to&hire&younger&workers&at&the&expense&of&older&
workers.&&&
&
All&three&County&jurisdictions&that&have&adopted&a&higher&minimum&wage&considered&
this&issue,&and&none&of&the&jurisdictions&have&adopted&a&youth&exemption.&
&
It&is&the&opinion&of&the&subcommittee&that&a&youth&exemption&has&no®ional&impact,&
since&youths&are&most&likely&to&work&in&close&to&home®ardless&of&employment&
conditions.& & Such& an&exemption&is& unlikely& to& create& issues& of& regional&
competitiveness.& & Therefore,&the$ subcommittee$ makes$ no$ recommendation$
about$ a$ youth$ exemption$other$ than$ to$ encourage$ the$ general$ concept$ of$
regional$consistency.&
Exemption*for*Restaurant*Wait*Staff*
&
One&concern&is&the&disparity&that&exists&when&a&minimum&wage&is&applied&to&both&
wait& staff& and& behindVtheVcounter& employees& in& restaurants,& since& wait& staff& can&
receive&tips&and&other&restaurant&employees&do¬.&Restaurant&employers&argue&
that&minimum&wage&wait&staff&receives&considerably&more&than&minimum&wage&once&
tip&income&is&taken&into&account.&&They&further&assert&that&applying&a&minimum&wage&
increase&to&&
&
California& state& law& prohibits& employers& from& crediting& tip& income& towards& an&
employer’s&minimum&wage&requirements.&
&
All&three&County&jurisdictions&that&have&adopted&a&higher&minimum&wage&considered&
this&issue,&and&none&of&the&jurisdictions&have&adopted&a&wait&staff&exemption.&
&
It& is& the& opinion& of& the& subcommittee& that& a& wait& staff& exemption&would& have&
significant&and&direct®ional&impact,&given&the&multiple&existing&ordinances&that&do&
not& make& such& an& exemption.&When& minimum& wages& vary& from& jurisdiction& to&
jurisdiction,&employees&and&customers&are&willing&to&look&to&restaurants&in&other&
jurisdictions&when&employment&terms&or&prices&differ.&&Maintaining&an&environment&
where&Silicon&Valley&restaurants&are&equally&attractive&to&potential&employees&and&
customers®ardless&of&jurisdiction&is&of&significant&value.&&Additionally,&wait&staff&is&
often& required& to& work& during& hours& when& little& or& no& income& from& tips& can& be&
realized.&&&The&State&of&California&does¬&permit&employers&to&credit&tips&towards&
the&state&legal& minimum& wage& requirement.& It& is& difficult& to& justify& a& wait& staff&
exemption& for& local& minimum& wage& requirements& when& state& minimum& wage&
requirements& make& no&such&distinction.&Therefore,&the$ subcommittee$
recommends$against$cities$creating$an$exception$for$restaurant$wait$staff.&
Exemption*for*non;profit*employees*
&
Concerns& have& been& raised& about& applying& an& increased& minimum& wage& to& nonV
profits&and&to&organizations&reimbursed&by&the&state,&since&such&entities&tend&to&
provide&services&for&the&most&atVrisk&community&members.&&A&higher&minimum&wage&
may&decrease&a&nonVprofit’s&ability&to&provide&those&services.&
&
All&three&County&jurisdictions&that&have&adopted&a&higher&minimum&wage&considered&
this&issue,&and&none&of&the&jurisdictions&have&adopted&a&nonVprofit&exemption.&
&
It&is&the&opinion&of&the&subcommittee&that&a&nonVprofit&exemption&has&no®ional&
impact,&since&nonVprofits&tend¬&to&suffer&from&issues&of®ional&competitiveness.&&
Therefore,&the$ subcommittee$ makes$ no$ recommendation$ about$ a$nonIprofit$
exemption$other$ than$ to$ encourage$ the$ general$ concept$ of$ regional$
consistency.&
Other*Issues*
&
The&subcommittee&discussed&the&pros&and&cons&of&a$total$compensation$approach&
rather&than&a&minimum&wage&specific&approach.&&As&a&matter&of&best&practices,&there&
is&considerable&merit&to&a&total&compensation&approach.&&Terms&of&employment&vary&
from& profession& to& profession,& with& some& professions& placing& greater& value& on&
considerations&such&as&leave&or&medical&benefits&than&others.&&A&total&compensation&
approach&may&provide&more&robust&and&equitable&requirements&for&both&employers&
and&employees,&and&such&an&approach&may&be&a&more&effective&way&to&address&issues&
of&income&inequality.&&However,&existing&state&and&local&laws&invariably&deal&with&
compensation&issues&on&a&benefitVbyVbenefit&basis,&with&one&law&addressing&health&
insurance,&another&addressing&wages,&a&third&addressing&sick&leave,&and&so&on.&&Given&
existing&legislation& addressing&specific& benefits,& applying& an& additional& total&
compensation&requirement&is&unlikely&to&achieve&the&desired&level&of&flexibility&or&
effectiveness.&&The&subcommittee&is&additionally&unaware&of&any&jurisdictions&taking&
a&total&compensation&approach&to&this&issue.&
&
&
Attachments:&
1. Sunnyvale&Report&to&Council&of&5/20/2014&
2. Sunnyvale&Report&to&Council&of&10/14/2014&
3. Campbell&Staff&Report&on&Minimum&Wage&Study&Session&of&05/19/15&
4. Campbell&Staff&Report&Attachments:&Cost&of&Living&and&Demographic&Charts,&
Campbell&Minimum&Wage&Survey,&Campbell&Minimum&Wage&Survey&Results,&
Addendum&to&Staff&Memo&&
5. California&Restaurant&Association&Letter&to&Campbell&City&Council&re:&
Minimum&Wage&Study&Session&
6. Sunnyvale/Mountain&View&Letter&to&Mayor&Cristina&of&Campbell&(and&all&
Mayors&in&Santa&Clara&County)&re:&minimum&wage&increase&approach&
&
City of Sunnyvale
Agenda Item
14-0280 Agenda Date:5/20/2014
REPORT TO COUNCIL (REPUBLISHED 5/21/2014)
SUBJECT
Establish a City Advocacy Position on Minimum Wage, and Provide Further Input Regarding Creation
of a Local Minimum Wage Ordinance, Including Enforcement and Implementation of Such Ordinance
(Study Issue)
BACKGROUND
In June 2013, Council sponsored Study Issue OCM-14-01,Consider Adopting a Local Minimum
Wage Ordinance Modeled on the City of San Jose Initiative (Attachment 1). At that time, the City
Manager made no recommendation on the study issue paper. In the fall of 2013, Governor Jerry
Brown signed legislation that would increase the state’s minimum wage rate to $9.00 per hour on
July 1, 2014 and $10.00 per hour on January 1, 2016. Staff updated the study issue paper to include
information on the new California law and the City Manager updated the staff recommendation from
no recommendation to drop, citing the new law as the basis for no longer needing a local ordinance.
At the 2014 Study/Budget Issues Workshop, however, Council directed staff to study a local
minimum wage ordinance similar to the one recently enacted in the City of San Jose that would adopt
a $10 per hour minimum wage with an annual adjustment tied to the Consumer Price Index (CPI).
The City of San Jose’s ordinance is presented as Attachment 6.
Staff has been researching and evaluating the requirements, including both programmatic and
community consequences, for adopting a minimum wage ordinance similar to the initiative passed by
San Jose voters in 2012. That initiative increased San Jose’s minimum wage from $8.00 per hour to
$10.00 per hour effective March 11, 2013. Beginning on January 1, 2014, the minimum wage was to
be adjusted annually by the amount corresponding to the prior year’s August Consumer Price Index
(Urban Wage Earners and Clerical Workers, U.S. City Average for All Items) as published by the U.S.
Department of Labor. Employers in Sunnyvale are governed by the state’s minimum wage
requirement, which is currently $8.00 per hour, and which is set to increase to $9.00 per hour on July
1, 2014 and $10.00 per hour on January 1, 2016. In San Jose, the current minimum wage is $10.15
per hour. The State’s minimum wage law does not preempt local ordinances from requiring payment
of a higher minimum wage.
Meanwhile, pending legislative efforts at both the state and federal level have presented
opportunities to advocate for increased minimum wage rates that staff has been unable to respond to
because the City has not adopted a policy position on minimum wage. This report presents a draft
Legislative Advocacy Position for Council’s consideration, which would enable City advocacy on this
topic.
In addition, the report provides information about the typical provisions which make up local minimum
wage ordinances, including the provisions in the City of San Jose’s initiative that increased the
minimum wage and included an annual cost of living adjustment tied to the CPI, and alternatives for
Page 1 of 8
14-0280 Agenda Date:5/20/2014
implementation and remedies/enforcement of the ordinance.
EXISTING POLICY
Council Policy 7.3.1 Legislative Management - Goals and Policies:
Policy 7.3B.3 Prepare and update ordinances to reflect current community issues and
concerns in compliance with state and federal laws.
Policy 7.3B.4 Prepare and update the Legislative Advocacy Positions as the shorter-term
policies that support the General Plan and guide Council and staff on intergovernmental
matters.
ENVIRONMENTAL REVIEW
N/A
DISCUSSION
A. City Advocacy Position
There are several key pieces of minimum wage-related legislation making their way through the
Congress and the California Legislature. Senate Bill 935 (Leno) may address Council’s intent
regarding raising the minimum wage and tying annual increases to the CPI. However, the City does
not have a policy position allowing advocacy regarding minimum wage increases at the state or
federal level. To support this issue at the state and federal level, a new long-term advocacy position
such as the following would need to be adopted by Council:
“Supporting the quality of life in Sunnyvale, the City would support legislation to increase the current
minimum wage or tie future increases to Consumer Price Index (CPI) or the rate of inflation.”
Adoption of such a policy would allow staff to advocate for minimum wage increases at the state and
federal level in a timely manner.
B. Local Minimum Wage Ordinance
Since Council’s ranking of Study Issue OCM 14-01, staff has evaluated the efforts of other cities on
the topic of minimum wage increases and local ordinances, and researched current and pending
legislation at the state and federal level. In addition, staff performed outreach in the community via an
online survey and targeted industry outreach meetings with business owners, business
representatives and business groups, including the Sunnyvale Chamber of Commerce and California
Restaurant Association, and nonprofit representatives including the Sunnyvale Community Services
Board.
There appears to be a growing concern that the current state minimum wage does not acknowledge
the high cost of living in California and in particular the Bay Area. The cities of San Francisco and
San Jose have already enacted local minimum wage laws, and a number of other Bay Area cities are
in the process of considering them. Some cities are having discussions about the viability of a
regional minimum wage for a geographic area, such as a county. Additionally, both the federal and
state legislatures are considering amending their minimum wage laws. Below is a table showing
some of the efforts currently underway:
Jurisdiction Proposal per hour Tied to
CPI/Inflation
Status/Exemptions
US Congress,
Minimum
Wage
Fairness Act
$10.10 Yes; tied to
Inflation
Failed to garner support from the
Senate, but several additional bills
are pending. The minimum wage
issue continues to be an actively
discussed topic at the Federal
level.
California
Legislature,
SB 935 (Leno)
1/1/15 $11.00
1/1/16 $12.00
1/1/17 $13.00
Yes; tied to
Inflation
beginning
January 2018
Suspense file (used by
Appropriations Committees in both
houses of the legislature to
temporarily hold bills with
$150,000 or more of
expenditures).
Berkeley 7/1/14 $9.00 (same
as state) 1/1/15
$10.00 1/1/16
$10.75
No Second Reading of the ordinance
to be on 5/20/14. The Council also
established a task force to work
with businesses on additional
increases. Task force would
explore creating a “regional
minimum wage” with Oakland and
other East Bay cities. Some
exemptions, but “direct tipped”
employees included in the
ordinance.
Richmond 1/1/15 $9.60 1/1/16
$11.52 1/1/17
$12.30
Yes; tied to CPI
beginning
January 2018
Council directed staff to draft an
ordinance with several
exemptions, including, but not
limited to: 1. People less than 18
years of age 2. Businesses with
fewer than 10 employees 3.
Employees that are regularly
tipped
Mountain
View
Nothing formally
proposed
Nothing formally
proposed
Community activists asking council
to consider a ballot initiative or
adopt ordinance to raise minimum
wage to $15 per hour.
Page 2 of 8
14-0280 Agenda Date:5/20/2014
Jurisdiction Proposal per hour Tied to
CPI/Inflation
Status/Exemptions
US Congress,
Minimum
Wage
Fairness Act
$10.10 Yes; tied to
Inflation
Failed to garner support from the
Senate, but several additional bills
are pending. The minimum wage
issue continues to be an actively
discussed topic at the Federal
level.
California
Legislature,
SB 935 (Leno)
1/1/15 $11.00
1/1/16 $12.00
1/1/17 $13.00
Yes; tied to
Inflation
beginning
January 2018
Suspense file (used by
Appropriations Committees in both
houses of the legislature to
temporarily hold bills with
$150,000 or more of
expenditures).
Berkeley 7/1/14 $9.00 (same
as state) 1/1/15
$10.00 1/1/16
$10.75
No Second Reading of the ordinance
to be on 5/20/14. The Council also
established a task force to work
with businesses on additional
increases. Task force would
explore creating a “regional
minimum wage” with Oakland and
other East Bay cities. Some
exemptions, but “direct tipped”
employees included in the
ordinance.
Richmond 1/1/15 $9.60 1/1/16
$11.52 1/1/17
$12.30
Yes; tied to CPI
beginning
January 2018
Council directed staff to draft an
ordinance with several
exemptions, including, but not
limited to: 1. People less than 18
years of age 2. Businesses with
fewer than 10 employees 3.
Employees that are regularly
tipped
Mountain
View
Nothing formally
proposed
Nothing formally
proposed
Community activists asking council
to consider a ballot initiative or
adopt ordinance to raise minimum
wage to $15 per hour.
In addition to the efforts under way in Richmond, Berkeley, and Mountain View, similar initiatives are
also being considered in Los Angeles, Oakland, and San Diego. In all of these jurisdictions, councils
are being lobbied to join San Francisco and San Jose in setting a minimum wage higher than state
law and, in some cases, to include an automatic annual increase linked to the CPI.
Community Outreach
A survey was created and promoted via Facebook, Twitter, and direct emails, resulting in about 460
participants providing input (Attachment 2). Approximately 65 percent of survey respondents were
Page 3 of 8
14-0280 Agenda Date:5/20/2014
Sunnyvale residents, 23 percent were business owners, and the remaining 12 percent choosing
either employee or “other”. About 78 percent of residents support an increase to $10.00 per hour
prior to the state’s increase in January 2016, and about 74 percent support linking the increase to the
CPI. Business owners’ responses were split nearly down the middle with 53 percent opposing an
increase to the minimum wage (47 percent in support) and 51 percent opposing linking future
increases to the CPI (49 percent in support).
The nonprofits unanimously support a minimum wage increase and support linking future increases
to the CPI (Attachment 5). Sunnyvale Community Services Board of Directors, an emergency
assistance provider, voted unanimously to support a minimum wage increase and tying future
increases to the CPI. The main reason for the support is due to the high cost of living in Sunnyvale.
These organizations are seeing more clients unable to pay for basic necessities such as housing and
food.
Points for Council Consideration
1.Typical Provisions of a Local Ordinance
The San Jose local minimum wage law adopts a local minimum wage which adjusts automatically
each year based on any increase to the CPI. It requires employers to pay its minimum wage for each
hour worked within the geographic boundaries of the City. It defines “Employer” as any person,
including corporate officers or executives, as defined in Section 18 of the California Labor Code, who
directly or indirectly through any other person, including through the services of a temporary
employment agency, staffing agency or similar entity, employs or exercises control over the wages,
hour or working conditions of any Employee and who is ether subject to the Business License Tax
Chapter of the Municipal Code or maintain a facility in the City.” The ordinance set the original
minimum wage at $10.00 per hour; under the adjustment formula, on January 1, 2014, San Jose
increased its minimum wage to $10.15 per hour.
Staff has met with business owners and groups, the Sunnyvale Chamber of Commerce, and
nonprofit organizations to discuss the study issue. A survey was also conducted to gather additional
input from the community at large. Based on the feedback from these groups, below are additional
provisions for Council consideration, including potential exemptions for specific working groups and
the intervals at which adjustments to the minimum are applied.
Increases to CPI or Inflation.
Some businesses are supportive of increasing the City’s minimum wage to $10.00 prior to
the state’s mandated $10.00 per hour on January 1, 2016. However, the majority of
businesses, including the Chamber of Commerce and California Restaurant Association, are
opposed to linking any future increases to the CPI. Business owners representing sectors
such as restaurants, hotels, small retail businesses, stated that they currently pay more than
the State’s minimum wage. However, most of the impacted businesses say that linking the
minimum wage to the CPI would change the minimum wage every year and would be costly
and inconvenient as they will not be able to accurately predict annual budgets.
Intervals at which adjustments to the minimum wage would be considered.
As an alternative to an annual increase that ties to CPI, the Sunnyvale Chamber of
Commerce is proposing that Council consider a fixed minimum wage with reviews every
Page 4 of 8
14-0280 Agenda Date:5/20/2014
three years and adjustments to a predictable and fixed amount (Attachment 3). The logic
behind the proposal is that if the CPI increases by two percent on year one, four percent on
year two, and three percent on year three, when Council reviews the minimum wage issue in
year three, the increase could be up to nine percent.
Potential exemptions for specified working groups or categories of people.
Directly-Tipped Employees: The California Restaurant Association strongly
opposes any minimum wage increase (Attachment 4) due to the industry’s low profit
margins and their assertion that tipped employees would profit the most from a
minimum wage increase. Restaurant owners repeatedly stated that minimum wage
should not apply to directly-tipped employees because they have higher
compensation when tips are taken into account, and because more base pay for
tipped workers would mean less funding would be available for non-tipped
employees. At the state level, California Labor Code 351 precludes crediting tips
against wages to meet a minimum wage requirement. San Jose’s ordinance
(Attachment 6) does not exclude any directly-tipped employees from the minimum
wage requirement.
Additional Exemptions Being Considered by Other Cities: Other cities, including
Berkeley and Richmond, are considering exempting businesses with less than a
certain number of employees, persons less than 18 years of age, and directly-tipped
employees.
2.Implementation and Enforcement
San Jose and San Francisco’s minimum wage ordinances were mandated by voter initiatives. San
Francisco voters approved their minimum wage ordinance in 2003. San Francisco’s program is
enforced by its Labor Standards Enforcement, which also enforces Healthy San Francisco (a
healthcare ordinance) and its Paid Sick Leave requirement. The San Jose Minimum Wage Initiative
was approved by voters in November 2012 and took effect March 2013. San Jose’s program
enforcement is managed by the city's Office of Equality Assurance, which also manages the city’s
Living Wage and Prevailing Wage programs. The City of San Jose has two full-time positions
assigned to enforcement of their program - a division manager and a contract compliance specialist.
The City of San Jose’s ordinance identifies two means of enforcement or remedy, including
administrative action by the city’s Office of Equality Assurance (OEA) and/or a private enforcement
action through the courts by the person aggrieved by the violation.
The San Jose minimum wage ordinance basically creates a minimum wage program. In order for the
City to implement an ordinance modeled after the one adopted in the City of San Jose, the following
activities would be required.
Implementation:
• Provide outreach and education to affected businesses and employees about their rights and
responsibilities, which would include creation and distribution of educational materials with
annual updates.
• Develop any guidelines required to implement the program.
• Answer questions about the ordinance.
Page 5 of 8
14-0280 Agenda Date:5/20/2014
Administrative Enforcement:
• Accept complaints.
• Investigate complaints made regarding compliance, which include interviewing employees,
requesting and reviewing documentation, and possible subpoenas.
• Negotiate informal resolutions of complaints.
• Issue administrative citations for noncompliance.
• Provide appeals with the hearing office for administrative citations.
• Collect and track administrative citations.
Unlike San Jose and San Francisco, Sunnyvale does not have infrastructure in place nor staff
expertise to manage a minimum wage program. Currently, persons employed within the City rely on
the State’s Department of Industrial Relations to enforce any wage issues between an employee and
their employer. Enforcement of a minimum wage ordinance program for the City is not currently
considered a core service. Development of such a program would take time and resources. Staff
estimates that up to six months and approximately 900 staff hours may be needed to fully develop an
implementation and enforcement program based on adoption of a minimum wage ordinance. The
amount of hours may increase or decrease depending on any exemptions and the intervals on which
increases are made.
It may be possible to contract out enforcement actions with another local agency that already has
resources dedicated to enforce such an ordinance. Should Council choose to explore this option,
staff would return with language presenting enforcement options for Council consideration.
Additionally, Council could consider an ordinance that adopted a local minimum wage that did not
include administrative enforcement provisions and provided only a private enforcement mechanism.
Under that scenario, an aggrieved person would file an enforcement action directly with the courts
rather than through a complaint with the City.
FISCAL IMPACT
There is no immediate fiscal impact to Council’s adopting an advocacy position or providing direction
on the specific provisions it would want in a local ordinance. At a minimum, to implement a City
minimum wage ordinance with City enforcement may require approximately 900 hours of staff time to
conduct outreach and update employee/employer notifications and guidelines; the estimated cost for
promotional and outreach materials would be approximately $10,000 per year. Specific costs for the
various provisions of a potential ordinance as presented in this report could vary and would be
presented to Council in a follow-up report.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board
outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public
Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of
the City Clerk and on the City's website. Staff also notified interested parties and those that submitted
comments and/or attended the outreach meetings.
As previously mentioned, staff conducted a community survey regarding the issue; survey results are
presented as Attachment 2. Additional letters received on this matter are presented as Attachments
3, 4, and 5
Page 6 of 8
14-0280 Agenda Date:5/20/2014
ALTERNATIVES
1. Advocacy Position:
a. Adopt a new long-term advocacy position as presented:Supporting the quality of life in
Sunnyvale, the City would support legislation to increase the current minimum wage or
tie future increases to Consumer Price Index (CPI) or the rate of inflation.
b. Adopt a modified long-term advocacy position.
c. Do not adopt a City advocacy position on this subject.
