Forum on Desirability of Raising the City of Sacramento s Minimum Wage. September 11, 2015

Transcription

1 Forum on Desirability of Raising the City of Sacramento s Minimum Wage September 11, 2015

2 Forum Plan Tracey Schaal Executive Director, Power Inn Alliance 2

3 Introduction Moderator Dr. Rob Wassmer Professor, Sacramento State 3

4 Background on Minimum Wage Policy Purpose of a Minimum Wage? Other Ways to Go About Achieving Purpose? EITC (Federal, SF City, CA this year) Commodity Egalitarianism 4

5 Background on Minimum Wage Policy Forum not about min wage vs. other policies About What level min wage set at? Should city set different level? Facts Federal Min Wage $7.25 Not indexed to CPI $1.60 in 1968 (about $11.00 in today s dollars) CA Min Wage $9.00 (2015), $10.00 (2016) Not indexed to CPI Proposed Sac City Min Wage $10.50 (2017), $11.00 (2018), $11.75 (2019), $12.00 (2020) 2021 and beyond (indexed to CPI) 5

6 Background on Minimum Wage Policy 6

7 Background on Minimum Wage Policy 2015 United Way Report For Sacramento County Household, 2 adults, 2 children Housing $12,252 Child care $10,587 Food $9,437 Health Care $6,344 Transportation $8,999 Misc $3,703 Taxes $3,108 Tax Credits (-$3,836) Total $50,595 If both min wage 2000 hours a year each 2016 CA min wage ($10) = $40, Sac City min wage ($12.50) = $50,000

8 Background on Minimum Wage Policy Data from 2013 American Community Survey, Sacramento County residents as reported by Professor Min Li, Sac State Business to Sac City Task Force on Income Inequality Profile of average Sac County Min Wage Worker Make up 22% of total workers 24% of working women, 20% working men 23% of working parents, 23% of working mothers 61% work full time Age profile < 18 (1%); (30%); (29%); (38%); >65 (2%) Race/Ethnicity profile Working Latinos (33%); Working Asian Americans (22%); Working African Americans (22%), Working Whites (20%) Top five minimum wage occupations Food Prep/Service (37%); Sales (17%); Personal Care/Service (10%); Office Support (10%), Transportation (9%)

9 Support of Minimum Wage Increase Mr. Fabrizio Sasso, Executive Director Sacramento Central Labor Council 9

10 Sacramento unemployment is falling at same rate as in the state Unemployment Rates, % 14% 12% 10% 8% 6% 6.2% 4% California Unemployment rate Sacramento City unemployment rate 2% 0% Jan 2008 Source: California Employment Development Department, Labor Market Information. Data are not seasonally adjusted. Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015

11 Sacramento workers earnings fell 7 percent between 2007 and 2013 Median Annual Earnings by Place of Work (2013 Dollars), $50, $40,000 $43,778 $40,551 $37,611 $30,000 $33,916 $20,000 $10,000 Source: U.S. Census Bureau, American Community Survey, Table B08521, 2007 & Year Estimates $0 Sacramento City California

12 Demographics of affected workers 5.5 percent of affected workers are teens Workers of color represent 59 percent of workers receiving raises 55 percent of affected workers have attended at least some college Median annual earnings of affected workers are only 44 percent of that of overall workforce Affected workers on average earn over half of their family s income

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14 Almost 40% of Sacramento Female Headed Households Live in Poverty

15 Income Inequality & Race Can all workers earn a living wage? Sacramento: In 2012, only 62 percent of workers of color earned at least $15/hour while 79 percent of white workers did. Why it Matters: Racial Economic Inclusion Could Add $2 Trillion to the U.S. Economy Every Year. America s GDP was $15.6 trillion in 2012, but it would have been $17.7 trillion, 14 percent higher, or a $2.1 trillion equit y dividend, in the absence of racial dif - ferences in incomes. To put this large number into context, the state of California the eighth largest economy in the world had an annual GDP of about $2 trillion in Income Inequality & Race

16 ii iii iv Myths & Facts ii: o9.pdf iii: iv:

