TASK FORCE ON INCOME INEQUALITY. Public Meeting #2 Council Chambers August 5th, PM - 6PM

Transcription

1 TASK FORCE ON INCOME INEQUALITY Public Meeting #2 Council Chambers August 5th, PM - 6PM

2 Meeting Agenda I.Welcome II.Presentation by UC Berkeley III.Minimum wage increase approaches by other cities. IV.Hear public comment. V.Next meeting

3 Why Consider Raising the Minimum Wage? Federal minimum wage is $7.25/hour. Current minimum wage in California is $9/hour. It will increase to $10 January 1, By historical standards, the value of the current minimum wage is fairly low. Rising inflation has outpaced increases in the minimum wage. The current value of $9.00 per hour is two dollars less than its real peak value of $10.97 in 1968.

4 PRESENTATION BY UC BERKELEY Professor Michael Reich Center on Wage and Employment Dynamics Institute for Research on Labor and Employment University of California, Berkeley

5 Estimated impacts of a proposed minimum wage law for Sacramento Professor Michael Reich August 5, 2015 Center on Wage and Employment Dynamics Institute for Research on Labor and Employment University of California, Berkeley

6 Outline Proposal and comparisons to other cities Economic context Effects on workers Effects on businesses and overall regional economy

7 Proposal of the Raise the Wage Coalition Wage Schedule for the Proposed Minimum Wage Policy Year Minimum Wage Percentage Increase from Previous Year 2017 $ $ $

8 Proposed minimum wage similar to SF and to LA-- after cost-of-living adjustment Proposed Sacramento, SF and LA Minimum Wage Levels, Adjusted to Lower Sacramento Cost-of-Living San Francisco Los Angeles Sacramento Proposal Nominal Dollars Cost-Adjusted Dollars Nominal Dollars Cost-Adjusted Dollars 2015 $9.00 $12.25 $10.45 $9.00 $ $10.00 $13.00 $11.09 $10.50 $ $11.50 $14.00 $11.94 $12.00 $ $12.50 $15.00 $12.79 $13.25 $ $13.50 $15.37* $13.11 $14.25 $ $13.80** $15.74* $13.43 $15.00 $13.08 Source: Authors analysis of BEA Regional Price Parities * The 2019 and 2020 San Francisco minimum wage is projected assuming a 2.45 percent cost-of-living adjustment. ** The 2020 Sacramento minimum wage is projected assuming a 2.23 percent cost-of-living adjustment.

9 Proposed increase compared to other cities increases Proposal would raise minimum wage 26.4 percent, adjusting for inflation. By comparison the average inflation-adjusted increase of for 24 existing local minimum wage laws: 34.1 percent. By 2019, minimum wage will equal 52.8 percent of the median full-time wage, well within the historical range of the federal minimum wage s ratio.

10 Sacramento unemployment is falling at same rate as in the state Unemployment Rates, Source: California Employment Development Department, Labor Market Information. Data are not seasonally adjusted.

11 Sacramento workers earnings fell 7 percent between 2007 and 2013 Median Annual Earnings by Place of Work (2013 Dollars), Source: U.S. Census Bureau, American Community Survey, Table B08521, 2007 & Year Estimates

12 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 Percent of Covered Workforce (cumulative) ,000 69,000 15, ,000 78,000 14, 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.

13 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

14 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

15 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

16 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 Source: Authors analysis of ACS, OES, QCEW, Economic Census, U.S. Census Annual Retail Trade, Wholesale Trade, and Services Reports, and BEA data. Cumulative Price Increase

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

18 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

19 WHAT OTHER CITIES HAVE DONE In California

20 Other cities that have done this have addressed minimum wage increases have considered five important components: 1. Amount of Wage Increase 2. Scope / Who is Covered? 3. Increase Timeline/Phasing In 4. Exemptions 5. Compensation 6. Indexing to CPI