2. Direct staff to Create a Minimum Wage Ordinance:
a. Automatic Future Increases.
i. Annual increases tied to CPI.
Ii Increases every three years tied to CPI.
iii. Other interval as directed by Council.
iv. Do not tie future increases of the minimum wage to CPI.
b. Potential exemptions for specified working groups or categories of people.
i. Exempt directly-tipped employees.
ii.Exempt businesses with less than a certain number of employees, as
specified by Council.
iii. Exempt persons within age ranges as specified by Council.
iv. Exempt public agencies and/or nonprofits.
v. Other exemptions as directed by Council.
vi. Do not provide any exemptions.
c. Enforcement options:
i. Direct staff to explore options for in-house City enforcement of the
ordinance and return to Council with their findings.
ii. Direct staff to explore options for contract enforcement of the ordinance and
return to Council with findings.
iii. Other action as directed by Council.
iv. Introduce an Ordinance with no City enforcement and only a Private Right
of Action.
3. Do not move forward with a minimum wage ordinance.
4. Other action as directed by Council.
RECOMMENDATION
Staff makes no recommendation on Alternatives 1 (City advocacy position) or 2 (whether or not City
should adopt a minimum wage ordinance). However, should Council pursue an ordinance, staff
recommends that Council provide guidance addressing each of the Alternative categories -
Automatic Future Increases,Potential Exemptions, and Enforcement Options. More specifically with
regard to Enforcement Options, should Council pursue an ordinance with City enforcement, staff
recommends Council move both Alternatives 2c(i) and 2c(ii) to ensure staff returns with a
comprehensive list of options.
The costs and effort required for either of those options could vary significantly. An in-house program,
for example, would require development from the ground up as currently the City has no supportive
infrastructure in place. The cost of a contracted enforcement service might be less; however there
may be additional inconveniences to the aggrieved parties in traveling to another city to file a
complaint. Exploring both options would benefit Council by resulting in a more comprehensive list of
options.
Page 7 of 8
14-0280 Agenda Date:5/20/2014
Prepared by: Connie Verceles, Economic Development Manager
Approved by: Robert A. Walker, Interim City Manager
ATTACHMENTS
1. Study Issue OCM-14-01
2. Minimum Wage Increase Survey Results
3. Sunnyvale Chamber of Commerce Letter
4. California Restaurant Association Letter
5. Silicon Valley Council of Nonprofits Letter
6. City of San Jose Minimum Wage Ordinance
Page 8 of 8
City of Sunnyvale
Agenda Item
14-0694 Agenda Date:10/14/2014
REPORT TO COUNCIL
SUBJECT
Introduce an Ordinance to Add Chapter 3.70 (Minimum Wage) to Title 3 of the Sunnyvale Municipal
Code to Require the Payment of a Citywide Minimum Wage; Find that the proposed ordinance is
exempt from the California Environmental Quality Act (CEQA) under CEQA Guideline Section 15061
(b)(3); and Approve Budget Modification No.16.
BACKGROUND
Currently, most Sunnyvale employers are governed by the State’s minimum wage requirement,
which is $9.00 per hour and is set to increase to $10.00 per hour on January 1, 2016. In San Jose,
the current minimum wage is $10.15 per hour and may increase on January 1, 2015, based on this
year’s increase in the Consumer Price Index (CPI).
At the May 20, 2014 City Council meeting, Council took three actions related to Study Issue OCM 14-
01:
1. Adopted a long-term advocacy position supporting legislation to increase minimum wage and
tie future increases to the CPI.
2. Directed staff to return to Council with a minimum wage ordinance (modeled after the City of
San Jose’s Minimum Wage Ordinance) with no exemptions for specific groups of employees
and with annual increases tied to CPI.
3. Directed staff to explore options for contract and in-house enforcement of the ordinance and to
return to Council with findings.
Staff has continued to monitor state legislation regarding minimum wage increases and submitted a
support letter for SB 935 (De Leon), which proposes to increase the minimum wage over a three
year period, and then provide for annual automatic adjustments based on the CPI. SB 935 did not
garner enough votes to pass the Assembly Labor and Employment Committee, and will not be heard
again this year.
Similar to the San Jose ordinance, the City of Sunnyvale’s proposed ordinance (Attachment 1)
adopts a local minimum wage which adjusts automatically each year based on any increase in the
CPI. The ordinance requires Sunnyvale employers to pay a minimum wage of $10.30 per hour
starting January 1, 2015, for each hour worked within the geographic boundaries of the City of
Sunnyvale. It defines “Employer” as any person, including corporate officers or executives, as
defined in Section 18 of the California Labor Code, who directly or indirectly through any other
person, including through the services of a temporary employment agency, staffing agency or similar
entity, employs or exercises control over the wages, hours or working conditions of any employee.
In accordance with Council direction provided to staff on May 20, 2014, the proposed ordinance
creates a minimum wage program for the City of Sunnyvale. In order for the City to implement and
Page 1 of 6
14-0694 Agenda Date:10/14/2014
administer the proposed ordinance the following is required:
··Adoption of the ordinance by City Council
··Outreach and education for employers and employees
··Informational materials regarding new ordinance
··Clear and concise program guidelines
··Investigation of complaints
··Complaint resolution
EXISTING POLICY
Council Policy 7.3.1 Legislative Management - Goals and Policies:
Policy 7.3B.3 Prepare and update ordinances to reflect current community issues and
concerns in compliance with state and federal laws.
Council 5.0 Long-term Advocacy Positions - Socio-Economic:
Policy 5.2.3 Supporting the quality of life in Sunnyvale, the City would support legislation to
increase the current minimum wage or tie future increases to Consumer Price Index (CPI) or
inflation.
ENVIRONMENTAL REVIEW
Adoption of the proposed ordinance is exempt from the requirements of CEQA in that it is not a
project which has the potential for causing a significant effect on the environment. (CEQA Guidelines
Section 15061(b)(3).)
DISCUSSION
Proposed Ordinance
The proposed ordinance creates Chapter 3.70 (Minimum Wage) of Title 3 of the Sunnyvale Municipal
Code and requires employers, including the City, to pay a citywide minimum wage to all employees
employed within the boundaries of the City of Sunnyvale. The provisions of the proposed ordinance
include, but are not limited to:
··A minimum of $10.30 per hour be paid by employers beginning January 1, 2015
··An adjustment to the minimum wage, every year on January 1, based on the prior year’s CPI
··Employers' adherence to the higher minimum wage in the City of Sunnyvale even though the
minimum wage rate is higher than the state and federal requirements
While the text of the proposed ordinance is very similar to the one adopted by the City of San Jose,
Sunnyvale’s ordinance also incorporates state provisions which are contained in San Jose’s
administrative regulations rather than the ordinance. For instance, state law allows offsets for meals
and housing costs if there is a prior voluntary agreement between employee and employer; San Jose
also allows the offset, but it is contained in the administrative regulations rather than the ordinance.
For convenience to both employers and employees, Sunnyvale proposes to include substantive
requirements in the ordinance itself, rather than in administrative regulations.
Implementation and Enforcement Options
As per Council direction, staff explored options for in-house and contract enforcement of the
proposed ordinance. The enforcement model of the proposed ordinance is complaint-driven. There
are two major phases needed for the implementation and enforcement of a minimum wage
ordinance:
Page 2 of 6
14-0694 Agenda Date:10/14/2014
1.Outreach & Education-actions include, but are not limited to:
a.Developing administrative guidelines for program implementation
b.Distributing materials regarding the ordinance to employers and employees
c.Creating a set of FAQs to respond to inquiries
d.Partnering with business associations to distribute information to employers and
employees
e.Staff training
f. Translating documents into different languages as prescribed in ordinance
g.Updating information on annual basis
2.Administration & Enforcement-actions include, but are not limited to:
a.Informal resolution
i. Conducting investigations
ii. Informal resolution of complaints
iii. Receiving and distributing restitution checks for affected employees
b.Administrative Citation
i. Issuing administrative citations for non-compliance
ii. Implementing a process for due process hearings, including defending
court appeals
iii. Pursuing civil action or other remedies if an employer does not respond to
administrative citations
iv. Receiving and distributing restitution checks for affected employees
Staff explored the pros and cons of both options for the two phases needed to implement the
ordinance. Below is a table outlining staff’s findings:
In-House Enforcement Pros Cons
Outreach & Education Familiarity with constituents New program - lack of
staff expertise
Businesses familiar with staff No enforcement
infrastructure in place
Aware of City’s outreach
requirements
Administration &
Enforcement
Higher cost due to lack of
staff expertise
Small number of
anticipated complaints
does not justify ongoing
staffing costs
No infrastructure in place
to manage program
Need to create program
from scratch
Contract Enforcement Pros Cons
Outreach & Education Familiarity with ordinance Not familiar with
constituents
Businesses unfamiliar
with staff
Not familiar with City of
Sunnyvale’s outreach
requirements
Administration &
Enforcement
Lower cost due to staff
expertise and by leveraging
existing staff resources already
dedicated to this effort in San
Jose
Not familiar with
constituents
Fully developed program in
place
Employees having to go
through another city for
enforcement
Staff familiar with Ordinance
Page 3 of 6
14-0694 Agenda Date:10/14/2014
Contract Enforcement Pros Cons
Outreach & Education Familiarity with ordinance Not familiar with
constituents
Businesses unfamiliar
with staff
Not familiar with City of
Sunnyvale’s outreach
requirements
Administration &
Enforcement
Lower cost due to staff
expertise and by leveraging
existing staff resources already
dedicated to this effort in San
Jose
Not familiar with
constituents
Fully developed program in
place
Employees having to go
through another city for
enforcement
Staff familiar with Ordinance
The City of Sunnyvale does not have infrastructure in place nor staff expertise to manage a minimum
wage program. Currently, persons employed within the City rely on the State’s Department of
Industrial Relations to enforce any wage issues between an employee and their employer.
Administration and enforcement of a minimum wage program for the City of Sunnyvale is not
currently considered a core service. At a minimum, to implement a City of Sunnyvale minimum wage
ordinance with City enforcement may require approximately 900 hours of staff time to conduct
enforcement, outreach and update employee/employer notifications and guidelines.
Staff has explored both options and plans initially to pursue a hybrid model. Under the hybrid model,
the City of Sunnyvale will complete the Outreach and Education phase in-house and contract with the
City of San Jose for the Administration & Enforcement- Informal Resolution part of phase two. The
City of Sunnyvale will coordinate with San Jose staff, but will have primary responsibility for the
Administration & Enforcement-Administrative Citation part of phase two. This operational strategy is
based on the fact that preliminary discussions with the City of San Jose suggest that contracting with
San Jose will be more cost-effective than providing these services in-house. It also recognizes
existing City resources: Sunnyvale is staffed to perform outreach and education functions, but lacks
the expertise and resources to execute day-to-day enforcement functions. Given this type of program
is new to the City of Sunnyvale and there is no existing City department that administers a similar
program, the hybrid model will allow Sunnyvale staff time to become familiar with the program and
determine whether other operational strategies should be pursued. The City already has provisions in
the Sunnyvale Municipal Code for the issuance of administrative citations and staff will coordinate
with the Office of the City Attorney to implement those administrative procedures when necessary.
FISCAL IMPACT
Based on preliminary discussions, the potential fiscal impact of entering into a contract with the City
of San Jose may be up to $30,000 per year. This amount could be lower or higher depending on the
number of cases needing to be resolved. The contract with the City of San Jose will only cover
administration and enforcement of typical cases; those needing to be moved to the administration
Page 4 of 6
14-0694 Agenda Date:10/14/2014
citation phase will return to Sunnyvale for staff issuance of citations and coordination with the Office
of the City Attorney. Costs for the outreach and education phase will be absorbed within the current
budget.
In addition to the costs of outreach and enforcement, adopting this ordinance also affects the City’s
operating costs. The City employs a variety of casual and seasonal staff, primarily in the Recreation
Division, who are paid at or below $10.30 per hour. The state minimum wage is already set to rise to
$10 per hour in 2016. Had the minimum wage of $10.30 been in place over the last fiscal year, it
would have affected approximately 50 employees at a total cost of approximately $25,000 for the
year. Therefore, bringing Sunnyvale staff up to a higher wage will not significantly affect the cost of
operations and can be absorbed in the current budget and adjusted for in future budgets. However,
on a long-term basis, this ordinance changes the nature of budgeting for these personnel as the
costs will subsequently be tied to CPI as opposed to directly under the City’s control.
Staff is recommending that the $30,000 per year for enforcement be funded from the General Fund
Budget Stabilization Fund. Should this cost remain stable, this will have a 20-year impact of
approximately $750,000.
Budget Modification No. 16 has been prepared to appropriate $30,000 from the Budget Stabilization
Fund to a new project to fund minimum wage enforcement activities.
Budget Modification No. 16
FY 2014/15
Current Increase/
(Decrease)
Revised
General Fund
Expenditures:
New Project - Minimum Wage
Ordinance Enforcement
$ 0 $30,000 $30,000
Reserves
Budget Stabilization Fund $38,371,772 ($30,000)$38,341,772
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board
outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public
Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of
the City Clerk and on the City's website.
Staff also sent postcards stating time and location of this evening's Council meeting to businesses
with valid business licenses. In addition, staff notified interested parties that attended outreach
meetings in the past regarding this issue and posted information regarding the ordinance on the
City’s Facebook and Twitter pages.
ALTERNATIVES
1. Introduce an ordinance, as presented in Attachment 1, to add Chapter 3.70 (Minimum Wage)
to Title 3 of the Sunnyvale Municipal Code to require the payment of a citywide minimum wage
Page 5 of 6
14-0694 Agenda Date:10/14/2014
2. Find that the proposed ordinance is exempt from CEQA under CEQA Guideline 15061(b)(3)
3. Approve Budget Modification No. 16
4. Introduce an ordinance with modifications
5. Do not create Chapter 3.70 at this time
RECOMMENDATION
Alternatives 1, 2 and 3: Introduce an ordinance, as presented in Attachment 1, to add Chapter 3.70
(Minimum Wage) to Title 3 of the Sunnyvale Municipal Code to require the payment of a citywide
minimum wage; Find that the proposed ordinance is exempt from CEQA under CEQA Guideline
15061(b)(3); and Approve Budget Modification No. 16 to fund the hybrid enforcement model.
Staff developed the ordinance in accordance with Council’s direction on May 20, 2014. Staff also
explored options for contract and in-house enforcement of a minimum wage program. Staff plans
initially to implement a hybrid enforcement model based on discussions with San Jose and the limited
resources currently available within the City of Sunnyvale. This ordinance creates a new minimum
wage program for the City of Sunnyvale and there is no existing City department to administer such a
program. The hybrid enforcement model will allow Sunnyvale staff time to become familiar with the
program and determine whether other operational strategies should be pursued.
Prepared by: Connie Verceles, Economic Development Manager
Reviewed by: Joan Borger, City Attorney
Reviewed by: Robert A. Walker, Assistant City Manager
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Sunnyvale Draft Ordinance
Page 6 of 6
Attachment 1
As of December 2014
Source: National Employment Law Project. Retrieved
from http://www.nelp.org/content/uploads/2015/03/City-Minimum-Wage-Laws-Recent-Trends-
Economic-Evidence.pdf
Bay Area Minimum Wage Ordinances
City Ordinance
Adopted
Current Hourly Minimum
Wage Rate
Notes
Berkeley 6/27/2014 $10.00
$11.00 on 10/1/2015
$12.53 on 10/1/2016
Passed by the City Council.
Campbell - $9.00 The City Council will hold a study
session on 5/19/2015 to
examine the issue of a minimum
wage ordinance.
Emeryville 5/5/2015 $9.00
$14.44 (for large businesses)
on 7/1/2015
$12.25 (for small businesses)
on 7/1/2015
$13.00 (for small businesses)
on 7/1/2016
$14.00 (for small businesses)
on 7/1/2017
$15.00 (for small businesses)
on 7/1/2018
$16.00 (for small businesses)
on 7/1/2019
Passed by the City Council. Small
business classification for those
with fewer than 55 employees.
Minimum wage rate for large
businesses will be tied to the
Consumer Price Index (CPI) and
increase each July 1 starting in
2016.
Morgan Hill - $9.00 The City Council has directed staff
to study the issue of a minimum
wage ordinance tied to the CPI.
Mountain View 10/9/2014 $9.00
$10.30 on 7/1/2015
$12.00 on 7/1/2016
$13.50 on 7/1/2017
$15.00 on 7/1/2018
Passed by the City Council. Tied
to the CPI after 2018.
Oakland 11/4/2014 $12.25 Voter-initiated ordinance
(Measure FF). Tied to the CPI, will
increase January 1 of each year.
City Ordinance
Adopted
Current Hourly Minimum
Wage Rate
Notes
Palo Alto - $9.00 The City Council Policy and
Services Committee endorsed the
following minimum wage rate
schedule on 4/28/2015: $11.00
on 1/1/2016, which would
gradually climb to $15.00 by 2018
through increments approved by
the City Council.
Richmond 5/6/2014 $9.60
$11.52 on 1/1/2016
$12.30 on 1/1/2017
$13.00 on 1/1/2018
Passed by the City Council.
Employers who pay less than 800
hours of employee wages over a
two-week period are exempt.
Employers who derive more than
50% of their income where the
point of sale is outside the city
must pay an intermediate wage
halfway between the city and
state minimum wage.
San Francisco 11/4/2003 $12.25
$13.00 on 7/1/2016
$14.00 on 7/1/2017
$15.00 on 7/1/2018
Voter-initiated ordinance
(Measure J). Tied to the CPI after
2018.
San Jose 3/11/2013 $10.30 Voter-initiated ordinance
(Measure D). No exceptions. Tied
to the CPI, will increase January 1
of each year.
Sunnyvale 10/14/2014 $10.30 Passed by the City Council. Based
on San Jose’s ordinance.
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Attachment 5
Survey Results
16.9%
9.4% 7.4% 6.9% 6.6% 4.0% 3.4%
45.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Pe
r
c
e
n
t
a
g
e
Type of Business
n = 350
69.6%
24.9%
5.5%
Respondent Title
Business Owner
Business Manager
Other (16 categories)
n = 342
Percentage of Minimum Wage Employees in Organization
Frequency Percent
Cumulative
Percent
0% - 10% 270 77.4 77.4
11% - 20% 10 2.9 80.2
21% - 30% 4 1.1 81.4
31% - 40% 9 2.6 84.0
41% - 50% 8 2.3 86.2
51% - 60% 6 1.7 88.0
71% - 80% 4 1.1 89.1
81% - 90% 1 0.3 89.4
91% - 100% 37 10.6 100.0
Total 349
38.9%
24.4%
14.5%
11.6%
3.1% 3.4%
0.6%
3.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0 - 5 6 - 10 11 - 15 16 - 30 31 - 45 46 - 75 76 - 90 91+
Pe
r
c
e
n
t
a
g
e
Number of Employees
Number of Employees in Organization
n = 352
What percentage of total positions would be eliminated (and not replaced)?
Frequency Percent
Cumulative
Percent
0% - 10% 227 84.4 84.4
11% - 20% 26 9.7 94.1
21% - 30% 8 3.0 97.0
31% - 40% 4 1.5 98.5
41% - 50% 1 0.4 98.9
51% - 60% 1 0.4 99.3
61% - 70% 1 0.4 99.6
71% - 80% 1 0.4 100.0
Total 269
10.1% 7.1%
2.5%
60.1%
14.7%
1.8% 3.7%
0%
10%
20%
30%
40%
50%
60%
70%
Definitely Yes Probably Yes Maybe Yes Definitely No Probably No Maybe No Unsure
Pe
r
c
e
n
t
a
g
e
Would your business eliminate (and not replace) any positions to
compensate for increased labor costs?
n = 326
7.6% 6.3% 5.7%
47.0%
19.7%
1.3%
12.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Definitely Yes Probably Yes Maybe Yes Definitely No Probably No Maybe No Unsure
Pe
r
c
e
n
t
a
g
e
Would your organization also increase the hourly wages of any higher-paying
positions, such as those who supervise minimum wage employees?
n = 315
7.9% 8.8%
2.5%
59.1%
15.4%
1.9% 4.4%
0%
10%
20%
30%
40%
50%
60%
70%
Definitely Yes Probably Yes Maybe Yes Definitely No Probably No Maybe No Unsure
Pe
r
c
e
n
t
a
g
e
Would your business reduce employee work hours?
n = 318
What percentage of employees would have their work hours reduced?
Frequency Percent Cumulative Percent
0% - 10% 214 80.5 80.5
11% - 20% 10 3.8 84.2
21% - 30% 11 4.1 88.3
31% - 40% 8 3.0 91.4
41% - 50% 9 3.4 94.7
51% - 60% 3 1.1 95.9
71% - 80% 2 0.8 96.6
81% - 90% 1 0.4 97.0
91% - 100% 8 3.0 100.0
Total 266
15.7%
11.4%
5.9%
46.0%
15.1%
0.9%
4.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Definitely Yes Probably Yes Maybe Yes Definitely No Probably No Maybe No Unsure
Pe
r
c
e
n
t
a
g
e
Would your business increase its prices to customers?
n = 324
What percentage would your business' prices to customers increase?
Frequency Percent
Cumulative
Percent
0% - 10% 194 78.5 78.5
11% - 20% 26 10.5 89.1
21% - 30% 10 4.0 93.1
31% - 40% 7 2.8 96.0
41% - 50% 2 0.8 96.8
51% - 60% 1 0.4 97.2
71% - 80% 1 0.4 97.6
91% - 100% 6 2.4 100.0
Total 247
1.8% 1.5%
28.2%
13.4% 12.2%
42.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Pe
r
c
e
n
t
a
g
e
If there was a possibility to expand your organization, would a
minimum wage increase affect this expansion?
n = 329
What percentage of your organization's total expenditures would a $1.30 increase in the
minimum wage be?