17 About three-fifths of affected workers are employed in four industries Food services 19.5 percent Retail trade 14.9 percent Administrative & waste management 13.3 percent (e.g., janitorial and security services, temp agencies) Other services 11.3 percent

18 92,000 Sacramento workers would get a raise Cumulative Number of Workers Affected by Proposed Minimum Wage Policy Year Number of Workers Affected (cumulative) , , ,000 Number of Directly Affected Workers (cumulative) Number of Indirectly Affected Workers (cumulative)* 64,000 16,000 69,000 15,000 78,000 14,000 Percent of Covered Workforce (cumulative) Source: Authors analysis of ACS, OES, and QCEW data. See Data and Methods Brief for details. Note: The proposed minimum wage proposal will not cover self-employed workers, state, and federal workers. * The ripple effect goes up to $15.01 in 2019.

19 Average worker s raise: $3,200 Cumulative Pay Increases for Workers Affected by the Proposed Minimum Wage Policy by 2019 (in 2014 dollars) Average Cumulative Annual Earnings Increase $3,200 Average Cumulative Annual Earnings Percent Increase 22.7% Total Aggregate Cumulative Increase in Earnings (in millions) $291 Source: Authors analysis of ACS, OES, and QCEW data

20 viii ix x Myths & Facts viii: ix: x: You-Dont-Know-About-Minimum-Wage

21 Projected price increases: modest for restaurants, negligible for retail and wider economy Cumulative Impact of the Proposed Minimum Wage Policy on Prices for Select Industries and the Overall Economy Food Services Year over Year Price Increase Cumulative Price Increase Retail Trade Year over Year Price Increase Cumulative Price Increase Overall Economy Year over Year Price Increase Cumulative Price Increase Source: Authors analysis of ACS, OES, QCEW, Economic Census, U.S. Census Annual Retail Trade, Wholesale Trade, and Services Reports, and BEA data.

22 Impacts on businesses and overall economy Multiple adjustment channels Reduced employee turnover and improved performance Small price increases, so small decline in sales Surprisingly small amount of automation Increased consumer demand from wage increases: offsets decline in sales

23 Regional economic effects Sacramento City versus Sacramento County City accounts for 52 percent of all county employment About half(rough estimate) of employees who work in the city do not live in the city (in-commuters) Effects In-commuters will spend increased wages outside the city Wages will be pulled up in surrounding areas Few businesses likely to relocate outside of city In other cities, some surrounding areas raise their minimum wage

24 xi Myths & Facts xi: HART RESEARCH ASSOCIATES Study # :UgY3QK3jhRwJ: 5/03/Minimum-Wage-Poll-Toplines-Jan pdf+&cd=1&hl=en&ct=clnk&gl=us

25 immediately, with only 25% in opposition. Sacramento Voter Also, 58 percent of Sacramento voters would support a separate measure that phases in a $15 minimum wage over the period of three years, with 36% opposing. Poll Results Support for both policies is broad-based, with a majority of men and women and all age groups and ethnicities expressing a desire to raise the minimum wage. oters Support Raising Minimum Wage SUPPORT OPPOSE DON T KNOW Raise Minimum Wage to $13.50 immediately Raise Minimum Wage to $15 Over 3 Years nto voters feels it is time to raise the minimum wage in Sacramento. SUPPORT FOR IMMEDIATELY RAISING THE MINIMUM WAGE s who are likely to participate in the 2016 elections shows that 70% of measure to raise the minimum wage in Sacramento to $13.50 opposition. Prior to being asked any substantive questions, voters were asked whether they would support a measure that would require employers to pay a minimum wage of $15 for work performed in the city of Sacramento, adjusted for changes in the regional consumer price index. Those who said that they would not support such a measure were then asked whether they would support an identical measure that would raise the minimum wage to $13.50, instead of $15. to voters would support a separate measure that phases in a $15 od of three years, with 36% opposing. Seventy percent of all voters interviewed support either the $15 minimum wage or the $13.50 minimum wage, with just 25% opposing. oad-based, with a majority of men and women and all age groups and to raise the minimum wage. The proposal draws solid support from around the city, with at least 60 percent in each City Council District supporting. African Americans SUPPORT and Latinos in particular OPPOSE drive support for DON T the measure, KNOW with 88 percent of African American voters and 78 percent of Latino voters supporting. to $13.50 immediately to $15 Over 3 Years