21 Timeline of Other California Cities CITY Prior/ Current Minimum Wage Richmond, CA $9.00 $9.60 $11.52 $12.30 $13.00 IA W/ CPI Berkeley, CA $9.00 $10.00 $11.00 $12.53 Emeryville, CA $9.00 $12.25 $13.00 $14.00 $15.00 $16.00 $16.42 IA W/ CPI Oakland, CA $9.00 $12.25 IA W/ CPI San Francisco, CA $10.56 $12.25 $13.00 $14.00 $15.00 IA W/ CPI Mountain View, CA $9.00 $10.30 IA W/ CPI Sunnyvale, CA $9.00 $10.30 IA W/ CPI San Jose, CA $10.15 $10.30 Los Angeles, CA $9.00 $10.50 $11.50 $12.50 $13.50 $15.00 San Diego, CA $9.00 $9.75 $10.50 $11.50 IA W/ CPI IA w/ CPI : Increase Annually with Consumer Price Index

22 Other Data on California Cities that have Recently Raised their Minimum Wage CITY Prior/ Current Minimum Wage Proposed Minimum Wage/ Raised To Median Household Income 2013 New Minimum Wage Income Real Cost Measure: 1 Adult Real Cost Measure: 1 Adult, 1 Infant, 1 Toddler Real Cost Measure: 2 Adults Real Cost Measure: 2 Adults, 1 Infant, 1 Toddler Sacramento, CA $ $49, $20,235 $43,704 $31,068 $52,637 Richmond, CA $9.00 $13.00 $54,589 $27,040 $24,245 $53,327 $36,608 $62,400 Berkeley, CA $9.00 $12.53 $63,312 $26,062 $24,173 $53,694 $36,479 $62,705 Emeryville, CA $9.00 $16.42 $65,000 $34,154 $24,173 $53,694 $36,479 $62,705 Oakland, CA $9.00 $12.25 $52,583 $25,480 $24,173 $53,694 $36,479 $62,705 San Francisco, CA $10.56 $15.00 $75,604 $31,200 $29,278 $66,941 $43,686 $77,858 Mountain View, CA $9.00 $10.30 $97,338 $21,424 $27,107 $59,789 $38,992 $68,807 Sunnyvale, CA $9.00 $10.30 $100,043 $21,424 $27,107 $59,789 $38,992 $68,807 San Jose, CA $10.15 $10.30 $81,829 $21,424 $27,107 $59,789 $38,992 $68,807 Los Angeles, CA $9.00 $15.00 $49,497 $31,200 $24,058 $52,851 $36,464 $61,998 San Diego, CA $9.00 $11.50 $64,058 $23,920 $24,186 $50,977 $35,545 $59,915

23 Richmond, California Previous Minimum Wage: $9.00 New Minimum Wage: $13.00 Increase: 44% ($4.00) Enacted in 2014 by a council vote. Median Household Income, : $54,589 Timeline: Increase to $9.60 January 2015 ($.60) Increase to $11.52 January 2016 ($1.92) Increase to $12.30 January 2017 ($.78) Phased in by ($.70) Starting in 2019, Richmond's minimum wage will increase annually based on Consumer Price Index. Exemptions: If the Employer pays at least $1.50 per hour per Employee towards an Employee medical benefits plan, the Employer shall pay Employees the Minimum Wage as defined in this section, less $1.50, Employer shall pay its Employees no less than the Intermediate Minimum Wage for each hour worked if Employer derives more than 50% of its income from transactions where the Employer s goods and services produced by the Employer in Richmond are delivered or shipped outside the City of Richmond. In determining whether this 50% threshold is met, the 5 Employer shall only consider operations within the City.

24 Berkeley, California Previous Minimum Wage: $9.00 New Minimum Wage: $12.53 Increase: 39.2% ($3.53) Enacted in 2014 by a council vote. Median Household Income, : $63,312 Timeline: Increased to $10.00 by October ($1.00) Increased to $11.00 after one year. ($1.00) Phased in by October ($1.53) Exemptions: Employees who are standing by or on-call according to the criteria established by the Fair Labor Standards Act, 29 U.S.C. Section 201. This exemption shall apply only during the time when the employee is actually standing by or on-call. Job training program participants up to 25 years of age in youth job training programs operated by Nonprofit Corporation or governmental agencies. Individuals who are the parents, spouses or children of the employer are not covered by the Berkeley minimum wage.