Frequency Percent
Cumulative
Percent
0% - 10% 249 80.3 80.3
11% - 20% 28 9.0 89.4
21% - 30% 8 2.6 91.9
31% - 40% 9 2.9 94.8
41% - 50% 4 1.3 96.1
51% - 60% 6 1.9 98.1
61% - 70% 2 0.6 98.7
71% - 80% 1 0.3 99.0
81% - 90% 2 0.6 99.7
91% - 100% 1 0.3 100.0
Total 310
5.5% 4.3%
34.9%
49.5%
5.8%
0%
10%
20%
30%
40%
50%
60%
Highly Likely Likely Unlikely Highly Unlikely Not Sure
Pe
r
c
e
n
t
a
g
e
How likely would a minimum wage increase to $10.30 per hour be to cause
your organization to move to another city with a lower minimum wage?
n = 327
*Question allowed for multiple responses per respondent, thus total figures sum to greater than 100%.
2.8%
7.5%
54.6%
4.7% 6.2%
24.2%
0%
10%
20%
30%
40%
50%
60%
Yes,
Significantly
More Qualified
Applicants
Yes, Slightly
More Qualified
Applicants
No, Equally
Qualified
Applicants
No, Slightly
Less Qualified
Applicants
No,
Significantly
Less Qualified
Applicants
Unsure
Pe
r
c
e
n
t
a
g
e
Would increased wages for your lowest-paid employees result in higher
qualified applicants for these positions?
n = 322
6.8%
17.8%
8.9%
18.4%
60.2%
0%
10%
20%
30%
40%
50%
60%
70%
Increased
Productivity
Increased
Morale
Reduced
Turnover
Would Not
Result in Any
Unsure
Pe
r
c
e
n
t
a
g
e
*
Would increased wages for your lowest-paid employees result in
increased productivity, increased morale, or reduced turnover?
n = 337
75.5%
24.5%
Would you support a minimum wage increase if it led to increases in
employee productivity, employee retention, employee morale, and the level
of qualifications of applicants, to offset all or part of increased labor costs?
Yes
No
n = 322
37.3%
62.7%
Would you support a minimum wage increase if it did not lead to increases in
employee productivity, employee retention, employee morale, and the level of
qualifications of applicants, to offset all or part of increased labor costs?
Yes
No
n = 322
Attachment 6
References
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prices, and labor market structure. Journal of Human Resources, 43(3), 688-720.
Retrieved from http://davideharrington.com/wp-content/uploads/2014/01/R9-Min-
Wage-Restaurant-Prices-and-Labor-MS.pdf.
Acs, G., Wheaton, L., Enchautegui, M., & Nichols, A. (2014). Understanding the
implications of raising the minimum wage in the District of Columbia. Retrieved
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of-Raising-the-Minimum-Wage-in-the-District-of-
Columbia.pdf?RSSFeed=UI_Employment.xml
Addison, J. T., Blackburn, M. L., & Cotti, C. D. (2009). Do minimum wages raise
employment? Evidence from the U.S. retail-trade sector. Labour Economics, 16(4),
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Allegretto, S. A., Dube, A., & Reich, M. (2011). Do minimum wages really reduce teen
employment? Accounting for heterogeneity and selectivity in state panel data.
Industrial Relations: A Journal of Economy and Society, 50(2), 205-240.
Allegretto, S. & Reich M. (2014). Minimum wage effects on prices: Preliminary results.
Paper presented at the Portland meeting of the Labor and Employment Research
Association.
Benner, C., & Jayaraman, S. (2012). A dime a say: The Impact of the Miller/Harkin
minimum wage proposal on the price of food. University of California Berkeley Food
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Boushey, H. & Glynn, S. J. (2012). There are significant business costs to replacing
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from https://www.americanprogress.org/wp-
content/uploads/2012/11/CostofTurnover.pdf.
Coomer, N. M., & Wessels, W. J. (2013). The effect of the minimum wage on covered
teenage employment. Journal of Labor Research, 34(3), 253-280.
Doucouliagos, H., & Stanley, T. D. (2009). Publication selection bias in minimum-wage
research? A meta-regression analysis. British Journal of Industrial Relations, 47(2),
406-428.
Dube, A., Lester, T. W., & Reich, M. (2010). Minimum wage effects across state
borders: Estimates using contiguous counties. The Review of Economics and
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Dube, A., Lester, T. W., & Reich, M. (2013). Minimum wage shocks, employment flows
and labor market frictions. Working Paper No. 149-13. Institute for Research on
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Dube, A., Naidu, S., & Reich, M. (2007). The economic effects of a citywide minimum
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te=ehost-live
Elmendorf, D. W. (2014). The effects of a minimum-wage increase on employment and
family income. Retrieved from https://www.cbo.gov/sites/default/files/44995-
MinimumWage.pdf
Giuliano, L. (2013). Minimum wage effects on employment, substitution, and the
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31(1), 155-194.
Hirsch, B. T., Kaufman, B. E., & Zelenska, T. (2011). Minimum wage channels of
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34). Retrieved
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Lee, C., Schluter, G., & O’Roark, B. (2000). Minimum wage and food prices: an analysis
of price pass-through effects. The International Food and Agribusiness
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from http://core.ac.uk/download/pdf/6553466.pdf.
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year-old-success-story
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Santa Fe, New Mexico. Retrieved
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Reich, M. (2012). Increasing the minimum wage in San Jose: Benefits and costs.
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the-Minimum-Wage-Have-No-Discernible-Effect-on-Employment.pdf.
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laws in three cities. Center for Economic and Policy Research. Retrieved
from http://new.reimaginerpe.org/files/min-wage-2011-03.pdf.
Wolfson, P. J., & Belman, D. (2014). What does the minimum wage do?. W.E. Upjohn
Institute for Employment Research: Kalamazoo, MI.
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doi: http://dx.doi.org.libaccess.sjlibrary.org/10.1016/S0927-5371(00)00021-X
5/19/2015 – Addendum to Staff Memo
Question 13: Would you support a minimum wage increase if it led to increases in employee productivity, employee
retention, employee morale, and the level of qualifications of applicants, to offset all or part of increased labor costs?
- All respondents: 75.5% Yes ; 24.5% No
Question 14: Would you support a minimum wage increase if it did not lead to increases in employee productivity,
employee retention, employee morale, and the level of qualifications of applicants, to offset all or part of increased
labor costs?
- All respondents: 37.3% Yes ; 62.7% No
Scenario 1: Remove all respondents with 0% - 10% of employees in their organization earning the minimum wage.
Question 13: Yes – 58.5%
No – 41.4%
Question 14: Yes – 22.9%
No – 77.1%
Scenario 2: Remove all respondents with 0% - 50% of employees in their organization earning the minimum wage.
Question 13: Yes – 54.8%
No – 45.2%
Question 14: Yes – 28.6%
No – 71.4%
Scenario 3: Remove all respondents with 0% - 90% of employees in their organization earning the minimum wage.
Question 13: Yes – 68.8%
No – 31.3%
Question 14: Yes – 34.4%
No – 65.6%
News Release
For Immediate Release Contacts
July 27, 2015 Kimberly S. Thomas, Assistant to the City Manager,
City of Mountain View, (650) 903‐6301;
kimberly.thomas@mountainview.gov
Connie Verceles, Economic Development Manager,
City of Sunnyvale, (408) 730-7256
CVerceles@sunnyvale.ca.gov
Community Feedback Wanted for
Regional Minimum Wage
FOR IMMEDIATE RELEASE
(Mountain View, Calif.) — The cities of Mountain View and Sunnyvale invite all
community members to attend one of two public meetings about a regional increase to
the minimum wage rate. The current minimum wage is $10.30 per hour in both
Mountain View and Sunnyvale. By the end of this year, both city councils will receive
a minimum wage update and may consider proposed ordinances to increase the
minimum wage to $15 per hour by 2018.
Mountain View Community Meeting Sunnyvale Community Meeting
When: Wednesday, September 2,
2015, from 6:30 - 8:00 p.m.
When: Thursday, September 3, 2015,
from 2:00 — 3:30 p.m.
Where: Mountain View Senior Center
266 Escuela Ave. - Social Hall
Mountain View
Where: City of Sunnyvale
Council Chambers
456 W. Olive Ave., Sunnyvale
[More]
Community Meetings on Regional Minimum Wage – page _
The following schedule is a potential approach to reaching $15.00 by 2018.
Neither Council has voted on the approach as of the time of this release.
In addition to the two meetings, members of the community may express feedback to
the Mountain View and Sunnyvale City Councils in the following ways:
Mountain View Community Feedback: Sunnyvale Community Feedback:
Online
Feedback:
Mountain View Open City
Hall forum – available on
September 1, 2015 at
www.mountainview.gov/open-
city-hall
Online
Feedback:
City of Sunnyvale Open City
Hall forum – available on
September 1, 2015 at
Sunnyvale.ca.gov or
MinimumWage.inSunnyvale.com
E-mail/
Call:
citycouncil@mountainview.gov
(650) 903-6301
E-mail/
Call:
MinimumWage@Sunnyvale.ca.gov
or (408) 730-7902
Council
Meeting:
Attend the City Council
meeting on October 27, 2015, to
address the City Council
(expected meeting date as of
the time of this announcement).
Council
Meeting:
Council date is to be
determined. Visit
TCMAC.inSunnyvale.com to view
upcoming Council items
More
Info:
MountainView.gov/minwage
City Manager's Office
500 Castro St., PO Box 7540
Mountain View, CA 94039
(650) 903-6301
MinWage@mountainview.gov
More
Info:
MinimumWage.inSunnyvale.com
City of Sunnyvale
456 W. Olive Ave.
Sunnyvale, CA 94086
(408) 730-7902
MinimumWage@Sunnyvale.ca.gov
# # #
Proposed Effective Date Proposed Minimum Wage Rate
Current $10.30
7/1/2016 $12.00
7/1/2017 $13.50
7/1/2018 $15.00
July 1st Each Following Year CPI Increase
For
Immediate
Release
June
16,
2016
Media
Contacts:
Cities
Association
of
Santa
Clara
County:
Raania
Mohsen,
(408)
766-‐9534
or
executive_director@citiesassociation.org
Office
of
Mayor
Liccardo:
David
Low,
408-‐535-‐4840
or
david.low@sanjoseca.gov
Silicon
Valley
Rising:
Elly
Matsumura
(510-‐301-‐1045
or
elly@wpusa.org)
or
Dianna
Zamora
Marroquin
(408-‐518-‐1034
or
dianna@southbaylabor.org)
South
Bay
Leaders
Come
Together
on
Regional
Minimum
Wage
Proposal
Regional
recommendation
aims
to
raise
minimum
wage
to
$15
by
2019
in
Santa
Clara
County
cities
Sunnyvale,
Calif.
–
The
Cities
Association
of
Santa
Clara
County
and
a
coalition
of
Santa
Clara
County
Mayors
have
announced
their
support
of
a
regional
minimum
wage
proposal,
providing
a
common
path
for
cities
throughout
Silicon
Valley
to
help
ensure
that
more
residents
benefit
from
the
region’s
growing
economic
prosperity.
The
two
groups
endorsed
raising
the
minimum
wage
to
$15
per
hour
by
2019,
with
increases
taking
place
in
three
steps
starting
in
January
2017.
As
a
result,
the
regional
minimum
wage
would
reach
$15
three
years
sooner
than
the
new
$15
statewide
minimum
wage
will
take
effect.
Mountain
View,
Palo
Alto
and
Sunnyvale
have
already
adopted
ordinances
that
will
bring
their
minimum
wage
to
$15
faster
than
the
state.
The
groups
also
endorsed
tying
future
increases
to
inflation
and
including
“off-‐ramp”
provisions
that
would
allow
for
scheduled
increases
to
be
delayed
under
certain
economic
conditions
–
two
elements
that
also
align
with
the
statewide
minimum
wage
legislation
signed
by
Governor
Brown
in
April.
“The
Cities
Association
acknowledges
the
severity
of
income
inequality
throughout
the
nation,”
noted
Cities
Association
President/Sunnyvale
Councilmember
Jim
Griffith.
“The
fact
is
minimum
wage
has
not
kept
pace
with
Silicon
Valley's
economic
success
for
decades
and
thus
it
is
an
issue
of
regional
concern.
The
Cities
Association
encourages
cities
to
take
a
regional
approach
to
protect
our
most
vulnerable
residents
and
to
work
in
concert
towards
a
uniform
solution
that
will
best
benefit
Silicon
Valley's
employees
and
employers.”
This
regional
effort
was
launched
last
fall
when
San
Jose
Mayor
Sam
Liccardo
brought
together
a
group
of
mayors
from
Santa
Clara
County
cities
and
began
engaging
with
the
Cities
Association
to
jointly
explore
a
potential
minimum
wage
increase.
“I’d
like
to
thank
my
colleagues
throughout
Santa
Clara
County
who
have
come
together
in
support
of
a
unified
proposal
that
will
help
the
growing
number
of
families
in
our
community
who
are
struggling
to
make
ends
meet,”
said
Mayor
Liccardo.
“By
taking
a
regional
approach,
we
will
ensure
that
all
of
our
residents,
businesses
and
cities
are
helping
address
the
widening
gap
between
rich
and
poor
here
in
Silicon
Valley.”
Working
in
collaboration
with
the
Cities
Association,
the
coalition
of
mayors
and
other
community
stakeholders,
the
City
of
San
Jose
commissioned
an
economic
analysis
to
study
the
potential
impacts
of
raising
the
minimum
wage
in
the
region.
Among
the
findings,
the
study
found
that
raising
the
minimum
wage
to
$15
by
2019
would
increase
annual
earnings
for
250,000
workers
in
the
county
(approximately
25%
of
the
total
workforce)
by
an
average
of
19.4%,
or
$3,200.
View
the
full
economic
analysis
report
and
accompanying
employer
survey.
“Silicon
Valley
Rising
applauds
this
bold
leadership
by
our
allies
in
elected
office,”
said
Ben
Field,
Executive
Director
of
the
South
Bay
AFL-‐CIO
Labor
Council
and
co-‐founder
of
Silicon
Valley
Rising,
a
campaign
to
build
an
inclusive
middle
class
in
the
region
that
has
made
improved
wages
and
job
standards
its
top
goal.
“Sunnyvale
and
Mountain
View
broke
ground
by
passing
$15
minimum
wages,
and
now
our
movement
has
grown
to
unprecedented
levels.
This
kind
of
regional
action
by
over
a
dozen
cities
is
a
first
in
our
nation’s
history.”
The
coalition
of
Santa
Clara
County
mayors
and
the
Cities
Association
Board
Members
agreed
to
bring
the
regional
minimum
wage
proposal
to
their
respective
City
Councils
for
consideration
this
fall.
Additional
Quotes
from
local
mayors
and
city
councilmembers
involved
in
the
regional
minimum
wage
increase
effort:
Rod
Sinks,
Cupertino
City
Council
and
Cities
Association
Minimum
Wage
Subcommittee
Member
“Though
the
recommendation
is
not
binding
for
cities,
the
Cities
Association
strongly
encourages
cities
to
consider
it
as
a
regional
effort
to
increase
the
earnings
of
our
low-‐wage
constituents,
ease
the
cost
of
living
in
Silicon
Valley,
and
promote
economic
growth.”
Greg
Scharff,
Palo
Alto
Vice
Mayor
and
Cities
Association
Minimum
Wage
Subcommittee
Member
“I
am
very
pleased
that
we
have
come
together
to
promote
a
regional
solution
which
will
promote
economic
growth
and
equity
as
well
as
begin
the
process
of
addressing
income
inequality
and
the
high
cost
of
living
in
Silicon
Valley.”
Jason
Baker,
Mayor
of
Campbell
“A
regional
minimum
wage
is
a
groundbreaking
effort
to
make
the
high
cost
of
living
in
Silicon
Valley
a
little
less
burdensome
to
working
families
and
all
those
in
our
prosperous
valley
who
are
struggling
to
get
by.
I
applaud
this
effort
of
the
Cities
to
address
regional
problems
with
regional
solutions.”
Lionel
(Lon)
Allan,
Mayor
of
Monte
Sereno
“A
regional
approach
to
raising
the
minimum
wage
is
essential
to
providing
equity
when
it
comes
to
business
growth
throughout
Santa
Clara
County.
Different
rules
for
different
cities
create
an
uneven
playing
field
that
can
be
damaging
to
local
economics.
We’re
taking
steps
towards
ensuring
all
residents
feel
a
positive
impact
from
any
minimum
wage
increase.”
Derecka
Mehrens,
Executive
Director
of
Working
Partnerships
USA
and
co-‐founder
of
Silicon
Valley
Rising
“To
lift
themselves
out
of
poverty,
working
families
need
higher
wages
and
access
to
more
hours.
The
move
to
raise
the
wage
to
$15
by
’19
is
a
critical
step
as
Silicon
Valley
Rising
campaigns
to
develop
regional
standards
for
wages,
hours
and
benefits
that
will
create
the
good
jobs
our
communities
need.”
#
#
#
Minimum Wage
Regional Recommendation
June 9, 2016
Minimum Wage Subcommittee
Greg Scharff
Rod Sinks
1
2
•Cities Association priority in 2015 & 2016
•June 2015 Cities Association position:
•Regional consistency is paramount
•No specific wage or timeline, but watch Mountain
View and Sunnyvale
•Restaurant wait staff exemption –
recommend against
•Non-profit exemption –no recommendation
•Youth exemption –no recommendation
History
3
•Sept 2015: Mayors of Campbell, Cupertino, Milpitas,
Morgan Hill, Monte Sereno, San Jose and Santa Clara
call for a study;
Cities Association signed on to San Jose’s effort;
Ben Brownstein, Matt Mahood, Rod Sinks appointed as
Advisory Team to San Jose Economic Development Staff
•Oct 2015: Study RFP posted
•Dec 2015: IRLE/CWED selected to conduct study
•Jan 2016: BW Research selected for employer survey
•April 2016: Results presented to Cities Association Board
•June 2016: Call for regional recommendation
History continued
The Effects of a $15 Minimum Wage
by 2019 in Santa Clara County
by Michael Reich, Claire Montialoux,
Annette Bernhardt, Sylvia Allegretto,
Sarah Thomason, and Ken Jacobs
With the assistance of Saika Belal and Ian Perry
Summary of Key Findings
April 2016
4
Increase in
payroll
costs
5
The net effect on jobs reflects the balance among factors impacting
workers and employers
Source: UC Berkeley IRLE Minimum Wage Research Group.
6
•Increase earnings for 250,000 workers
•Raise average annual earnings of affected
workers by 19.4 percent, or $3,200 (in
2014 dollars)
•Increase average prices in Santa Clara
County by 0.2 percent over three years
•Have a net effect on employment that is
slightly negative at the county level (1,450
jobs) and close to zero at a 10 county
regional level
Key Findings for Santa Clara County
Conclusions
•Higher wage costs would be absorbed through
improved productivity, reduced worker turnover,
and modest price increases.
•Net effects on employment would be very slightly
negative at the city and county levels and close to
zero at the regional level.
•The resulting improvement in living standards
would outweigh the small effects on employment.
7
Santa Clara County Minimum
Wage Employer Survey
A Study Conducted by BW Research Partnership
In Collaboration with City of San Jose and Institute
for Research on Labor and Employment (IRLE)
April 2016
The majority of surveyed employers report that they will likely have to
increase prices for customers, but that their employees will be more
satisfied and productive given a minimum wage increase.
40.9%
42.1%
22.0%
21.2%
17.8%
18.0%
12.5%
8.3%
24.7%
20.7%
23.2%
20.7%
22.2%
21.2%
14.1%
12.7%
22.0%
20.7%
34.9%
43.4%
46.7%
45.0%
57.5%
58.5%
6.8%
9.7%
11.4%
7.9%
7.9%
9.5%
8.5%
10.4%
You will need to increase prices to your customers to pay for the…
Your employees at the minimum wage will be more satisfied and…
Your costs of employee turnover will decrease because employees…
You will invest in technologies that reduces the need for workers…
You will reduce the total number of workers that you employ
You will reduce the hours for your minimum wage employees
You will move the business to a community that has a lower…
You will have to close the business
Very likely
Somewhat likely
Not at all likely
2016 2017 2018 2019
Existing
San Jose $10.53**$10.76**$11.00**
Palo Alto & Santa
Clara City $11.25**$11.50**$11.75**
Mountain View &
Sunnyvale $11.00 $13.00 $15.00 $15.37**
Rest of Santa Clara
County (State
schedule)
$10.50*$11.00*$12.00*
Subcommittee Recommendation 1/1/2017 1/1/2018 1/1/2019
Santa Clara County $12.00 $13.50 $15.00
Local Minimum Wage
* Businesses of 25 or more employees; delayed one year for less than 25 employees
** Where minimum wages are scheduled to increase according to CPI, we estimate the increase using the average annual CPI increase over the past
10 years. Mountain View’s minimum wage is indexed to the San Francisco CMSA CPI-W. All other cities are indexed to the U.S. All Cities CPI-W.
10
Schedule of California minimum wage increases
State schedule
Business with more
than 25 employees
Businesses with 25 or
fewer employees
2017 $10.50 $10.00
2018 $11.00 $10.50
2019 $12.00 $11.00
2020 $13.00 $12.00
2021 $14.00 $13.00
2022 $15.00 $14.00
2023 $15.00 $15.00
11
The new statewide law, SB-3 (Leno), increases minimum wages
to $15 an hour by 2022 for large businesses and 2023 for small
businesses. Starting in 2024, the minimum wage will be indexed
to the cost of living.
New California
Minimum
Wage
Subcommittee
Recommendation
$12.00
$13.50
$15.00
$15.33*
$15.68*
$16.03*
$16.38*
* Assumes annual 2.2% CPI adjustment.