26 Opposition of Minimum Wage Increase Mr. Josh Wood, Executive Director Sacramento Region Builders, Inc. 26

27 TASK FORCE ON INCOME INEQUALITY Council Chambers September 2nd, 2015

28 Meeting Agenda I. Welcome II. Review of Task Force Principles III. Review of Recommended Exemptions IV. Additional Task Force Recommendations V. Minimum Wage Recommendation IV. Public Comment

29 Task Force Principles 1. Don t sacrifice one for the other: employers for workers or workers for employers. 2. Don t let rhetoric drive the recommendation. 3. No sticker shock to businesses. 4. Approach exemptions as incentives. 5. Cultivate a thriving economy that fosters entrepreneurship. 6. Benefit the welfare of the whole city. 7. Do no harm to the City, individuals, families, business, economy, etc. 8. Consider unintended consequences. 9. Current minimum wage cannot sustain a household. Meet basic needs of wage earners and families. Support working families in Sacramento to improve quality of life. Two adults working full time should live over the poverty level. 10. Consider both real costs for families and real incomes of workers. 11. Stay regionally competitive. 12. Have Sacramento lead and not limit ourselves to other cities approaches. 13. Promote Racial Equity

30 Recommended Exemptions Youth Certain defined exempt workers with developmental disabilities Heathcare Credit Total Compensation Training Programs

31 Recommended Exemptions 1. Youth: Youth Under 18 Years of age 2. Certain Workers With Developmental Disabilities: Exempt workers with an approved DLSA 106 Permit. This definition will need to be further refined. 3. Heathcare Credit: If the Employer pays at least $2.00 per hour per Employee towards the premium cost of an Employee and/or dependents medical benefits plan (health, dental, vision), the Employer shall pay Employees the Minimum Wage as defined in this section, less $1.50. Credit is applied per the following schedule: 37 cents in 2017, 75 cents in 2018, $1.12 in 2019, and $1.50 in In 2021 on, the credit would index with the wage increase.

32 Recommended Exemptions (continued) 4. Total Compensation: Establish a Total Compensation option for employers, whereby employers would be exempt from paying the increased Sacramento minimum wage if they can verifiably prove that employees have a taxable gross income greater than $15.00 per hour. 5. Training Programs: Exempting employers for trainees during the first 6 months of each person s employment. The exemption would allow these employers to pay trainees the state minimum wage- rather than the city s- for up to 6 months. These employers provide minimum-wage jobs designed to prepare these transitional workers for the workplace.

33 Additional Task Force Recommendations The Income Inequality Task Force recommends the City Council include in the Ordinance the following items: 1. Annual Review: The City should task the City Auditor and/or the Independent Budget Analyst with performing ongoing analysis of any impacts the change in the minimum wage has had on the local economy and report back annually to the Council at a public meeting. The City should also analyze data from the City of Oakland and others. Annual Council check-in. Following the review described above, the City Council should hold an annual meeting to discuss potential changes in the minimum wage and the timing of implementation in the context of the overall health of the economy and the impacts resulting from the changes to date. The City should adjust subsequent increases to reflect market conditions if necessary. 2. Enforcement. The City Manager should develop recommendations for Council action to ensure legal implementation of the Council actions on changes in the minimum wage. 3. Small Businesses should have a delay in implementation of a reasonable amount of time. Definition of small business and timeline TBD.

34 Additional Task Force Recommendations The Income Inequality Task Force additionally recommends that the City Council prioritize other critical issues that impact the lives of Sacramentans, including but not limited to: Housing Job Training Early Childhood Education Programs Small Business/Economic Development Reconvene Task Force

35 Task Force Wage Recommendation $12.50 by $10 $10.50 $11.00 $11.75 $12.50 CPI

36 Time for Q & A 36

37 Thank you Sally Freedlander, Domich/Separovich Chair, PIA Board of Directors 37