12
Local Indexing
•Past 2018, Mountain View and Sunnyvale
both index minimum wage increases to
San Francisco Bay Area CPI-W, capped at 5%
per year
13
San Francisco Bay Area CPI-W
14
Ramp-Up Provisions & State Indexing
•Until Min Wage reaches $15, SB-3 provides “off-ramp”
triggers
–Sec 3 (d)(1)On or before July 28, 2017, and on or before every July 28
thereafter until the minimum wage is fifteen dollars ($15) per hour pursuant to
paragraph (1) of subdivision (b), to ensure that economic conditions can support
a minimum wage increase, the Director of Finance shall annually make a
determination…
•Past 2024, SB-3 indexes minimum wage to U.S. CPI-W,
capped at 3.5% annually and rounded to nearest 10 cents
–Sec 3 (c)(1)Following the implementation of the minimum wage increase specified in
subparagraph (F) of paragraph (2) of subdivision (b), on or before August 1 of that year, and
on or before each August 1 thereafter, the Director of Finance shall calculate an adjusted
minimum wage. The calculation shall increase the minimum wage by the lesser of 3.5
percent and the rate of change in the averages of the most recent July 1 to June 30,
inclusive, period over the preceding July 1 to June 30, inclusive, period for the United States
Bureau of Labor Statistics nonseasonally adjusted United States Consumer Price Index for
Urban Wage Earners and Clerical Workers (U.S. CPI-W). The result shall be rounded to the
nearest ten cents ($0.10). Each adjusted minimum wage increase calculated under this
subdivision shall take effect on the following January 1.
15
Subcommittee Recommendation on
Ramp-Up and Indexing
•Use State defined economic “off-ramp” triggers with
local determination during the ramp up period
•Index to Bay Area CPI-W after 2019
–If CPI-W negative, hold min wage flat
–If CPI-W exceeds 5%, cap minimum wage increase at 5%
–Round to nearest 10 cents
–Use same calculation process as the State
16
State of California Exemptions
•Learners (regardless of age)
–May be paid not less than 85% of the minimum wage
rounded to the nearest nickel during their first 160 hours
of employment in occupations in which they have no
previous similar or related experience.
17
Cities’ Learner Exemptions
•Most cities in California incorporate the state’s learner
exemption.
•4 exempt youth training programs operated by a non-
profit corporation or government agency (Sacramento,
Richmond, Berkeley, San Diego)
•1 exempts publicly subsidized job-training and
apprenticeship programs for teens (San Francisco)
•2 extend the state learner provision to 480 hours or 6
months (Santa Monica, Long Beach)
18
Transitional Job Programs
•Transitional jobs programs provide short-term,
subsidized employment and supportive services
through a non-profit organization to help
participants overcome barriers to employment
•Most minimum wage laws treat transitional jobs
programs the same as other non-profit organizations
•In Los Angeles and Santa Monica, participants in
transitional jobs programs that meet specified
criteria are exempted from the higher minimum
wage for a maximum of 18 months
19
Local Exemptions
•Mountain View and Sunnyvale included no
exemptions in their ordinances
•San Jose has a collective bargaining waiver
•Some interest expressed in learner/training
exemptions
•Palo Alto studying potential exemptions
20
Subcommittee Recommendation
on Exemptions
•Each city determines its own exemptions,
if any
21
Alternative for Consideration
•Adopt the State learner exemption but no
other exemptions
–Learners (regardless of age)
•May be paid not less than 85% of the minimum
wage rounded to the nearest nickel during their
first 160 hours of employment in occupations in
which they have no previous similar or related
experience
22
Elements for Board Consideration
•Ramp in 3 steps
–$12.00 on 1/1/17, $13.50 on 1/1/18, $15.00 on 1/1/19
•“Off-ramp” triggers during ramp phase
•Index to Bay Area CPI-W after 2019, capped at 5%
•Exemptions
•Questions from Board Members
•Public Input
•Deliberation
23
Backup slides follow
24
25
96% of Santa Clara County workers receiving increases are over
the age of 20, and 57% are over 30Age
26
Workers receiving pay increases are much more likely to live in
families with incomes below the Federal Poverty Level (FPL).
Family
poverty level
Scenario B: Santa Clara County
Industry Percent of affected
workforce
Percent of workers in the
industry receiving an
increase
Restaurants 20.2%71.0%
Retail 16.1%44.4%
Administrative &
waste management*11.9%47.6%
The three industries shown below account for nearly
half of all workers receiving increases in Scenario B.
Industry
impacts
* Includes office administrative services, facilities support services, employment services, business support services, and waste
management.27
Increase in
payroll
costs
28
Total payroll impact estimated at 1.0% for Santa Clara County
employers
1
JUNE 2016 LAC, CSC & BOARD OF DIRECTORS MEETING SUMMARY
Legislative Action Committee Meeting Summary
• Larry Stone, Santa Clara County Assessor, presented on legislation
addressing assessment of commercial airlines, assessment of below-
market homes, and a review of the 2016 Assessment Roll.
• The airline industry is attempting to change the aircraft assessment appeals
process in favor of the airlines through AB 2622 (Nazarian) and SB 1329
(Hertzberg).
• After the 9/11 terrorist attacks, the airline industry suffered major financial
losses. In 2005, the assessment methodology was modified to provide
interim property tax relief for domestic airlines. Commercial aircrafts were
assessed at 10% less than the wholesale value.
• AB 2622 and SB 1329 address whether or not airlines are allowed to continue
to receive about a $2 billion reduction in assessed value.
• Last year the interim assessment methodology was set to expire; AB 2622
(Nazarian) was proposed in order to extend the sunset for another year to
allow more time for dialog between the airline industry and the California
Association of Assessors.
• SB 1329 (Hertzberg) proposes to extend the current valuation indefinitely and
provides “trial de nevo” for airline companies disputing the value of
commercial aircrafts. This would allow airline companies to take appeals of
valuations to the Supreme Court instead of the Assessment Appeals Board,
which is more equipped and prepared to resolve technical valuation
assessments, and will likely lead to the airline companies using the Appeals
Board as a “trial run” for expensive trials in the Superior Court System and
extend the time it takes to resolve an assessed value dispute to more than
two or three years.
• Recently, a compromise has been proposed that eliminates “trial de nevo,”
and extends the current assessment methodology for another three years
provided the assessment period of the aircrafts are changed to occur during a
more accurate “representative period.” Currently the representative period is
the second week of January, which is the lowest travel period. The busiest
time of the year for airlines is generally between Thanksgiving and the New
Year. Assessing commercial aircraft requires assessors to consider many
factors including average activity of each carrier operating in California for the
year. Sampling data for a single week during the month of the lowest
passenger load creates an unfair and inaccurate estimate.
2
• The LAC was requested to provide recommendation to oppose SB 1329 and
support AB 2622 as amended. The LAC unanimously voted to support the
request.
• AB 2450
(Achadjian) improves the accuracy of information submitted by
property owners to assessors upon a change of ownership, and also clarifies
that the county assessor, in addition to the tax collector, are to be provided
notice when a public entity proposes to acquire property for a public use.
These changes will improve the accuracy and efficiency of the property tax
assessment process.
• LAC members unanimously passed recommendation to support AB 2450.
• The 2016 Assessment Roll was reviewed.
• Oral Communication: LAC Member Liz Gibbons and Seth Williams of the
League of California Cities recommended cities submit expressions of
opposition to the Governor’s by right affordable housing proposal due to the
undermining of cities’ local control. The LCC’s template opposition letter is at
https://www.cacities.org/Policy-Advocacy/Action-Center/Governor-s-By-Right-
Housing-Proposal. Leslye Corsiglia of Silicon Valley at Home urged
Members to consider the Non-profit Housing Association’s position, which is
supportive with amendments.
City Selection Committee Meeting
• Jim Davis of Sunnyvale and Greg Scharff of Palo Alto were unanimously
reappointed to ABAG Executive Board for a new term expiring June 2018.
• Chris Clark of Mountain View and Mary-Lynne Bernald of Saratoga were
unanimously appointed to ABAG Executive Board as Alternates to a new
term expiring June 2018.
• Glenn Hendricks of Sunnyvale was unanimously reappointed to the Airport
Land Use Commission (ALUC) as a representative from a city that is
adjacent to an airport to a new term expiring May 2, 2020.
• Greg Scharff of Palo Alto was unanimously appointed as the At-Large
Representative to the ALUC for a term expiring May 2, 2020.
• Marsha Grilli of Milpitas was unanimously appointed to the Silicon Valley
Regional Interoperability Authority (SVRIA) as an Alternate to fulfill an
ongoing term expiring October 2018.
Board of Directors Meeting Summary
Minimum Wage Subcommittee Members Rod Sinks of Cupertino and Greg
Scharff of Palo Alto presented recommendation on minimum wage.
• The Cities Association first adopted minimum wage as a priority in 2015 and
supported regional consistency.
• Though the state has passed legislation raising the minimum wage to $15 by
2022, our region has an option to adopt a more aggressive schedule (like
Sunnyvale and Mountain View) due to the higher cost of living than any other
region in the state.
• The recent economic analysis and report led by San Jose and presented to
the Cities Association in April found increasing the minimum wage to $15 by
2019 will:
3
o Increase earnings for 250,000 workers, 25% of the workforce
o Raise average annual earnings of affected workers by 19.4 percent, or
$3,200 (in 2014 dollars)
o Increase average prices in Santa Clara County by 0.2 percent over
three years
o Have a net effect on employment that is slightly negative at the county
level (1,450 jobs) and close to zero at a 10 county regional level. For
details of the presentation and report see presentation at
• Economic analysis shows that:
o Higher wage costs would be absorbed through improved productivity,
reduced worker turnover, and modest price increases.
o Net effects on employment would be very slightly negative at the city
and county levels and close to zero at the regional level.
o The resulting improvement in living standards would outweigh the
small effects on employment.
• For analysis and presentation see
http://sanjose.granicus.com/GeneratedAgendaViewer.php?event_id=ef9f9f98-
70c3-4924-8de8-50b24984686a
• The subcommittee recommendation included:
o Ramp-up (increases) take place in three steps ($12.00 on 1/1/17,
$13.50 on 1/1/18, $15.00 on 1/1/19);
o “Off-ramp” triggers during ramp-up phase that would allow for
scheduled increases to be delayed under certain economic conditions;
o Index to Bay Area CPI-W after 2019, capped at 5%
o Round to nearest 10 cents
o Exemptions to be determined by individual cities
• Regarding exemptions:
o An alternative recommendation includes consideration of adopting the
State’s Learner exemption: regardless of of age, one may be paid not
less than 85% of the minimum wage rounded to the nearest nickel
during their first 160 hours of employment in occupations in which they
have no previous similar or related experience.
o Mountain View and Sunnyvale included no exemptions in their
ordinances.
o San Jose has a collective bargaining waiver.
o Some interest expressed in learner/training exemptions.
o Palo Alto studying potential exemptions.
• Board Members discussed various jurisdictions’ status on considering
increasing minimum wage.
• Several members of the public representing San Jose State University,
LUNA, Raise the Wage Coalition, Working Partnerships, Sacred Heart
Community services, City of Sunnyvale, Santa Clara County provided
comments of support for increasing the minimum wage, no exemptions,
regional consistency, and ease of implementation across the region.
• CA Restaurant Association representative expressed support for exemption
to restaurant wait-staff in order to ease the burden of higher costs on
restaurants.
4
• President Jim Griffith noted a letter of opposition to increasing the minimum
wage was received from President and CEO Matt Mahood of San Jose
Silicon Valley Chamber of Commerce.
• Board Members endorsed motion to forward presented recommendation to all
cities and the County with the following amendments: “no exemptions” and
revise “round to nearest 10 cents” to “round to nearest 5 cents.”
• The final adopted subcommittee minimum wage recommendation
includes:
o Increase minimum wage to $15 by 2019 in three steps: $12.00 on
1/1/17, $13.50 on 1/1/18, $15.00 on 1/1/19;
o “Off-ramp” triggers during ramp-up phase that would allow for
scheduled increases to be delayed under certain economic
conditions;
o Index to Bay Area CPI-W after 2019, capped at 5%;
o Round to nearest 5 cents;
o No exemptions.
• Next steps include forwarding letter with recommendation and model
ordinance to all membership cities and the County.
Chris O’Connor of Silicon Valley Leadership Group briefly reviewed the
proposed November 2016 Tax Measure and requested the Board of
Directors to endorse the measure.
• The proposed half-cent 30-year measure will raise approximately $6 billion.
• The draft expenditure plan includes the following allocations:
• On June 3, VTA Board of Directors unanimously voted to place the sales-tax
measure on the November 2016 Ballot.
5
• Cities Association Board Members expressed individual and jurisdiction
positions.
• Public Comment representative of the Silicon Valley Taxpayers Association
expressed opposition to the transportation tax measure.
• Board Members motion to support the November 2016 Transportation Ballot
Measure passed.
Cities Association FY 2016-17 Budget Proposal was reviewed and
presented for adoption. The budget proposal includes a 5% increase in dues
in order to resume operations without using Reserves to meet expenses. The
Association has been using its Reserves for the past five years in order to meet
expenses. The Board of Directors unanimously supported and adopted the
proposed 2016-17 Dues and Budget Proposal.
Cities Association Board Appointees Mary-Lynne Bernald of Saratoga and
Gary Waldeck of Los Altos Hills provided an update of the recent meetings
of the FAA Select Committee on South Bay Arrival. The Select Committee
includes four elected officials from each of three counties: San Mateo County,
Santa Clara County, and Santa Cruz County. Their appointments are for a
limited time and the Committee is not a standing committee. The Select
Committee is responsible for accepting public comment, evaluating the new FAA
Initiative on South Bay Arrivals, and providing recommendations on South Bay
Arrivals to the FAA. Two meetings have occurred to discuss and evaluate the
various flight paths and the next meetings are scheduled for June 15th in San
Mateo County and June 29th in Santa Clara County; recommendations are due in
August.
CSC Appointee Greg Scharff of Palo Alto provided update on recent
activities of ABAG. A decision has been made regarding merging ABAG and
MTC. Per the various merger options presented by Management Partners, both
organizations agreed to merge all of ABAG staff with MTC. The ABAG Board
and MTC Boards will continue to govern. MTC will oversee both governing
Boards and Executive Directors until one Executive Director is selected.
Management Partners has been requested to propose an implementation plan
which will then be presented and approved by both governing structures.
Jim Griffith reviewed the LAC’s recommendation and the Board
unanimously supported the following:
o SB 1329 (Hertzberg) – Property Taxation: Certified Aircraft - Oppose
o AB 2622 (Nazarian) – Certificated Aircraft Assessment – Support as
amended
o AB 2450 (Achadjian) – Property Taxation: Below Market-Rate Housing –
Support
o Board Member Steve Tate of Morgan Hill requested to consider SCC’s
affordable housing bond at the August LAC/Board Meeting.
o President Jim Griffith requested consideration of AB 45 (Mullin) Household
Hazardous Waste at the August LAC/Board meeting.
6
City Managers’ Association Report: Assistant City Manager Kent Steffens’
report included an update on the joint Santa Clara County/San Mateo County City
Managers’ Associations meeting – Seth Miller of the League of California Cities
Peninsula Division presented update on the Governor’s by right affordable
housing proposal and urged cities to opposed it; Leslye Corsiglia presented an
overview of Silicon Valley at Home, and Nicole Pollack, Assistant Director of the
San Mateo County Human Services Agency presented overview of its Homeless
Outreach Teams (HOT).
Legislation Report: Betsy Shotwell of San Jose provided update on November
ballots; eight ballots thus far address medical marijuana. August 31st is the
deadline for Legislators to pass bills. AB 2502 (Palmer Fix Bill) did not pass out
of its house of origin; it may be included in the budget.
Announcements
• Save the date: SVLG Regional Economic Forum, July 21, 2016, 8 am – 12
pm; location TBD; Cities Association is participating as a co-partner.
Draft Minutes
BOARD OF DIRECTORS MEETING
Sunnyvale West Conference Room
April 14, 2016
The regular meeting of the Cities Association Board of Directors was called to order at
7:15 p.m. with President Jim Griffith presiding.
1. Call to Order/Roll Call
Present: Also Present:
Jason Baker, Campbell Raania Mohsen, Cities Association
Rod Sinks, Cupertino Jim Davis, Sunnyvale
Peter Leroe-Muñoz, Gilroy Omar Chatty
Jeannie Bruins, Los Altos Steve Preminger, SCC
Rob Rennie, Los Gatos Betsy Shotwell, San Jose
Jose Esteves, Milpitas Sam Liccardo, San Jose
Burton Craig, Monte Sereno Katie Martin
Steve Tate, Morgan Hill
Pat Showalter, Mountain View
Kim Walesh, San Jose
Victor Lecha III
Chappie Jones, San Jose Michelle Thong, San Jose
Teresa O’Neill, Santa Clara Carl Guardino, SVLG
Manny Cappello, Saratoga Ken Jacobs
Jim Griffith, Sunnyvale Josh Williams
Deanna Santana, Sunnyvale
2. Oral Communication: None.
3. Consent Calendar
Approval of February 2016 Financial Statements, Minutes for April 14, 2016 Board
Meeting, Motion (Cappello)/ Second (Baker). Motion carried unanimously (13:0).
Ayes: Baker, Bruins, Cappello, Craig, Esteves, Griffith, Jones, Leroe-Muñoz, O’Neill, Rennie,
Sinks, Showalter
No:
Abstention:
Absent: Scharff, Waldeck
4. Presentations & Priorities Discussions
a. Mayor Liccardo and Economic Development Director Kim Walesh of San Jose
introduced the regional minimum wage study presentation.
• Though the state has passed legislation raising the minimum wage to $15 by 2022,
our region has an option to adopt a more aggressive schedule (like Sunnyvale and
Mountain View) due to the higher cost of living than any other region in the state.
• The scope of the regional study on minimum wage was developed by an Advisory
Committee (Rod Sinks of the Cities Association, Bob Brownstein of Working
2
Partnerships, Matt Mahood of San Jose/ Silicon Valley Chamber of Commerce, San
Jose’s OED Staff).
• Consultants BW Research Partnership and Institute for Research on Labor and
Employment of UC Berkeley were selected to analyze the effects of increasing the
minimum wage to $15 by 2019 in San Jose and across Santa Clara County.
• Ken Jacobs presented “The Effects of a $15 Minimum wage by 2019 in Santa Clara
County and the City of San Jose.” The report does the following:
o Provides an economic analysis of the effects of increasing minimum wages to
$15 by 2019 in San Jose only and in all of Santa Clara County.
o Examines the economic context and the effects of a $15 minimum wage on
workers, business, and the economy.
o Assesses associated policy issues.
• It was noted that the analysis was done before the state passed recent minimum
wage legislation raising the state minimum wage to $15 by 2023.
• Key findings of the report include:
• Increasing the minimum wage to $15 an hour by 2019 in Santa Clara County would
do the following:
o Increase earnings for 250,000 workers, 25% of the workforce
o Raise average annual earnings of affected workers by 19.4 percent, or
$3,200 (in 2014 dollars)
o Increase average prices in Santa Clara County by 0.2 percent over three
years
o Have a net effect on employment that is slightly negative at the county level
(1,450 jobs) and close to zero at a 10 county regional level. For details of the
presentation and report see presentation at
• Economic analysis shows that:
o Higher wage costs would be absorbed through improved productivity,
reduced worker turnover, and modest price increases.
o Net effects on employment would be very slightly negative at the city and
county levels and close to zero at the regional level.
o The resulting improvement in living standards would outweigh the small
effects on employment.
• In June 2016, a detailed report will be released and will include more details about
how San Jose/ SCC would absorb an increase in the minimum wage to $15 over
three years, qualitative discussion about the impact of increasing the minimum wage
to $20, and a full description of the underlying economic model.
• Josh Williams of BW Research Partnership presented “Santa Clara County Minimum
Wage Employer Survey.”
• Overall key findings included:
o The majority of surveyed firms anticipate increasing prices.
o However most also believe their employees will be more satisfied and
productive under a minimum wage increase
o Few firms think it is likely they will have to move or close business given an
increase
o Three-fourths of firms agree that an increase in the minimum wage makes
sense given the high cost of living.
3
o The majority of surveyed firms believe a minimum wage increase will reduce
income inequality in the region.
o However, most also agree that it will be harder to start new businesses in the
region
• Fore more details and information, both presentations are available for review at
http://sanjose.granicus.com/GeneratedAgendaViewer.php?event_id=ef9f9f98-70c3-
4924-8de8-50b24984686a
• Second Vice President and Member of the Subcommittee on Minimum Wage
recommended for Board Members to share the presentations and the results of the
study with their respective cities and to come back in June to review potential
regional recommendation.
• Public Comment included positive remarks regarding the results of the study, some
concern for the restaurant industry, and consideration of $15 by 2018.
• Board Members expressed their appreciation for San Jose’s efforts with the study
and presentation to the Board.
b. Carl Guardino, CEO of Silicon Valley Leadership Group reviewed the potential
November 2016 Tax Measure.
• Overall, cities in Santa Clara County submitted $48 billion worth of project requests.
• The proposed measure will raise approximately $6 billion.
• The draft expenditure plan includes the following allocations:
• Details of the draft expenditure plan can be reviewed in the attached presentation.
4
• On April 22, VTA plans to review the expenditure plan and determine if the tax
measure will be placed on the November 2016 Ballot.
5. New Business
a. Request to participate in SVLG’s Regional Economic Forum as a co-host, on
July 21, 2016, at the Computer History Museum in Mountain View, with over 20
partners was reviewed and unanimously approved by the Board. Participation will
cost the Cities Association $1,000 and will include a table of 10 for Cities Association
Members/Guests, opportunity to participate in three planning sessions for the forum,
and three on-stage roles during the program.
Motion (Leroe-Muñoz)/ Second (Baker). Motion carried unanimously (13:0).
Ayes: Baker, Bruins, Cappello, Craig, Esteves, Griffith, Jones, Leroe-Muñoz, O’Neill, Rennie,
Sinks, Showalter
No:
Abstention:
Absent: Scharff, Waldeck
b. The Board unanimously ratified FAA Select Committee on South Bay Arrival
Appointments and assigned Alternates.
Gary Waldeck of Los Altos Hills – Alternate: Greg Scharff of Palo Alto
Mary-Lynne Bernald of Saratoga – Alternate: Jean Mordo of Los Altos
Motion (Cappello)/ Second (Bruins). Motion carried unanimously (13:0).
Ayes: Baker, Bruins, Cappello, Craig, Esteves, Griffith, Jones, Leroe-Muñoz, O’Neill, Rennie,
Sinks, Showalter
No:
Abstention:
Absent: Scharff, Waldeck
c. Jim Griffith reviewed the LAC’s recommendation and the Board unanimously
supported the following:
o AB 1851 (Gray & Ting) – Vehicular Air Pollution: Reduction Incentives - No
Position
o SB 873 (Beall) Sale of Low Income Housing Tax Credits – Support
o AB 2817 (Chiu) Low Income Housing Tax Credit – Support
o AB 2502 (Mullin & Chau) Land Use: Zoning Regulations – Support
o AB 1591 (Frazier) Transportation Funding – Support
o SB 1053 (Leno) Housing Opportunity Act – Watch
Motion (Tate)/ Second (Jones). Motion carried unanimously (13:0).
5
Ayes: Baker, Bruins, Cappello, Craig, Esteves, Griffith, Jones, Leroe-Muñoz, O’Neill, Rennie,
Sinks, Showalter
No:
Abstention:
Absent: Scharff, Waldeck
d. City Managers’ Association Report: City Manager Deanna Santana’s report
included an update on the April City Managers’ Association meeting – City Managers
have referred the Cities Association request to review countywide taxi regulations to the
SCC Police Chiefs; the county presented a new proposal regarding weed abatement,
and the county has extended the current EMS contract with Rural Metro for three more
years.
Joys & Challenges/Announcements
• Rod Sinks of Cupertino announced that there are four potential ballot measures
addressing the development of projects in Cupertino, e.g. Vallco Mall, and building
height ordinances.
• Jason Baker of Campbell announced VTA’s upcoming evaluation of the bus system
across the county.
• Rob Rennie of Los Gatos announced North 40’s progress and continued
development.
• Jeannie Bruins of Los Altos announced the city’s new search for a City Manager.
• Jim Griffith of Sunnyvale announced the inaugural meeting of Community Choice
Energy Authority, Wednesday, April 13, 2016; and the retirement of Sunnyvale
Council Member David Whittum; there will be a special election in August for a
replacement.
• Save the date for the Cities Association General Membership Meeting, Thursday,
May 12, 6 – 9 pm, Microsoft, Mountain View.
Adjournment, 9:05 pm
Next Meeting: Thursday, June 9, 2016, 7 pm, Sunnyvale City Hall.
Respectfully submitted,
Raania Mohsen,Executive Director, Cities Association of Santa Clara County
May
13,
2016
Dear
Cities
Association
Board
Members
and
Alternates,
In
2015,
the
Cities
Association
adopted
Minimum
Wage
as
a
priority
and
endorsed
the
recommendation
to
implement
regional
consistency
across
the
county.
As
an
effort
to
provide
economic
data
about
the
impacts
of
increasing
minimum
wage
across
the
region,
the
Cities
Association
supported
a
regional
minimum
wage
study
led
by
the
City
of
San
Jose.
At
our
April
14,
2016
Board
Meeting,
we
received
a
presentation
on
the
results
of
the
regional
minimum
wage
study
and
survey
from
the
Institute
for
Research
on
Labor
and
Employment
at
UC
Berkeley
and
BW
Research.
This
effort
was
also
supported
by
a
number
of
mayors
in
September
2015,
who
expressed
a
desire
to
study
and
then
take
action
on
minimum
wage
to
as
best
possible
create
regional
consistency.
Construction
of
the
study
scope
of
work,
selection
of
expert
consultants,
and
review
of
contents
for
completeness
was
conducted
by
the
Minimum
Wage
Advisory
Team
of
Matt
Mahood
of
the
Silicon
Valley
Chamber
of
Commerce,
Bob
Brownstein
of
Working
Partnerships,
Rod
Sinks
representing
the
Cities
Association,
and
John
Lang,
Economic
Coordinator,
City
of
Morgan
Hill,
in
conjunction
with
economic
development
staff
at
the
City
of
San
Jose.
Key
findings
of
the
study
showed
that
increasing
the
minimum
wage
to
$15
an
hour
by
2019
in
our
County
would:
• Increase
earnings
for
250,000
workers
• Raise
average
annual
earnings
of
affected
workers
by
19.4
percent,
or
$3,200
(in
2014
dollars)
• Increase
average
prices
in
Santa
Clara
County
by
0.2
percent
over
three
years
• Have
a
net
effect
on
employment
that
is
slightly
negative
at
the
county
level
(1,450
jobs)
and
close
to
zero
at
a
10
county
regional
level
The
study
assumed
these
steps,
whi ch
land
at
$15
one
year
after
Mountain
View
and
Sunnyvale,
and
three
years
before
the
State
of
California:
• $12.00
on
1/1/2017
• $13.50
on
1/1/2018
• $15.00
on
1/1/2019
As
we
discussed
in
the
April
meeting,
we
are
asking
you
as
your
city’s
Cities
Association
board
representative
to
come
to
our
meeting
on
June
9
prepared
to
discuss
and
vote
on
a
regional
recommendation
that
interested
cities
could
consider.
Some
cities
are
conducting
study
sessions
to
share
the
presentation
and
provide
direction
to
their
board
representatives.
The
presentations
are
available
here
(Attachments
B
&
D),
and
the
San
Jose
Council
study
session
video
featuring
presentations
and
questions
of
the
study
and
survey
consultants
is
available
here.
Questions
on
the
study
or
survey
may
be
directed
to
Michelle
Thong,
michelle.thong@sanjoseca.gov,
408-‐535-‐8169.
Questions
on
the
process
may
be
directed
to
any
of
the
members
of
the
Minimum
Wage
Advisory
Team
listed
above.
Sincerely,
cc:
City
Managers
&
Economic
Development
Staff
Hon.
Rod
Sinks,
City
of
Cupertino
Minimum
Wage
Advisory
Team
Hon.
Jim
Griffith,
Sunnyvale
President,
Cities
Association
Mayor
Sam
Liccardo
City
of
San
Jose
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City of Palo Alto Minimum Wage Survey
Employees & Individuals
Ü Question
Summaries t Data
Trends U Individual
Responses
Share Share
Sign up FREE
Q1
Q2
2.01%3
46.31%69
26.17%39
25.50%38
How old are you?
Answered: 149 Skipped: 0
Total 149
1518
1940
4160
over 60
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
1518
1940
4160
over 60
Do you live in Palo Alto?
Answered: 148 Skipped: 1
All Pages
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Q3
Q4
90.54%134
9.46%14
Total 148
Yes
No
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Yes
No
38.51%57
18.92%28
14.86%22
8.78%13
18.92%28
Which of the following best describes your
current employment status?
Answered: 148 Skipped: 1
Total 148
Work full time
Work part time
Selfemployed
Full timestudent/not...
Not
employed/Una...
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Work full time
Work part time
Selfemployed
Full time student/not working
Not employed/Unable to work
The cities of Sunnyvale and Mountain View
are proposing a regional effort to achieve a
minimum wage of $15 an hour by 2018. This
will be achieved by increasing the minimum
Q5
75.36%104
7.97%11
16.67%23
wage annually in increments until 2018.
Palo Alto has been approached to join in
this effort. What of the following would you
most support?
Answered: 138 Skipped: 11
Total 138
Reach a $15 anhour minimum...
Reach a $15 an
hour minimum...
Not join theregional effort
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Reach a $15 an hour minimum wage by 2018
Reach a $15 an hour minimum wage by 2020
Not join the regional effort
The Cities Association of Santa Clara
County recently voted to endorse a regional
consistency within the County on
establishing minimum wage ordinances.
Restaurant wait staff, youth or nonprofit
employees would be included. While not
willing to endorse a specific minimum wage
requirement or timeline, the subcommittee
points to the Sunnyvale/Mountain View
efforts towards regional consistency and
encourages other cities to take a closer
look at these efforts. Would you support
this regional consistency?
Answered: 134 Skipped: 15
Yes
No
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Q6
Q7
80.60%108
19.40%26
Total 134
Yes
No
0.00%0
13.77%19
65.22%90
15.22%21
5.80%8
Beginning January 1, 2016 the State of
California's minimum wage will increase to
$10 an hour. There is currently proposed
legislation that would raise that level to $11
in 2016 and $13 in 2017. Palo Alto is
considering raising the city's minimum
wage to the levels of surrounding cities by
January 1, 2016. Which would you support?
Answered: 138 Skipped: 11
Total 138
Raise the
minimum wage...
Raise theminimum wage...
Raise theminimum wage...
Keep in linewith the Sta...
None
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Raise the minimum wage to $10.30 an hour by January 1, 2016
Raise the minimum wage to $11 an hour by January 1, 2016
Raise the minimum wage to $12 an hour by January 1, 2016
Keep in line with the State minimum wage of $10 beginning January 1, 2016
None
Moving forward, which do you most
support?
Answered: 130 Skipped: 19
Q8
25.38%33
39.23%51
35.38%46
Total 130
Local minimumwage
Regionalminimum wage
State/Federalminimum wage
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Local minimum wage
Regional minimum wage
State/Federal minimum wage
Please provide any additional comments
that you may have on this issue:
Answered: 68 Skipped: 81
no minimum wage. Instead lower cost of living by increasing development of housing, which is the biggest
component of any family's budget.
9/6/2015 5:32 PM
Unfortunately I don't think raising or lowering the minimum wage is the problem, if it is raised, will the cost of
living inflate even higher? I would love to make $15 and hour, but I certainly hope that the cost of living doesn'tincrease with it or we will be right back to where we started. The real problem in this area is housing costs.
People who work in the service industry can barely afford to live here. Just because there are a lot of incredibly
rich people in this area, doesn't mean all apartments should raise their rates to over inflated prices. If the wealthy
want to spend 3,000 a month on luxury apartments or buy a million dollar home, then fine. But they should berediculously luxurious! I'm paying nearly 2,000 per month for a tiny studio with asbestos in the ceiling! That's
insane! Who's going to serve those fine dining experiences, wash the BMWs, and clean the homes for all those
rich people when all the blue collar people are ran out of town? If Palo Alto wants to do something for the people
making minimum wage, try putting a cap on rentals at a level that's possible for your average blue collar workerto afford. My husband and I moved here because he got offered a position in a startup company. He makes
more money per hour than he has any where else plus I work as a bartender five days per week. We are making
way more money than we ever did living in Oregon, and yet we have never been under such financial stress as
we are here. We were paying $800 peri the for a 1000sf duplex in Portland. That won't even rent a room over
here! This is the issue the city should be focusing on. This is the problem. Not minimum wage.
8/27/2015 11:44 AM
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City of Palo Alto Minimum Wage Survey
Business Owners and Managers
Ü Question
Summaries t Data
Trends U Individual
Responses
Share Share
Sign up FREE
Q1
Q2
33.33%2
33.33%2
16.67%1
16.67%1
Type of business:
Answered: 6 Skipped: 9
Total 6
Comments (9)
1 (16.67%)
Retail
Restaurant orFast Food
Hospitality
Manufacturing
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Retail
Restaurant or Fast Food
Hospitality
Manufacturing
You are a:
Answered: 15 Skipped: 0
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Q3
Q4
93.33%14
6.67%1
Total 15
Business Owner
BusinessManager
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Business Owner
Business Manager
73.33%11
0.00%0
13.33%2
0.00%0
13.33%2
What percentage of your business'
employees earn the minimum wage?
Answered: 15 Skipped: 0
Total 15
0%20%
21%40%
41%60%
61%80%
81%100%
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
0%20%
21%40%
41%60%
61%80%
81%100%
How many employees does your business
employ?
Answered: 15 Skipped: 0
Q5
86.67%13
13.33%2
0.00%0
0.00%0
Total 15
010
1150
51100
more than 100
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
010
1150
51100
more than 100
28.57%4
14.29%2
57.14%8
0.00%0
Would your business eliminate (and not
replace) any positions to compensate for
increased labor costs?
Answered: 14 Skipped: 1
Total 14
Yes
Maybe
No
Don't know
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Yes
Maybe
No
Don't know
Q6
Q7
0.00%0
35.71%5
64.29%9
0.00%0
Would your business also increase the
hourly wages of any higherpaying
positions, such as those who supervise
minimum wage employees?
Answered: 14 Skipped: 1
Total 14
Yes
Maybe
No
Don't know
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Yes
Maybe
No
Don't know
Would your business reduce employee
work hours?
Answered: 14 Skipped: 1
Q8
42.86%6
7.14%1
50.00%7
0.00%0
Total 14
Yes
Maybe
No
Don't know
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Yes
Maybe
No
Don't know
35.71%5
14.29%2
50.00%7
0.00%0
Would your business increase its prices to
customers?
Answered: 14 Skipped: 1
Total 14
Yes
Maybe
No
Don't know
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Yes
Maybe
No
Don't know
Q9
Q10
37.50%3
62.50%5
50.00%4
50.00%4
Would increased wages for your lowest
paid employees result in any of the
following among these workers? (Select as
many that apply)
Answered: 8 Skipped: 7
Total Respondents: 8
Increasedproductivity
IncreasedMorale
ReducedTurnover
Unsure
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Increased productivity
Increased Morale
Reduced Turnover
Unsure
The cities of Sunnyvale and Mountain View
are proposing a regional effort to achieve a
minimum wage of $15 an hour by 2018. This
will be achieved by increasing the minimum
wage annually in increments until 2018.
Palo Alto has been approached to join in
this effort. What of the following would you
most support?
Answered: 12 Skipped: 3
Q11
41.67%5
8.33%1
50.00%6
Total 12
Reach a $15 anhour minimum...
Reach a $15 anhour minimum...
Not join theregional effort
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Reach a $15 an hour minimum wage by 2018
Reach a $15 an hour minimum wage by 2020
Not join the regional effort
58.33%7
41.67%5
The Cities Association of Santa Clara
County recently voted to endorse a regional
consistency within the County on
establishing minimum wage ordinances.
Restaurant wait staff, youth or nonprofit
employees would be included. While not
willing to endorse a specific minimum wage
requirement or timeline, the subcommittee
points to the Sunnyvale/Mountain View
efforts towards regional consistency and
encourages other cities to take a closer
look at these efforts. Would you support
this regional consistency?
Answered: 12 Skipped: 3
Total 12
Yes
No
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Yes
No
Q12
Q13
40.00%4
10.00%1
10.00%1
40.00%4
Beginning January 1, 2016 the State of
California's minimum wage will increase to
$10 an hour. There is currently proposed
legislation that would raise that level to $11
in 2016 and $13 in 2017. Palo Alto is
considering raising the city's minimum
wage to those of surrounding cities by
January 1, 2016. Which would you support?
Answered: 10 Skipped: 5
Total 10
Comments (2)
Keep in linewith the Sta...
Raise theminimum wage...
Raise theminimum wage...
Raise theminimum wage...
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Keep in line with the State minimum wage of $10 beginning January 1, 2016.
Raise the minimum wage to $10.30 an hour by January 1, 2016
Raise the minimum wage to $11 an hour by January 1, 2016
Raise the minimum wage to $12 an hour by January 1, 2016
Moving forward, which do you most
support?
Answered: 10 Skipped: 5
Q14
10.00%1
40.00%4
50.00%5
Total 10
Local minimumwage
Regionalminimum wage
State/Federalminimum wage
0%10%20%30%40%50%60%70%80%90%100%
Answer Choices Responses
Local minimum wage
Regional minimum wage
State/Federal minimum wage
Please provide any additional comments
that you may have on this issue:
Answered: 8 Skipped: 7
We will just have to raise our prices which hopefully will not result in customers spending their money in other
cities. We will cut labor and replace with technology when possible. Minimum wage will raise and that is a reality
of inflation but to quickly ramp it up will devalue the educated and reward those that have done nothing to
improve themselves. Those making $1317 an hour currently will essentially be going backwards as they will notsee an increase in pay but a significant increase in the expense of necessary goods. Quickly raising minimum
wage is very much a social experiment. The cost of living will rise requiring a need for a higher minimum wage in
the future and additional price increases. The strong will survive and the weak will go out of business.
9/17/2015 1:40 PM
Do not include tipped employees
8/26/2015 5:41 PM
Rents have gone up considerably, the residential parking permit goes into effect in September, and now theywant to raise the minimum wage to $15/hr by 2018? Margins are shrinking as competition with internet retailers
increases and the City makes it more difficult to do business here. How do you expect any of the independent
retailers to survive in downtown Palo Alto?
8/24/2015 12:13 PM
I hire 14 year olds and place them in administrative positions in an office environment. The kids I hire do this togain real work experience in a professional setting, as opposed to Jamba Juice, which doesn't really give them
much in the way of training, other than how to use a blender. A 14 year old is not supporting a family on this
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CITY OF SAN JOSE CITY OF Memorandum
CAPITAL OF SILICON VALLEY
TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Kim Walesh
SUBJECT: FINAL REPORTS FOR
MINIMUM WAGE STUDY
DATE: June 20, 2016
Approved Date (g(2o|«0
INFORMATION
The purpose of this Information Memo is to inform City Council of the final report on the
economic impacts of a minimum wage increase in San Jose and Santa Clara County.
Background
On September 15, 2015, the Mayor and City Council directed the City Manager to hire
economists to study a potential increase of the minimum wage to $15 per hour. Council
identified a range of specific elements to be studied
(http://www.sanioseca.gov/DocumentCenter/View/48616L
The Administration, with input from an Advisory Team comprised of members representing the
Silicon Valley Chamber of Commerce, Working Partnerships USA and the Cities Association of
Santa Clara County, selected the Institute for Research on Labor and Employment at UC
Berkeley (IRLE). Details of the RFP process are described in an Information Memo dated
December 18,2015.
(http://www.sanioseinfo.Org/external/content/document/1914/2768661/l/12-18-15QED.PDFL
The Advisory Team recommended the addition of an employer opinion survey to collect
information on how employers perceive a potential minimum wage increase. The City of San
Jose contracted independently with BW Research Partnership to conduct the survey.
Scope of Work
IRLE was directed to analyze the economic impacts on workers, businesses and consumers of a
minimum wage increase, beginning on January 1, 2017 and increasing to $15 per hour by
January 1, 2019, for San Jose and for Santa Clara County.
BW Research Partnership was directed to conduct a countywide employer opinion survey with a
focus on industries that would be most impacted by a minimum wage increase.
RULES AND OPEN GOVERNMENT COMMITTEE
June 20, 2016
Subject: Minimum Wage Study
Page 2
Presentation of Findings
On April 18, 2016, the City's consultants presented the findings of the economic analysis and
countywide survey at a City Council Study Session. The materials for the Study Session included
a summary presentation from IRLE (Attachment B) and the employer survey report from BW
Research Partnership (Attachment C).
(http://saniose.granicus.com/GeneratedAgendaViewer.php7event id=ef9f9f98-70c3-4924-8de8-
50b24984686aJ
The results were also presented to the Board of Directors of the Cities Association of Santa Clara
County on April 14, 2016.
Final Reports
To supplement the high-level findings presented at the Study Session, IRLE has prepared a final
report that includes details of how the San Jose and Santa Clara County economies would absorb
a minimum wage increase, a full description of the underlying economic model, and analysis of
policy considerations. The final report is available at the following link:
http ://sani o seca. go v/Do cumentCenter/V ie w/57459
The final report for the countywide survey remains the same as the version originally published
for the Study Session:
http://saniose.granicus.com/MetaViewer.php7view id=&event id=2266&meta id=568905
/s/
KIM WALESH
Deputy City Manager
Director of Economic Development
For questions please contact Michelle Thong, Business Development Officer, at (408) 535-8169.
NOT YET APPROVED
160907 jb 0131546 1 Sept. 7, 2016
Ordinance No.
Ordinance of the Council of the City of Palo Alto Amending Chapter 4.62 to Title 4
(Business Licenses and Regulations) of the Palo Alto Municipal Code to Provide a
Schedule Increasing the Citywide Minimum Wage to $15 per Hour by 2019 for Palo
Alto Employees
RECITALS
1. The Bay area in general and Palo Alto in particular are becoming increasingly
expensive places to live and work.
2. Payment of a minimum wage advances the interests of the City as a whole,
by creating jobs that keep workers and their families out of poverty.
3. A minimum wage will enable a worker to meet basic needs and avoid economic
hardship.
4. This ordinance is intended to improve the quality of services provided in the
City to the public by reducing high turnover, absenteeism, and instability in the workplace.
5. Prompt and efficient enforcement of this Chapter will provide workers with
economic security and assurance that their rights will be respected.
6. Key findings of a regional minimum wage study and survey performed by the
Institute for Research on Labor and Employment at UC Berkeley and BW Research showed that
increasing the minimum wage to $15.00 an hour by 2019 in Santa Clara County would:
● Increase earnings for 250,000 workers
● Raise average annual earnings of affected workers by 19.4 percent, or $3,200.00 (in
2014 dollars)
● Slightly increase average prices in Santa Clara County by 0.2 percent over three
years
● Have a net effect on employment that is slightly negative at the county level (1,450
jobs) and close to zero at a 10 county regional level.
7. The Cities Association of Santa Clara County recommends a regional minimum
wage increase to $15.00 by 2019 as an effort to prevent an uneven playing field that can be
damaging to local economies, provide equity to our shared economy, and implement regional
consistency across the county.
The City Council of the City of Palo Alto does ORDAIN as follows:
SECTION 1. Section 4.62.030 of Chapter 4.62 (Citywide Minimum Wage) of the Palo
Alto Municipal Code is amended to read as follows:
NOT YET APPROVED
160907 jb 0131546 2 Sept. 7, 2016
4.62.030 Minimum wage.
a. Employers shall pay employees no less than the minimum wage set forth in this
section for each hour worked within the geographic boundaries of the City of Palo Alto.
b. b. The minimum wage shall be an hourly rate of eleven dollars ($11.00) through
December 31, 2016. On January 1, 2017, tThe minimum wage shall be an hourly rate of twelve
dollars ($112.00). On January 1, 2018, the minimum wage shall be an hourly rate of thirteen
dollars and fifty cents ($13.50). On January 1, 2019, the minimum wage shall be an hourly rate of
fifteen dollars ($15.00). To prevent inflation from eroding its value, beginning on January 1,
20196, and each January 1styear thereafter, the minimum wage shall increase by an
amount corresponding to the prior year’s increase, if any, in the cost of living, not to exceed
5%. The prior year’s increase in the cost of living shall be measured by the percentage
increase, if any, as of August of the immediately preceding year over the level as of August of
the previous year of the Bay Area Consumer Price Index (Urban Wage Earners and
Clerical Workers, San Francisco-Oakland-San Jose, CAU.S. City Average for All
Items) or its successor index as published by the U.S. Department of Labor or its successor
agency, with the amount of the minimum wage increase rounded to the nearest multiple of five
($.05) cents. If there is no net increase in the cost of living, the minimum wage shall remain
unchanged for that year. The adjusted minimum wage shall be announced by October 1 of
each year, or as soon as practicable thereafter if the Consumer Price Index for August has not yet
been published, and shall become effective as the new minimum wage on January 1st of each
year.
SECTION 2. CEQA. The City Council finds that this ordinance is exempt from the
provisions of the California Environmental Quality Act pursuant to Section 15061(b)(3) of the
California Environmental Quality Act Guidelines, because it can be seen with certainty that there
is no possibility of significant environmental effects occurring as a result of the adoption of this
ordinance.
SECTION 3. Severability. If any provision or clause of this chapter is held to be
unconstitutional or otherwise invalid by any court of competent jurisdiction, such invalidity shall
not affect other provisions of this chapter, and clauses of this chapter are declared to be
severable.
SECTION 4. Effective Date. This ordinance shall become effective upon the
commencement of the thirty-first day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
NOT YET APPROVED
160907 jb 0131546 3 Sept. 7, 2016
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _____________________________
Senior Asst. City Attorney City Manager
_____________________________
Director of Administrative Services
Excerpt Minutes
POLICY AND SERVICES
COMMITTEE TRANSCRIPT
Page 1 of 31
Special Meeting
August 16, 2016
Chairperson DuBois called the meeting to order at 6:01 P.M. in the
Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California.
Present: Berman, DuBois (Chair), Kniss, Scharff
Absent:
4. Consider Options for Changing the Palo Alto Minimum Wage, Currently
$11 Per Hour, By Further Increasing the Rate and Considering
Exemptions and Direct Staff to Take Related Action or Maintain the
Existing Rate and Rate Increase Scheduled for January 2017.
Chair DuBois: Ok, we can go ahead start this item on an update on the
minimum wage.
David Ramberg, Assistant Director of Administrative Services: Good evening,
Chair and members of the Policy and Services Committee. My name’s Dave
Ramberg. I’m the Assistant Director of the Administrative Services
Department (ASD) and I’m joined here as well by Cara Silver from the City
Attorney's office for this item tonight. We’ll jump into a few slides. I hope
you all have the slides at your places. I did want to make one correction to
the staff report on Page 1 of the Staff Report I think it's the second line from
the bottom there's a typo where we say 19. You probably caught that by
2019 that should be $15.00 by 2019. Elsewhere in the report it's correctly
called out. So for tonight the topics that we're going to cover briefly in these
few slides that I have about six slides, six or seven slides, is just really to
bring you up to speed on kind of where we're at with minimum wage since
last year and then run through the recommendations that we're suggesting
for consideration tonight. So we're going to talk about the current status of
where we're at and then we're going to cover a recap of the State and
regional minimum wage status, propose changes from the Cities Association
which is kind of the big topic for tonight that’s covered in the staff report,
highlight a couple exceptions for consideration by the committee and then
TRANSCRIPT
Page 2 of 31
Policy and Services Committee Special Meeting
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jumping into recapping with what the recommendation is for the committee
to consider for tonight. So going on then to Slide 3 to remind everyone that
Palo Alto adopted a change in the minimum wage in 2015 that went into
effect in 2016. So the current minimum wage in Palo Alto is $11.00 per
hour. With under the current ordinance the minimum wage is scheduled to
increase by the Consumer Price Index (CPI), the national CPI which right
now is about a percent. So it would look to the August to August change in
the CPI which is coming out to be reported here shortly. If it stays about
the same the new minimum wage under the current ordinance would change
to $11.11 roughly in January of 2017, so just coming up here. We are
required in the Ordinance to announce what that change will be in by
October 1st. So that's really the most immediate kind of timeframe item
that we need to be considerate of as we talk about things tonight. And then
December 1st we do the actual publishing of the new schedule and
announcement that we make available to all the businesses via the website.
Those are the two key dates coming up based on the current ordinance.
Jumping then to moving on to Slide 4, just a quick recap of some of what's
happened maybe since the last time we were all together or at least
refreshing of what the current state is. California is at on a schedule to be
at $15.00 by 2022. San Jose is currently at $10.50 with an annual
Consumer Price Index (CPI) increase built in. Sunnyvale recently went to an
$11.00 minimum wage. Mountain View is at an $11.00 minimum wage as
well. Mountain View is currently scheduled to go to $15.00 by 2018. And
then you see there Palo Alto at $11.00 right now as well. Next Slide 5.
Council Member Berman: Sorry that, one question on that last slide. So my
understanding was Sunnyvale’s going to $15.00 an hour by 2018 as well.
Council Member Kniss: They have. They’ve adopted it.
Council Member Berman: I just checked their website earlier today.
Mr. Ramberg: Great. Thank you for that clarification. And we would say
that Sunnyvale is going to $15.00 by [inaudible]
Council Member Kniss: Right, by 2018? January 1st? Or 2018.
Man: Yes.
Woman: Just like Mountain View.
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Mr. Ramberg: Thank you. Slide 5 then the proposed changes from this
Cities Association of Santa Clara County this is what this slide recaps which
is kind of the basis of a lot of the discussion in the Staff Report. The
proposal there is to have a $15.00 per hour by 2019 it’s the $15.00 by 19
proposal. It would be phased in starting in 2017 at $12.00 an hour, go to
$13.50 cents by 2018 and $15.00 an hour by 2019. It would then increase
by CPI by the Bay Area CPI after 2019. And there are no…
Vice Mayor Scharff: January 1, 2020.
Mr. Ramberg: Thank you. And there are no built in additional exceptions
recommended in the Santa Clara County Cities Association proposal. And
then speaking of exceptions there are a couple exceptions worth bringing
forward that we're requested to bring forward for Council consideration.
One is referred to as the State’s learner exception. We wanted to emphasize
that this really is already built into the definition of employee in the Palo Alto
ordinance. So the State learner's exception allows for employers to pay a
minimum of 85 percent of the minimum wage for the first 160 hours of
employment. Palo Alto assumed that exception in adopting the State's
minimum standards when we brought in our Ordinance. So that's built in.
Some cities have gone beyond that and that's the possible discussion topic if
so desired. Berkeley and San Francisco have gone beyond that State's level.
Vice Mayor Scharff: Well where’s Mountain View and Sunnyvale?
Mr. Ramberg: They haven't made any changes to that.
Vice Mayor Scharff: So they have a learner exception?
Mr. Ramberg: Correct.
Mr. Ramberg: They've incorporated the State’s.
Woman: What?
Person: No.
Woman: Oh, we have no exemptions.
Mr. Ramberg: They’ve incorporated the State’s definition of …
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Policy and Services Committee Special Meeting
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Woman: No, oh, someone else can field that one.
Mr. Keene: Maybe Cara, our City Attorney.
Cara Silver, Senior Assistant City Attorney: Yes, that’s correct; Cara Silver,
Senior Assistant City Attorney. So the this is a little bit complicated the
State law contains a learner’s exemption as David mentioned and this City of
Palo Alto incorporates the definition of this the State’s definition of employee
thereby incorporating this learner's exception. So it does apply in Palo Alto’s
ordinance and in Sunnyvale and Mountain View’s ordinance which has a
similar structure.
Mr. Ramberg: The other exception is one for…
Mr. Keene: Well there was a request to bring this forward, the wait staff.
Mr. Ramberg: Correct, yes. Thank you for that reminder Jim. The Council
asked for information on the wait staff exception. And I believe you all
received information from the City Attorney on that and that can be
discussed further as needed. This would be an exception within the
restaurant workers category and we don't have examples of other
jurisdictions at this time incorporating a wait staff exception.
Chair DuBois: The other thing the state splits it by small company/large
company. Is, do other cities do that?
Ms. Silver: So just recently in connection with Senate Bill (SB) 3 the new
State law increasing the minimum wage there is a distinction between small
businesses and large businesses. And so I think that's what you're referring
to? Yes.
Chair DuBois: Yeah, I was asking Cara about it. Are cities emulating that at
all?
Ms. Silver: As far as we've researched in California there are no cities that
have that distinction. In the recently adopted ordinances San Mateo just
recently considered an ordinance and it actually went on second reading last
night and I don't know if they passed it or not. And they have an
exemption, a one year delayed deferral for nonprofits. So that's sort of the
most recent thing that we found.
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Policy and Services Committee Special Meeting
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Chair DuBois: I guess was that the end of the report or?
Mr. Keene: Can I just add something, Mr. Chairman? As it relates to the any
sort of a special exemption you know just [inaudible] those specific. I mean
in addition to the information you can get from the City Attorney I think just
in general that aside from many perspectives about fairness just the fact of
creating exemptions really complicates the ability to kind of collect and
maintain and enforce issues. Even some of the issues we've had with the
business registry had to do with starting to put lots of different layers of
categories and it’s self-reporting and it’s varied and it gets confusing for
folks. In addition as David mentioned none of the other jurisdictions are
exempting wait staff and we contract actually with San Jose to provide for
the enforcement of this function. So I mean as the City Manager I mean my
perspective would be it injects the opportunity for lots of errors in collection
that sort of thing and complicates our contract in relationship I think
potentially with San Jose as to how to enforce the ordinance. Thanks.
Chair DuBois: Alright so we have quite a few members of the public
[inaudible] public comments next. Because we have so many you have two
minutes to speak and if when I call your name if you could come up to the
microphone. So first speaker is David Page and we have Michael Martin on
deck.
David Page: Hi, thanks. Thanks for having this, taking the time to listen to
us tonight. I’m in favor of the $15.00 minimum wage. When I was looking
through the literature about this it seemed like the toughest concern,
biggest concern was about the potential loss of jobs. And if you're
considering helping out these people that are making $11.00 an hour a
couple more dollars an hour would be really appreciated, but on the other
hand somebody is making $11.00 an hour losing their job isn't going to be
helpful at all. So I think that would be a really difficult call to make if we
were living in a different part of the country without this extremely
expensive cost of living that we have here in the world famous Silicon Valley.
So given that consideration I say let's go for the $15.00 and no exemptions.
Thank you.
Chair DuBois: Thank you. Ok, Michael Martin followed by Susyn Almond.
Michael Martin: Good evening. I'm not going to say this more eloquently
than Galen Fletcher said in his email to the to the Committee and or as
succinctly as Laurie said in hers as well. Fleming's is a company I work with.
We're very strongly in support of living wage. As a company we have long
TRANSCRIPT
Page 6 of 31
Policy and Services Committee Special Meeting
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been paying in excess of minimum wage to non-tipped employees. Frankly
$15.00 an hour is probably not enough to work a single job and live in Palo
Alto and we understand that as well. Our tipped associates probably make
anywhere from $20.00 to $40.00 dollars an hour. Our non-tipped associates
we would like to be able to pay them an equal wage, $25.00 to $30.00 an
hour. So we were just looking for an exemption and for that; however, I we
also understand we lobby the State of California we realize that's probably
the best place for that exemption to come forward, but thank you.
Chair DuBois: Thank you. Susyn Almond followed by Camelia Coupal.
Susyn Almond: Hi, I’m Susyn Almond and I'm here to tell you the family side
of this. My kids went to Palo Alto schools and my son has for the last five
years worked minimum wage at McDonald's, Jamba Juice, and delivered
your pizzas among other things. The way that he's able to stay on the
peninsula is he lives with eight other people in a two bedroom apartment.
So in the last couple of years we, I have lived in Mountain View and
Sunnyvale and advocated and we’ve successfully passed minimum wage. So
what I'm here to ask is that you do the same, you pass it forward to Council,
no exemptions and help our all of us out. Thanks.
Chair Dubois: Ok, Camelia Coupal followed by Paul George.
Camelia Coupal: Hi, I am in agreement with the $15.00 wage increase, but
for restaurants and small businesses like Coupa Café having the wait staff
exemption is necessary because there is a discrepancy between front of
house and back house staff. So if you have a front of house staff making
$15.00 with tips or making over $30.00 an hour discrepancy within the
same people who should all be you know, trying to earn in the industry at
the same level or range of $15.00, $20.00 an hour, but when you're adding
tips which is the majority of the wage that they're going to be getting
anyway the increases it's too high when you're comparing front and back of
house. So I do think we need for restaurants the wait staff exemption.
Thank you.
Chair DuBois: Thank you. So Paul George followed by Alison Hicks.
Paul George: Hi, Paul George with Municipal Peace and Justice Center.
Through my organization I've been involved in literally every one of the local
efforts to raise minimum wages. Most recently in San Mateo that was just
mentioned and I thought I'd share some of the experiences there because
the second reading was actually the third reading. They had an original bill
TRANSCRIPT
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Policy and Services Committee Special Meeting
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where they had all kinds of exemptions build in and I think it's helpful to
learn from them. First of all on restaurants our legal advice mostly from
California Labor Federation and legislative analysts in Sacramento is the
California law does not allow exemptions for tipped workers. The law is
pretty clear to protect tip workers from just kind of exploitation that they
have to get the same wage. Two tier wages offsetting tips things like that
are pretty clearly banned. I sent you a copy of the analysis that we use.
San Mateo backed off when they saw that. Another one that they had
originally built in was for teenagers, but we pointed out to them that not all
teenagers are there for spare pocket change. A lot of teenagers are working
for minimum wage and actually contributing to the family income and there's
no way you can write an ordinance that's going to be able to tell whether
someone's working to put food on her family's table or for a summer job.
So that's an exemption that got left out. On nonprofits it's an excellent
question. San Mateo who originally just put nonprofits in their ordinance
and then realized that places like the Chamber of Commerce are a nonprofit
so they reduced it to 501(c)3 organizations. Those are tax exempt
nonprofits and you might want to be careful about that one. And Councilman
DuBois asked about defining small businesses. San Mateo originally had in
their first ordinance a definition of under 50 employees, 50 employees or
under and the question came up what about the places that have 52 or 53
employees, will they lay off two, three, four workers to benefit from a lower
tier wage? The same thing could be said of if you set the limit at 20 or 30 or
10, there's always going to be that that break. In the end actually the
employers in San Mateo said make it clean, it's easier for us, it's easier for
enforcement. So thank you.
Chair DuBois: Alison Hicks followed by Jesse Cool.
Alison Hicks: Hi, I'm Alison Hicks. I'm with two groups: the let me see if I,
The Raise the Wage Peninsula and South Bay Coalition and also I’m with the
Raise the Wage Mountain View. I wanted to echo what Paul George said
that when we were doing the work in Mountain View the legal opinion we got
was that a two tiered wage for tipped workers and non-tipped workers was
not legal and that's one of the reasons we didn't go for it in Mountain View.
And then I just wanted to urge you to go to do a clean ordinance, a clean
$15.00 by 2018 and to do it as quickly as possible. I have two big reasons
for that. The first reason is that as you know from the presentation
California wide there's going to be $15.00 by 2022. And that will apply to
places like Bakersfield and Eureka, places where the cost of living is nowhere
near as high as it is here. When we went to $15.00 by 2018 in Mountain
View it was a somewhat new thing to do. Now this is not controversial
anymore and I think we need you to move fast so that if you move more
TRANSCRIPT
Page 8 of 31
Policy and Services Committee Special Meeting
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slowly the wage will be virtually the same as it is in the rest of California and
we're living in a very different situation here in Mountain View in terms of
cost of living. The second reason I'd like you to do it, the first was to get
ahead of the rest of the wages around the State. The second reason is that
low wage workers here are really living in a desperate situation. Let me tell
you what happened to me the other day. I got I live in a family, a
neighborhood of single family homes. I woke up in the morning I opened
my kitchen window to look at the trees across the street and I couldn't see
them. Instead of a man, a gentleman opened his kitchen window several
feet from my house. He had moved to the street right outside my kitchen,
virtually into my yard. He lived in a Recreational Vehicle (RV). You know I
talked to him, he was a low wage worker and he can't afford to live in any
other way. If if our elected officials don't take common sense steps like this
to help out low wage workers they're going to take their own steps and
possibly in ways that we don’t like. Thank you.
Chair DuBois: Jesse Cool followed by Michael Ekwall.
Jesse Cool: I'm actually Jesse Cool. That's ok. I've been a Palo Alto resident
and have owned restaurants in Palo Alto and Menlo Park for 40 years. This
is… sorry? This is one of the hardest challenges I think I've ever had in my
career. Nothing compared to economic or businesses, business challenges.
I am for the increased minimum wage, but I’m asking that you please
consider an exemption for tipped employees. We are not going to be here
much longer if you don't. We can't hire people, we can't find them. We're
already all pay, already paying dishwashers from $13.00 to $14.00 an hour.
I'm not sure if you all know but by law we cannot give any of the tips to the
kitchen staff. None of your money goes to any of them. It all goes to the
front of the house, tipped people. Half of our staff are tipped employees
with men… and they make minimum wage from $18.00 to $24.00 and
$40.00 an hour. In order for us to pay higher wages we are forced to raise
prices on the food that you buy in our restaurants. When we pray, when we
raise prices you tip more. It all goes to the servers and we can't pay our
kitchen staff any more. My labor costs have gone within the last six months
from 36 percent to 44 percent. In general in the restaurant business if we
can make five to ten cents on a dollar we're doing really well. I'm down to
about two percent. So if I have to pay everyone minimum wage and then
on top of that the I keep raising prices and they're making more I will not be
able to pay the kitchen staff and I'll be honest with you, I’ll be gone. I don't
care how opulent this community is or how many people are in the
restaurant, I’ll be gone. Most restaurant owners agree with an increased
minimum wage. What we are asking you in Palo Alto, my community, is to
please put a freeze no matter how hard it is for you we’ll keep the books.
TRANSCRIPT
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We've done it in the past with anything we have mandated to us. Put a
freeze on the current minimum wage for only tipped employees. They'll
automatically make more as we are forced to increase our cost to you
because you tip on percentage. Thank you for your time and I'm really
asking that my community take care of this. Thank you.
Chair DuBois: Ok, Michael Ekwall followed by Peter Katz.
Michael Ekwall: Good evening. I'll try to stick to my script tonight although
I've heard a couple of things that I don't think are quite accurate. However,
from our perspective as a local restaurant that's been open for 19 years in
Palo Alto we're not opposed to the concept of raising the minimum wage, but
to do so without acknowledging the tipped income and provide an exemption
for these tipped employees only helps our top wage earners in tip settings
and leaves the untipped staff which are generally our kitchen workers
unaffected by your efforts. So the reality is that over 40 states including
New York have a tiered minimum wage system. The federal government as
well has a tiered minimum wage system. And regarding tips and gratuities
as has been pointed out earlier the Department of Labor specifically states
that it's against federal law for back of the house employees to participate in
tip pools. So the reality here in Palo Alto is that none of our kitchen
employees are paid minimum wage, but just with this past January’s
minimum wage increase in our business it cost us this year $40,000 in
additional payroll. Unfortunately, not one of those dollars went to our
minimum wage, I'm sorry, to our kitchen staff. They all went to our
minimum wage tipped employees. So what we're asking is the Council help
create an ordinance that will help our lowest wage earners and also provide
hospitality and our tipped employees with an exemption. Not a sub
minimum wage exemption, but keeping us at the State minimum wage. So
I heard earlier something about California Labor Code 351 that might
allegedly prohibit the Council from an exemption to the State wage. Now
legal experts that we've talked with have a contrary opinion and said that
that only applies to the State mandated minimum wage. So what we're
asking is let us pay our tipped employees that State mandated minimum
wage. Also I noticed in tonight’s meeting notes on page four that there was
a confidential memo from the City Attorney's office regarding this issue so
we'd be interested in knowing why that issue is confidential. We're asking
that our tipped employees be exempted from the law, but those employees
still be compensated at the State's minimum wage. It's wrapped up. I
thank you for your time.
Chair DuBois: Thanks, Michael. Alright, Peter Katz followed by Dan Gordon.
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Peter Katz: Thank you. My name is Peter. I own a restaurant here in Palo
Alto. I own seven other restaurants around the Bay Area. Everybody raise
your hand if you don't believe in paying people living wage? Ok. We all
believe and in fact we believe that what people are making in the Bay Area
at the lower end is not enough. And I know a lot of restaurant owners and
frankly I know very few if any that don't support raising the minimum wage
to a living wage. We certainly do. The issue as others have said is more
about the impact of that minimum wage on most of the workers in our
restaurant. The folks that are going to gain from it are the folks that
actually are really unconcerned with their daily paychecks because they're
being paid $30.00 or $40.00 dollars an hour in tips. That wouldn't be a
problem either if it didn't impact our ability to pay the rest of the folks that
work in the restaurants. More than half our staff are making well above
minimum wage right now and the more that we end up having to pay
because of an increased minimum wage to folks that are already making
$30.00 or $40.00 dollars an hour the less we're going to be able to afford to
pay these other folks that are working in what we call the back of house. So
the losers in all this are going to be the folks that probably most need it and
also frankly the restaurant owners. And why should you be concerned about
that? Well there are frank… candidly right now the restaurants and you
probably haven't seen it yet, but you going to see it pretty quickly across the
country and even here in the Bay Area and even here in Palo Alto are
starting to suffer pretty serious economically. And we're going to see
restaurants going out of business. We've already seen it across the country
we've already seen restaurant chains shutting down, three in the last two
weeks. You know very large restaurant chains. We’re kind of mom and
pop, but the same thing is happening to us. I agree with what the previous
speaker said about the State minimum wage being a floor for tipped
employees that I believe in the gates what Mr. George pointed out about any
legal ramifications. And candidly I've got as I said eight restaurants here in
the Bay Area. We've stopped growing. We're not looking to open any more
because of these economic issues and that should be a concern as well. And
the last question before I close it up is I’ll ask the folks in support of no
exceptions at all even though 48 other states have exceptions and it's to the
City Manager it's managed properly in those 48 other states. I'd ask why
not? What, why not take that money that's going to folks that are making
$30.00/$40.00 an hour and pay it to the poor, you know, folks that are on
the grill that are making today $15.00, $16.00, $17.00 an hour, but we
could pay them more. We could pay them $18.00 or $25.00 an hour.
Chair DuBois: Thank you. Dan Gordon followed by Meghan Fraley.
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Dan Gordon: Hi, I’m Dan Gordon. I’m the co-founder Gordon Biersch, now
Dan Gordon’s around the corner. It’s great to be back in Palo Alto. It's kind
of funny, 28 years ago I was sitting in the City Council Chamber wondering
whether we’re going to get approved to have a building permit to open the
place up and now I'm full circle.
Mr. Keene: It didn’t take you 28 years to get the permit, did it?
Mr. Gordon: No, it didn’t. It did take us, actually the permitting process
went pretty quick. It was only like six months total and we were up and
running so not, that wasn’t bad at all. Yeah, it was a very efficient City. I'm
pleading for the exemption. Clearly no one can live on $15.00 an hour as if
that's their only income. The reality is that servers that are tipped
employees get anywhere from $20.00 to $40.00 dollars an hour in tips
working in Palo Alto. They don't need the help. You've heard that from
everybody. It's unanimous. Those are not underserved underpaid
individuals. We've got to have that. We're the only one of seven states in
the country that doesn't have a subminimum wage level. We're not even
talking about subminimum wage for hourly employees. For the tip
employees you go in a, you look check the stats and I brought some studies.
If you want to keep these, they are economic studies about subminimum.
It's crazy that we're even in a state that does it, let alone a City that's going
to be putting forward a 36 percent increase in hourly pay for tipped
employees. Thirty-six percent increase in labor costs for anybody in the
world in business is going to take them under and that's what's going to
happen down the street. By 2019 first thing there's going to threat to all
businesses that want to consider opening up in Palo Alto. I, as an investor
in this operation, would have seriously reconsidered opening up had I known
that it was going to go from $11.00 to $15.00 in such a short time frame.
Everybody in the restaurant industry is going to think the same way. You’re
going to find that decimation there. Then there's going to be panic attacks
on how to figure out how to accommodate this rapid increase. So when
you're talking about someone like Jesse who's got you know 40 percent
labor costs and half of those are hourly and you look at the inflationary
aspect of a 36 percent increase and you're working on a two to three
percent margin to begin with that means every, the majority of the
restaurants in the industry are going to go to a rapid loss. And you’re going
to see decimation of all the restaurants you like except for some power
players, you know. I'm going to be honest we we’re pretty profitable over
there. Rob does a great job at his place and we're very, very high volume
oriented, but the majority of restaurants in this town are not that way.
There are a lot of mom pop institutions and you can't discriminate against
them. The ones that are winning, well, and then the majority that are
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barely eeking by. So you've got to really consider this. There is a legal
precedent you can do this. It's just we're one of the few states that is bad
at business environment and doesn't look to the outside of this region and
this State to find out what's going to work. Ok, thanks.
Chair DuBois: Thank you. So Jon Kiya. I’m sorry, Meghan and then Jon
Kiya.
Meghan Fraley: Hi, my name is Megan Fraley I'm with the Raise the Wage
Coalition. We've been you've seen us many times I think at this point. I
also an the Clinical Director of a Community Center for Health and Wellness
which works with people and improving mental health here in Palo Alto. So
our as part of the Raise the Wage Coalition though there's a few of us in this
room, there's also thousands of people that we're here to speak on behalf of
minimum wage workers who are working and also Peninsula Young
Democrats, really as you can see even with all of these wonderful restaurant
owners that are here this is about as popular and clear of an issue as it can
get. Even Hillary and Bernie duked it out about $15.00 and we're not even
talking about the heart of Silicon Valley. So in that sense it's very politically
popular; that said what it really comes down to is what's moral and fair and
people deserve to be able to live, right? As someone in the mental health
field I see the very real consequences of not being able to work 40 hour
weeks and instead 60-80 hour weeks and what that does to the children and
what that does to the families and it's very it's very real. So I would ask
that you join Palo Alto, sorry, yeah. Join the heart of Palo Alto and Mountain
View and Sunnyvale and passing the a clean path to $15.00 by 2018. And
join us, I’m a Mountain View resident as well. So please join us in leading
the way. I think you know Sunnyvale and Mountain View moved, but right
now after the Cities Association sent forth the recommendation, actually I
have the letter here so I can share any of that from you. And you can share
because you were there. It was beautiful, oh my God. But after the Cities
Association sent out the recommendation for all of us to move in concert
what was really clear was how important it was I think from everyone who
really thought through that that it was a clean ordinance to make it easily
replicable, much more easy to enforce because we already have people
working on wage theft issues, easier for businesses who work in more than
one city. So please pass a clean path to $15.00 by 2018. Thank you guys
for being leaders on this issue and other cities are watching for the lead. So
thanks.
Chair DuBois: Thank you. So Jon Kiya followed by Ruth Silver Taube.
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Jon Kiya: Hi, Jon Kiya, a longtime resident; I’m on the Board of the Chamber
of Commerce and I'm here to speak on behalf of the Chamber and its
members and the business community, you know, local business community
in general. So we don't want to stand in the way of the path to $15.00.
That movement is already underway regionally we and we believe that's the
it's the right thing. We are concerned about a couple of sectors that this
impacts and one of course is the restaurant sector and tipped workers. And
I can't say anything better than it's already been said by many of the
restaurant owners, but we are concerned about the disparity between the
front and the back of the house, the rise in prices in order to compensate
some very low margin business, and I would also say that following the lead
of a Sunnyvale or a Mountain View I don't think that we necessarily as a city
have to go down that path. We're in, we're a vastly different city than
Sunnyvale or Mountain View. You know I could I guess I would make the
analogy that running a restaurant in Sunnyvale or Mountain View is not as
challenging as it is running in Palo Alto. You've got a high cost of real
estate. You've got fierce competition. You've got a real big challenge in
hiring workers and so I don't think that we necessarily have to look at our
neighboring cities and pattern our policies after those cities. We’re I think
we’ll all agree that Palo Alto is a very different city. The others sector that
we are concerned about is the a, it's the nonprofit sector. Because
nonprofits many nonprofits get the bulk of their revenues for through
government contracts: local, state, and federal or grants and they're multi-
year grants they base those revenues off budgets, fixed budgets and to
change those budgets would put a lot of pressure on these nonprofits. And
one thing we don't want to do is drive nonprofits like Acterra, like Abilities
United, like the Junior Museum, like Avenidas out of out of this area. I think
we’ll agree that we're better community when we have those nonprofits
operating here. Thank you very much.
Chair DuBois: Thank you. Ruth Taube followed by Rob Fischer.
Ruth Silver Taube: Hello, my name is Ruth Silver Taube. I'm the
Supervising Attorney at the Workers' Rights Clinic at the Alexander Law
Center at Santa Clara University Law School. And I see a lot of clients from
Palo Alto that come to our clinic, low income clients that often because of
the money that they're making which is so low have to either end up living
in their cars being homeless or living in very crowded circumstances. And
raising the minimum wage will make a huge difference. Many of these
workers work many, many jobs. Really aren't… it impacts their health and it
makes a huge difference. And I I'm speaking here in favor of a clean
measure and I'm also an employment attorney. I teach employment law at
Santa Clara University Law School. And I disagree vehemently with the
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interpretation of Labor Code 351 that was proffered by the speaker from the
restaurant. In fact, the Labor Commission itself says that California law
requires that employees receive the minimum wage plus any tips left for
them by patrons of the employer's business. I do not agree that there is
any exemption in because it's local rather than state. As a matter of fact the
state is the floor. The local cannot, can maybe be better, but it can't go
lower than that. And I am confident that that's a losing argument. The
other thing about the learner's wage is that it's only for 160 hours and then
it has to go up. So I don't think it's going to buy anybody very much.
Finally, I don't believe that non-profits should be exempt. We're talking
about a very low amount of money. The last speaker spoke about how
challenging it is for the restaurants in Palo Alto which may very well be true,
but conversely it is very, very, very challenging for people who live in Palo
Alto and even more challenging than Mountain View and Sunnyvale because
the costs are even higher here. And there's been studies. There was a
University of California (UC) Berkeley study and it shows that the minimum
wage has a very positive impact. Raising the minimum wage in the past has
made a difference. People have more buying power and they're able to live
near where they work. Thank you.
Chair DuBois: Thank you. Rob Fischer followed by Forest Peterson.
Rob Fischer: Hi, good evening. I’m Rob Fischer, local restaurateur. A couple
things, one is I think what we all want is fairness for all of our employees.
And that's what we're asking you to give us, the ability to be fair to
everybody. Not, we're not looking to not do the minimum wage of $15.00
an hour, we're not looking to go below the floor of the State, but what we
want to do is we want to take that money and give it to the people who work
harder than anybody else in our restaurants. The people in our kitchens are
by far the hardest workers we have. And there are dishwashers if anyone in
here has washed dishes before I don't think you could disagree with me.
They are the, that is the hardest job in any of our restaurants. Our cooks
work extremely hard. The fact that we don't have the ability to pool our tips
and share with those people the laws are pretty clear that if you're not
touching that table, what I mean by that is if you're not going to that table
and talking to the guest you cannot share in that gratuity. So it's really
important for us to be able to pay our people in the back of the house more
money. And we want them to have as good of a life as the people in the
front of our restaurants do and that's what we're asking for and nothing
more. Ok, thank you very much.
Chair DuBois: Forest Peterson followed by Poncho Guevara.
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Forest Peterson: Thank you for giving me the opportunity to speak and I'd
like to speak in favor of the $15.00 an hour wage. So first what I'd like to
do is thank Gordon for his beer because that's what as a grad student at
Stanford that's what keeps us going. And I haven't been to a single event
where the difference between a good event and a bad event wasn't over that
beer. So that brings me to grad students. A lot of my neighbors in
Escondido Village we have to work in the community. Sometimes we
threaten our advisors that I'm going to go work in the community for $10.00
an hour if I don't get funding. That's a big difference trying to support your
family, your wife, your kids; some of it's the women supporting their
husband and their kids while they're finishing their graduate degrees. So
raising the wage I don't think is something I need to speak on that much. It
sounds like everybody agrees that that's important. So what I can speak
professionally is as a construction engineer. In the construction industry we
have laws that are incredibly complex on wages. And I understand the
importance of varying the wages for different types of workers and trying to
equalize it and the problems that the law creates, but if you jump into the
prevailing wage law you can create an entire business just in prevailing
wage administration. And so I wouldn't recommend anybody to go down
that road as a solution is a more complex law. Thank you.
Chair DuBois: Poncho Guevara followed by Maria Noel Fernandez.
Poncho Guevara: Hi, again my name is Poncho Guevara. I’m the Executive
Director of Sacred Heart Community Service in San Jose and it’s a pleasure
to actually be here. And actually I just want to congratulate you for having
this dialogue and making sure that we're really lifting up this this
conversation about what's happening with families in our community. Last
year alone Sacred Heart served over like I said about over 62,000 men,
women, and children that came through our doors last year out of our base
of operations up in San Jose, but we serve folks that live and work
throughout the Valley including over 300 folks that are working in Palo Alto
according to information that we have. And one of the one of the gals was
named, a woman by the name of Griselda who actually works at a
restaurant up here takes two busses, takes over two hours in terms of
commute time every day, time that she's not able to spend with her kids
and she is doing everything that she can to try to make sure that she can
actually provide for her family. She can't work full time because of all of her
commute time and being able to be with her kids. And the hours that she's
worked both front of the house and back of the house are what sustains her
and she needs a strong working environment. And just being able to
calculate what's happening and making sure that we're able to do everything
we can to lift up everyone and trying to go through the process where
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sometimes she hasn't gotten paid everything that she was or not by
necessarily in any of the employers in this room, but having to go to a clinic
like Ruth’s and be able to say, you know I I'm not sure if I'm paid correctly
and I didn't get this or that kind of thing. Most of these are complaint driven
you know processes to actually audit for enforcement becomes very, very
difficult to be able to make sure that everything is able to be operated
efficiently and so creating a system that's fair, flat, and effective that doesn't
have lots of exemptions is really important for the day to day reality of
families like Griselda’s. So we ask for a clean $15.00 by 2018. It does
create a standard for our area and is representative of the values that I
think we'd like to share. Because let me say what we've been able to do
even lifting it $11.00 an hour has made a huge difference in the lives of so
many families like Griselda’s. We ask you to move forward with this in an
effective and efficient way for the entire valley. Thank you.
Chair DuBois: Thank you. Your last speaker is Maria Noel Fernandez.
Maria Noel Fernandez: Good evening, Maria Noel Fernandez with Working
Partnerships USA and Silicon Valley Rising. I don't want to be repetitive so
I’ll try to be pretty short. The reality is that many of us in this room have
been a part of this movement for many, many years. And since we started
this work we were up against really this fear that is in the community and
that's really being generated in part lot of times by the commerces etcetera
and what we've found in passing the first step which was to get to $10.00 in
San Jose we were told that restaurants were going to close that, you know,
the sky was going to fall and the reality is that it didn't. And so I think it's
really important for us to really look at some of the studies that have been
done. Ruth lifted up a really important study that I'm fearful that we
haven't talked enough about which is the University of California (UC)
Berkeley report that was done. UC Berkeley really is seen as the gold
standard in terms of studying this issue locally and nationally and from the
report they were able to find really the benefit that it would bring to the local
economy, but also address some of the fears that our business leaders are
bringing to us. And what if found is that it would likely increase costs from
about 0.3 percent to 2.9 percent and that could be something that would be
able to be absorbed. I want to also just lift up this idea around tip minimum
wage. The reality is that Code Section 351 is real and that it will potentially
put Palo Alto at a real legal risk if that's ignored. I really do appreciate all
the work that's already been done on this issue. I think we're all working to
really figure out how we can make this work and how we can make Silicon
Valley a place for all of us that businesses can thrive that communities and
workers can thrive in and this is a key step in making that possible. And
just really lastly I just want to lift up that I appreciate the concern for
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nonprofits. I am a nonprofit. I work for a nonprofit and the reality is is that
the movement has been driven by nonprofits. And so I want to just make
sure that people know that nonprofits are part of this movement and are a
part of making $15.00 real. Thank you.
Chair DuBois: Thank you. Thank you to all of our speakers. Now I’ll turn to
Council Members.
Council Member Kniss: Could we start with asking Cara if she would go
through the 351, talk about other states, set the legal stage for us.
Chair DuBois: Sure. That’s a good idea. Yeah. Did you hear that [inaudible]
Ms. Silver: So certainly. So as the foundation I think that the most complex
question here is the tip credit and most of the speakers addressed that
question. So the statutory framework for the tip credit is Labor Code 351
which says that essentially it prohibits employees from taking tips from the
workers to credit against their base pay. And there are cases that have
interpreted that section as also prohibiting the State from providing for a tip
credit or a tip exception. Now since there aren’t any cities that have actually
provided this tip exception or tip credit there are no cases that talk about
whether this State provision is applicable to cities. However, you know there
are certainly commentators out there and lots of legal opinions out there
that believe in they’re, you know, the best judgment that this provision
would apply to cities as well. It is currently an open issue and we provided
you a confidential memo on our assessment of at that issue.
Chair DuBois: Ok, thank you. Greg?
Vice Mayor Scharff: Thanks. So first of all I'd like to thank everyone for
coming out today. This is a small town in many ways and I'm actually really
glad that the restaurants came out that and I, and all the people that have
been working so hard to have $15.00 by 2018. I appreciate you all coming
out. I know how hard you’ve worked on this and I've seen you over and
over again at many things like the Cities Association meetings and all of
that. And I think the first thing I'm struck by is I think there almost seems
universal agreement by all the speakers in the room that $15.00 is the way
to go. I don't think that's really a question. I think everyone's thought
about that. I actually also wanted to say that I appreciated the nonprofits
that got up and spoke because I have had some concerns about an
exemption for nonprofits. I have been concerned that for what the person
from the Chamber of Commerce said, but I haven't seen the nonprofits. I’ve
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seen the nonprofits do the opposite. They've come up here and asked to be
part of $15.00 by 2018 and that counts for a lot. So the most troubling
thing of all for me obviously is that the restaurant tip issue. I think that's
actually a really difficult issue, but we have a State law and the State law is
if it's not clear we would then become the test case. And I am an attorney
and no attorney I think who is any good would tell their client frankly to be
the test case for the State. And I think if Palo Alto did that we would be the
test case. And I want to say that because I appreciate what you've all said
and frankly I actually have actually gone through some of the books with my
friends who own restaurants in Palo Alto and I do think that there is an
issue. And I recognize it is a true issue, but I actually think as I think it was
the person from Fleming said this is really an issue to address to your State
legislators. I really feel that we in the City here have our hands tied on this
issue. And you know we could you know make a bold statement in favor of
the restaurant industry. We could do that I suppose and take on litigation.
I don't think that's the right thing to do. I also think there's an enforcement
issue that we need to be cognizant about. That if we have separate rules it
becomes much, much harder to enforce things. The other thing is as you
know I'm part of the Cities Association, the Vice President of it. And I got to
say that I think what we really want to do here is we want to take a regional
approach. And if everyone has the same rules you all compete on a level
playing field as restaurants and as everyone else. And that seems to make
sense to me. And I got to say I think that's probably one of the strongest
arguments why we should have a clean simple to enforce rule that everyone
understands. So that's where I'm coming from. And I did sign the letter
from the Cities Association so I'm sure that's not a huge surprise to people
where I’m coming from on this. And when we talk about what we want to
do today what I'd like us to do is to make sure we get in sync with our
neighboring cities so that by 2020 frankly all the cities in Santa Clara County
are on the same page. And that was the thrust and the reason I said 2020 I
saw some confusion is that other people… No, it's a good question. Is cities
of Mountain View and Sunnyvale are going to be ahead of a lot of other
cities. A lot of people are at $10.00 right now. We're at $11.00 and so by
20 the Cities Association suggested $15.00 by January 1st of 2019. And the
notion was at that point that Mountain View and Sunnyvale will go back and
suspend the CPI increase and that the new CPI increase on $15.00 will
actually be, you know, January 1, 2020. And that's why I said in 2020
everybody hopefully will have the same wage we just all have to catch up
and get together. At least that was the vision of the Cities Association so
that there's no difference everyone's at the same rate. If you open a
restaurant in Mountain View or open in Palo Alto or you open any business
you know where you are. And so that's the Cities Association vision of
where we get to. I think there's obviously some details here, you know, Palo
Alto is currently $11.00. A lot of cities are at $10.00. So the Cities
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Association said you know three steps you know $12.00, $13.00, $15.00
and $15.00 on January 1, 2019. How we actually get to that $15.00 we can
talk about my view. You know, I mean there's different reasons I've heard
from some restaurant owners that you know a little more time on some of
these things is very helpful, but within that framework I think we need to all
be the same, you know, by January 1, 2019 that we’re at $15.00 and then
we all deal with the CPI increase to all come into alignment. So that's what
I was thinking on that. I did want to say the other thing in the back of my
head is a little bit is I ate at restaurants all over California and I haven't
found the Oakland restaurant scene I am pretty sure Oakland's at $15.00
aren’t they? They're close, right?
Woman: They’re between, they’re around $12.50 or $13.00.
Vice Mayor Scharff: So they’re at $12.50. Ok. So what I've noticed is
Oakland seems to be going to a different system where you don't tip. They
seem to be going to a system of you know a surcharge. And I noticed that
Tamarind frankly, I don’t know if anyone here represents Tamarind, now has
like a three percent mandate charge.
Man: Do they? I didn’t realize that.
Vice Mayor Scharff: And I'm guessing that that is the work around. And
when I was a Beverly Hills they didn't, they had the same thing. They had a
large this is I don't remember I think it was like 15 percent or whatever.
This is the surcharge due to the minimum wage. I think that's what they
wrote on the menu. Because I think Beverly Hills is way up there. It may
even be at $15.00 currently. So I know that you guys will adapt and I feel
bad saying that.
Man in audience: I know that this is probably out of order, but can I say that
we did that in our restaurant in Cupertino? For three months and we had to
change under duress from all of our [inaudible]. It is exactly where we all
need to get, but there is no way as an individual restaurant we can do that
in this environment. We tried it. We got Yelp reviews. All of our Yelp
reviews prior to [inaudible] the restaurant said excellent and we go to the
point where after three months we had to change it and apologize to our
customers who called us greedy even though all of that money was going to
higher wages.
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Vice Mayor Scharff: So fair enough, I think and I think that's what argues for
a regional approach because if every city and every restaurant has the same
rules then you won't have that problem.
Chair DuBois: Let’s keep some order here. That’s ok. We’ve been a little lax
tonight, but let’s maintain some order. Greg?
Vice Mayor Scharff: So yeah, San Mateo, but San Mateo as a county is
moving as a whole in the same direction. And I think you know we
obviously can't, can't make a perfect world without, you know, we can't
enforce everything. So what I want to see us do and I think it's really is I
want to make sure that we do $15.00 by at least January 1, 2019. I want to
make sure that we have some step increases so in 17 we start again. I
would suggest probably that we move since the Cities Association is actually
suggesting $12.00, we’re a dollar had already. I would probably suggest
that we move to $13.00 on January 1, 2017. I realize and then I actually
wouldn't have another increase to January 1, 2019 of $15.00 which gets us
up. I mean there's some people are going to say that the $13.00 is too
quick. Yes it's quick, it goes up, but it goes up the way the other cities went
up. They were at $10.00, we’re at $11.00. I don't think we need to have
another interim increase. I think you then have time to adapt by January 1,
2019 and then at that point we have a CPI increase start on January 1,
2020. And I also think that we should have actually that's in the Cities
Association letter. I think I handed it out to my colleagues. And then I do
think we should change the index frankly to be the Bay Area CPI as opposed
to the National CPI. I think the… now the Cities Association also had some
off ramps which I think we should. It said first of all that we cap the CPI at
five percent in any one year. I think we should do that and I think we
should have some off ramps that could be possibly triggered it would be at
City Council discretion. That's only during the ramp up phase. I don't think
we actually, I don't think Palo Alto needs that frankly. They, they basically
had some off ramps that if there was a recession during this ramp up phase
then that would basically be between 2017 and 2019. I don't think that's
necessary in this. And then I don't think we should have any exceptions at
all other than what's in the State law in terms of the learner's exception. I
think that makes it easier to enforce. So I would make that as a Motion. So
that's something…
MOTION: Vice Mayor Scharff moved, seconded by Council Member Berman
to recommend the City Council direct Staff to prepare Ordinance
amendments to increase the minimum wage to $13 on 1/1/2017 and $15 on
1/1/2019 with a CPI increase starting 1/1/2020 indexed to the Bay Area.
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Council Member Kniss: I’d like a little discussion first. I realize Cities
Association spent a lot of time on it. So it is wonderful to see everybody
turn out tonight, but Jesse Cool’s comments certainly affected me. Many of
you I know from the restaurants that you run. But the question will be and
Jim you might have a better handle on this than some, we’re not just
discussing restaurants tonight. We're discussing a minimum wage for every
company that we are that is in our jurisdiction. As I understand, correct?
Mr. Keene: Correct.
Council Member Kniss: So it's not… this is the restaurant business may be a
small part of this larger, larger hole. And as far as the minimum wage for
everything outside of the restaurants I don't know, no problem with that.
But I am, I'm puzzled. I want to go back to a couple of things that Cara
said. Did you say 48 other states have different rules regarding tipped
employees? Did I understand that?
Ms. Silver: So I didn't, I didn't say that, but it is true that this is a very
unique law that the 351 and there it's very common for other cities to have
tip credit exceptions because they don't have a state, exactly other states,
because they do not have the protection that California law has.
Council Member Kniss: So therefore it means there's something behind this
that I probably don't know about, but…
Mr. Keene: Could I interrupt just for a second, do you mind? Just on this,
this real quickly.
Council Member Kniss: Sure.
Mr. Keene: Well, I mean want to state the obvious. This is the United States
of America. I mean we're divided into states where the dominant power in
this country is allocated to states and so there's tremendous variety in the
states. I'm sure if we came back to the Council with a list of laws that only
California has that does not, did not exist in other states it would be a long,
long list. I mean California it really is. So the challenge really is that I mean
we have complaints all the time about things you'd like to do as a City
Council that you’re precluded by and preempted by the State. And so it
ultimately does require State legislative changes so many things.
Council Member Kniss: And so what really surprised me about this though it
was that how many other states have seen this as an issue, especially in
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New York as I understand states with, states known for their restaurants and
so forth, Florida. I hear what we're saying about the State law, we’re
hesitant to go up against it. I, Greg I hear you on the regionalism. I like
the regionalism idea, but I think that we are perhaps without meaning to
really singling restaurants out and really singling out those who are in the
front versus the back and that that really troubles me. What I'm hearing
you say Cara is we, we would be a test case if we were to do it otherwise?
Ms. Silver: Yes that's correct. The other cities that have tried this, larger
cities Sacramento and Los Angeles there were a lot of organized labor
groups that fought that particular exception and we would expect the same
thing here.
Council Member Kniss: Alright, that gives me the answer that I was looking
for.
Council Member Berman: Politics, Liz.
Council Member Kniss: Yeah I just heard that. So for those of you who are
here in the restaurant business I can’t tell you how sympathetic I am. As a I
once worked in the back and I once worked in the front to get through
college. So I remember this very well. And it's tough. The back room
certainly does do the work. I wish there were something we could do for
you. I don't think we're quite at that test case yet, but I would hope that
some of you would work with the State and I can hear how tough that is. I
heard the message and what Cara was saying in order to alter this. You
know several of you I know your restaurants. Your food is terrific. It would
be an enormous loss if they were to close. That said, the path clear clearly
is the one we have to follow as long as we're complying with the State law
351. And that’s regrettable.
Council Member Berman: Yeah, so I mean just kind of along those lines I'm
not here and thank you. I mean Greg and Liz have spoke very eloquently
about the situation, about the context, and I'm not here to raise the
minimum wage for the front of house staff for a lot of the restaurants in this
room. That's not why I coauthored a colleague's memo to raise a minimum
wage in Palo Alto. But I am here to raise the minimum wage in Palo Alto
because wages across the region and across the State haven't kept up with
the cost of living. And we heard about that with a speaker who said that her
son is living 8 people to a two bedroom apartment and that's happening all
that's happening in Palo Alto. And that's happening all across the region and
that's why you see this effort to raise the minimum wage. And but I'm also
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not here to make a decision that clearly puts the City at a disadvantage in a
legal dispute. And we don't know what the result will be because no city has
done it. And that kind of tells me the answer I need. That there are 17
cities across the State that have not that have adopted minimum wages
higher than the State minimum wage and have not carved out a tipped
worker exemption. And I'm sure the restaurant associations in those
communities have lobbied just as hard and as eloquently as you guys have
here. But we wouldn't be doing our duty as stewards of this City and of this
City’s resources if we walked ourselves into a lawsuit that the odds were
heavily stacked against us. And so you know I think a lot of people have
mentioned you know that different states have different rules and I think
we've kind of keyed in on that you know where this this debate needs to
occur, but we as a City I'm not willing to make a decision that's going to
guarantee us a lawsuit tomorrow and probably [inaudible] hundreds of
thousands of dollars of legal fees down the road and lots of staff time. And
so I and I do think you know Mr. Gordon mentioned you know Menlo Park.
And I do have concerns about San Mateo County. I was heartened to see
the City of San Mateo pass a minimum wage ordinance for I think it’s $15.00
by 2019 and my hope is that the other San Mateo County cities follow suit.
The Cities Association of Santa Clara County almost unanimously passed, it
wasn’t an ordinance, but you know guidance to their cities. I think Gilroy
was the only one to say no?
Vice Mayor Scharff: I don't remember who said no. They may have
abstained.
Council Member Berman: Yeah, you know, and so I think you're going to see
this happen in every city in Santa Clara County very soon. I mean that they
will move to $15.00 by 2019. My hope is that San Mateo County cities
follow suit. Tough to tell, but I'm always happy to see San Mateo do it. And
I think that you know we when we raised the minimum wage to $11.00 an
hour by January 1, 2016, said that you know we had a goal of getting to
$15.00 an hour by 2018. We did not set a schedule to do that. There's
right now there are two different schedules there's the Mountain
View/Sunnyvale schedule which is $13.00 an hour by January 1, 2017, and
$15.00 an hour by January 1, 2018. Both of those cities are that's their
half. The Cities Association is a little different and Palo Alto kind of finds
itself in the middle because we started earlier than the Cities Association,
but we started later than Mountain View and Sunnyvale. And so I would
second Greg’s Motion with an amendment which is $13.00 an hour by 2000,
by January 1, 2017, and then $15.00 an hour by July 1, 2018, so a year and
a half later. Which at that point we’ll actually be for a while there we’ll be
behind all the cities in Santa Clara County for six months. And then there
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won’t be another increase for another 18 months after that until January 1st
of [inaudible].
Vice Mayor Scharff: I would accept that.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND THE SECONDER to change the timeline to state “$13 on
1/1/2017 and $15 on 7/1/2018.”
Chair DuBois: So if I could make a few comments, so I also co-authored the
memo on minimum wage. I have given a lot of thought and again I also
appreciate hearing from the business community. And the thing I really
struggle with is this issue of regional alignment and which I think having a
level playing field I mean consistency on the Peninsula makes a lot of sense.
I’m also very sensitive to having something simple and keeping it
enforceable. And I know that some restaurants have tried the service
charge and again, maybe if it's a consistent playing field trying it again will
have better results. The other thought I gave thought to which is in the
State law it was, you know, should we lag businesses less than 25
employees for a year, which is what the State law does. It's something to
consider. I mean I think you know ultimately I come down on keeping it
simple, but I guess I'm a little confused about, you know, we did increase
our minimum wage in Palo Alto already. Why would we not stick to the
schedule that the Cities Association put out? Why would we go in advance
of that? You know I think we need to look at the year on year increases and
what that does to business and jumping that up a lot in any one year I
would rather smooth it out and kind of match the proposed schedule which
again seems like it would keep us in line with the most cities in the area. So
if anybody wants to explain why you would go to a totally different schedule
then this schedule?
Vice Mayor Scharff: So what I thought is that we should end up where they
are. And that's the [inaudible] we get there with Marc. And then we also
get there with what I initially proposed.
Chair DuBois: And we would also get there [inaudible].
Vice Mayor Scharff: And we also get there with their schedule. So the
reason is, is because the Cities Association came up there when most cities
were at $10.00 and we’re at $11.00. So I wanted us to basically continue
along the same path we had, which would really bring us to $13.00 and that
I thought the $13.00 to $15.00 that's why I proposed having it later. Marc
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wanted to bring it six months in and I think I can speak for Marc, but the
reason I accepted that is I know that there was some promises by doing it
by 2018 which brings it into the 2018 concept and it's six months earlier I
said to myself is that really hardship, that extra six months? It might be you
know it's, but then there's no other change for 18 months. I you know I
think you could make arguments on the details of that and I…
Chair DuBois: My concern is we're talking about $13.00 this coming January,
right? Versus $12.00. You know, so again I guess I'm not really picturing
what you guys are proposing. What was Marc’s proposal?
Council Member Berman: It was yeah, so mine was $13.00 by this January,
January 1st. And then just to give a little context what I want is the City
we've already passed, when we passed our ordinance to raise the wage we
said our goal as a City is to get to $15.00 by 2018. So we unanimously
approved that a year ago. Sunnyvale and then it was looking at what
Sunnyvale and Mountain View have done because we're all at the same
place right now. We're all $11.00. Sunnyvale I think actually just got to
$11.00 an hour three months ago. So on July 1, 2016, they went up to
$11.00 and then on six months later on January 1, 2017, they're going to go
up to $13.00. So I mean at least our increase isn’t that dramatic. We've
been at $11.00 since January 1st. It's to go to $13.00 by January 1, 2017,
then wait a year and a half and go to $15.00 by July 1st 2018, which meets
with our goal of getting to $15.00 by 2018. And is slower actually then
Mountain View and Sunnyvale. Mountain View and Sunnyvale go up to
$15.00 by January 1, 2018. So we're giving our business community a year
and a half instead of a year to implement that additional increase.
Vice Mayor Scharff: And I guess I was thinking that frankly $12.00 you know
I realize the restaurants have issues, but you know if you are working you
know going from $11.00 to you know to $12.00 while it's helpful, $13.00 is
much more in line with the promise of what we're trying to achieve. And
that's why I suggested $13.00.
Chair DuBois: And then the details and the CP alignment [inaudible] that we
wouldn’t figure that out.
Vice Mayor Scharff: Well I think the CP alignment is you don’t have any CPI
until 2020. And that aligns everybody. And so…
Mr. Keene: And that would be indexed in the Bay Area.
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Vice Mayor Scharff: And that would be indexed to the Bay Area.
Council Member Berman: And so we would actually just correct what you
were saying earlier we’d actually be all aligned at January 1, 2019, because
we'd all be at just $15.00. And Mountain View, Sunnyvale, Palo Alto no
increase and all the other cities are just getting to that point at that point.
So we'd all be at the same place January 1, 2019.
Chair DuBois: And so we’re penalizing our businesses versus other cities
other than Mountain View and Sunnyvale.
Council Member Berman: Well, no. I mean we set our goal already a year
ago so I don't view it as penalizing businesses. I view it is as getting more…
finally raising the wage for workers that hasn't been raised for too long and
catching up to where you know we really should've started that process a lot
earlier. And that's part of the problem is that you know wages have been so
low for so long while the cost of living has increased so dramatically and so
there is this big gap to catch up. And I'm cognizant of that, but you know
this is a goal that we set a year ago already and it’s moving along …
Chair DuBois: I mean I think that we've said that everybody seems to be
pretty in favor of $15.00. I’m just concerned about the tips.
Council Member Kniss: And I have that same concern. It just is a little
troubling to suddenly change the methodology when we're sitting here
tonight.
Council Member Berman: We don't have a methodology, so we’re not
changing it.
Council Member Kniss: Well, yeah we are. We’re putting, we’re paying more
earlier. So…
Council Member Berman: We haven't set a schedule yet.
Council Member Kniss: Well, we're discussing setting a schedule right now.
So that’s…
Council Member Berman: Yes, absolutely. So we’re not changing anything
though.
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Council Member Kniss: Well I think which we're changing the understanding
that was inherent.
Council Member Berman: I disagree, but I won’t fight it.
Vice Mayor Scharff: If both of you want the Cities Association schedule I'm
not going to stand in the way of that.
Council Member Kniss: I’d like the Cities Association schedule.
Vice Mayor Scharff: Since I signed a letter suggesting we do that I’m going
to stand [inaudible].
Council Member Kniss: I just, I know that you ground that out and it came
to us and that I know. You know it’s the thing that we have in front of us,
it’s what you had said you would do. So that’s where I’d be, right where the
three of you all were as cities very recently. I’m sympathetic Marc, but this
is where we were. It’s…
Council Member Berman: It’s a great way to remind me that the Cities
Association was the recommendation that every city follow that path? My
recollection is Mountain View and Sunnyvale signed on to that also.
Vice Mayor Scharff: They did. I mean I think the recommendation ….
Council Member Berman: And then I’ll follow along with that.
Vice Mayor Scharff: Well, right. I mean, but everyone [inaudible]. So this
path Marc, you are correct, I mean this path was set forward to get
everyone with regional consistency by January 1, 2019. Yeah and that’s,
and that’s why I started this by saying you know I think that reasonable
people could disagree in terms of how we do that. You know and whether or
not we go to $12.00…
Council Member Kniss: And unreasonable people could.
Vice Mayor Scharff: Right, but I mean whether or not we go to $12.00 or we
go to $13.00 I think that makes a big difference in people's lives. And so I
would prefer that we do $13.00 frankly, but you know I would much rather
we have a recommendation rather than split 2-2 the Council and so I'd much
rather this be more of a you know let's get together and have something
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rather than fight over it. And so that's why I'm ok with following the Cities
Association thing. Even though my heart actually is with Marc and that's
why I made the choice.
Council Member Kniss: Well, my heart might be with Marc, but I think when
you're when you have come to us with something like this well discussed,
well agreed on that was what made sense to me. It's not I'm very
sympathetic with those who are working at minimum wage. At the same
time businesses are, businesses have to adjust to that as well. So if you're
a large business and you're adding that on that $1.00/$2.00 that has a fair
amount of impact, but we're concentrating an awful lot on restaurants
tonight when I think we're really talking a whole lot about across the board.
And I have no idea how many employees we’re talking about, what we're
probably talking about a huge number of employees.
Chair DuBois: Well, when we talked about this previously I think we said
that there actually I don't think, know if we ever had numbers, but in terms
of numbers of employees working at minimum wage in Palo Alto you know it
was hard to tell.
Council Member Kniss: It's very hard to tell, right?
Vice Mayor Scharff: So what I did notice that every time I see a sign it's
about minimum wage in Palo Alto. I mean every time [inaudible].
Council Member Kniss: What I see all over Palo Alto are help wanted signs.
Chair DuBois: Alright so do we have a Motion?
Council Member Berman: There's currently a Motion and a second, but the
maker of the Motion I think is going different directions, so if we need a
Substitute Motion?
Vice Mayor Scharff: Well I guess it would be ok if I ask some of the
restaurant people just to basically weigh in? So I don't mind who wants to
speak to it, but not too many people. The question really on the table is if
we do the Cities Association schedule or if we go faster to $13.00. Does it
make a big difference to you? I mean is it a huge problem?
Jesse Cool: It’s just going to serve the tipped employees. It’s not going to
serve our kitchens. The people you’re trying to take care of, the low income
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people who are living in houses like that one we talked about aren’t going to
get touched because we’re going to have to get at all the servers. We aren’t
going to have enough to give it to them.
Woman: On the question of timing can you repeat the question? The
question is the timing.
Vice Mayor Scharff: Right. The question is purely on the timing. I guess I
just you know everyone spoke to having a tipped exemption or whatever.
So I want to get some sense, you know, we're talking about timing of
basically what, a year?
Mr. Keene: Do you want the exact recommendation from the Cities
Association? Is that what the alternative is versus your $13.00 dollars?
Vice Mayor Scharff: That’s correct.
Mr. Keene: Ok. So just so we're clear the Cities Association says that we
would basically we would be the position of increasing on January 1, 2017,
the minimum wage to $12.00, $13.50 a year later on January 2018, and
$15.00 on January 1, 2019. The alternate proposal that was put forward
was increasing not to $12.00 dollars, but the $13.00 dollars on January 1,
2017, and there was some disagreement about whether or not the jump to
$15.00 would take place in July of 2018 or in January 1, 2019. That's the
difference.
Laura: Hi, Laura. Sorry for being late tonight, I was working. I agree with
what Jesse said and I think the longer we [inaudible] now add to that then I
think the longer we can postpone it. I think the easier it is for us to adapt
because I think it’s going to have such a great impact. So you can also ask
yourself many places are just going to raise their prices and the cost of living
here is already so expensive that when that happens all we’re going to do
for the most part, especially at the established restaurants we’re already
operationally efficient or as operationally efficient as we can be. So all we're
going to be doing is passing that along so when your $5.00 beer is $8.00 do
you want to postpone that? It’s only going to make the cost of living more
expensive so anything you can do to postpone it we appreciate it.
Vice Mayor Scharff: Alright, I’ll withdraw my Motion then and just make the
Cities Association Motion without the off ramps though, because the off
ramps were only in between.
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Council Member Kniss: Ok, I'll second that.
MOTION WITHDRAWN BY THE MAKER
MOTION: Vice Mayor Scharff moved, seconded by Council Member Kniss to
recommend the City Council approve the Cities Association recommended
minimum wage increase without the off-ramp triggers and direct Staff to
prepare related Ordinance amendments to increase the minimum wage to
$15 in three steps: $12 on 1/1/2017, $13.50 on 1/1/2018, $15 on 1/1/19,
and a CPI increase after 2019 indexed to the Bay Area with five percent cap
and no exemptions.
Chair DuBois: Any more discussion?
Council Member Berman: Give me a second to think. I’m deciding about
how much I really want to say. Yeah. I’ll save it for the Council.
Chair DuBois: Ok and then I guess because of the nature of this issue does
this go as an Action Item to Council…
Mr. Keene: Well, because it sounds like Council Member Berman’s not going
to vote for this so it will go as an Action Item to the Council not as Consent.
If it goes as Consent the public is still able to speak at the Council meeting
when the Consent Item comes up at the Council. Essentially unless it’s
pulled would be [inaudible] to the Committee.
Chair DuBois: Last time we approved it unanimously, but we said we were
going to take it to Council.
Council Member Berman: Yeah I mean and so because I don't want to be
seen as… I support raising the minimum wage, but I do think though this
needs to be brought up as an Action Item obviously.
Vice Mayor Scharff: So we’ll put it on Action anyway.
Council Member Berman: And I'll vote and I’ll support it in the sense that I’m
supporting raising the minimum wage, but I have a different, something
different in mind in terms of the schedule for it.
Chair DuBois: Ok, so all those in favor?
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MOTION PASSED: 4-0
Council Member Kniss: And as a postscript, it's the regionalism that I …
Council Member Berman: Liz, let's talk afterwards because I've said… I mean
we can get into this for the next 15 minutes, but there are two huge cities in
the region that are moving at a different pace that signed onto this letter
that are not moving at this letter’s schedule so let's not use regionalism as
the reason why we're doing what we're doing. Because we're not going
along, there is no regional schedule until January 1, 2018.
Mr. Keene: Ok, so just so we're clear and Mr. Chairman then the
Committee’s recommend, recommended the Cities Association
recommendation apply to us without the off ramp triggers by a 4-0 vote, but
specifically requested we put this on the Action Agenda for the Council when
it comes up so that the public will be able to speak and the Council as a
whole will re-discuss this again when it comes up.
Ms. Silver: And just as further clarification so we’ll bring forward an
amended Ordinance for a first reading to the fully Council.
Vice Mayor Scharff: Right. That was part of the Motion just so we’re clear
that it was what you asked for which was a record of the full Council to
direct Staff to prepare the Ordinance and amendments. That was included.
Chair DuBois: I’d suggest we take a five minute break, if we can keep it
short so we can get at it.
The Committee took a break from 8:21 P.M. to 8:29 P.M.
eting was adjourned at 9:26 P.M.