25 Emeryville, California Previous Minimum Wage: $9 New Minimum Wage:$16 Increase: 33.3% ($7.00) Enacted in June 2015 by council ordinance Median Household Income, : $65,259 Timeline: Increase to $12.25 July 2015 ($3.25) Increase to $13.00 July 2016 ($0.75) Increase to $14.00 July 2017 ($1.00) Increase to $15.00 July 2018 ($1.00) Increase to $16.00 July 2019 Increase according to CPI July 1 each following year. Exemptions: These rates will increase annually with Large Business minimum wage rates adjusting annually for inflation every July 1 based on the annual increase in the local consumer price index (CPI). Small Business minimum wage rates will increase in increments until 2019, at which point the Small Business minimum wage rate will match the Large Business minimum wage rate and both will be increased every July 1 by the local CPI. o Small Businesses with 55 or less employees will increase to $12.25/hour effective July 2, o Large Businesses will provide a minimum wage of $14.44/hour effective on July 2, 2015.

26 Oakland, California Previous Minimum Wage: $10.56 New Minimum Wage: $12.25 Increase: 16% ($1.69) Enacted in November 2014 by ballot measure. Median Household Income, : $52,583 Timeline: Increase to $12.25 March 2, 2015 ($1.69) Increase according to CPI each following year. Exemptions: The provisions of Oakland Municipal Code section may be waived in a bona fide collective bargaining agreement but only if the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

27 San Francisco, California Previous Minimum Wage: $10.74 New Minimum Wage: $15.00 Increase: 39.7% ($4.26) Enacted in November 2014 by ballot measure. Median Household Income, : $75,604 Timeline: Increase to $12.25 May 2015 ($1.51) Increase to $13.00 July 2016 ($.75) Increase to $14.00 July 2017 ($1.00) Increase to $15.00 July 2018 ($1.00) Increase according to CPI July 1 each following year. Exemptions: Delayed increase for Government Supported Workers (under the age of 18 and is employed as an afterschool or summer Employee, or over the age of 55 and is employed by a Non-Profit Corporation that provides social welfare services to individuals over the age of 55, whose both positions are subsidized by federal, state or local government ) o May 1, 2015, the Minimum Wage paid to Government Supported Employees shall be an hourly rate of $12.25 o Beginning July 1, 2016, and each year thereafter, the Minimum Wage paid to Government Supported Employees shall increase be an amount corresponding to the prior year s increase, if any, in the Consumer Price Index for urban wage earners and clerical workers for the San Francisco-Oakland- San Jose, CA Metropolitan area, as determined by the controller.

28 Mountain View, California Previous Minimum Wage: $9.00 New Minimum Wage: $10.30 Increase: 14% ($1.30) Enacted on October 9, 2014 by council ordinance. Median Household Income, : $109,802 Timeline: Increased to $10.30 on October 9, 2014 Increase according to CPI January 1 each following year. Exemptions: 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 or Sec (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.

29 Sunnyvale, California Previous Minimum Wage: $9.00 New Minimum Wage: $10.30 Increase:14% ($1.30) Enacted in July 2014 by council ordinance. Median Household Income, : $96,647 Timeline: Increased to $10.30 January 1, 2015 Increase according to CPI each following year. Exemptions: Governmental Agencies are exempt from the minimum wage requirements under the principle of governmental immunity when the work performed is related to the agency's governmental function. The Employer may offset a portion of the Minimum Wage for housing and meal costs only if the offsets are the same as those available under the California minimum wage law. The offsets shall only be recognized if there is a prior voluntary agreement between the Employer and the Employee.

30 San Jose, California Previous Minimum Wage: $10.15 New Minimum Wage: $10.30 Increase:1.5% ($0.15) Enacted in November 2012 by ballot measure. Median Household Income, : $77,000 Timeline: Increased by 1.5% on January 1, 2015 Increase according to CPI each following year. Exemptions: No exemptions.

31 Los Angeles, California Previous Minimum Wage: $9 New Minimum Wage: $15.00 Increase: 33% ($6.00) Enacted in 2015 by council vote. Median Household Income, : $48,466 Timeline: Increase to $10.50 on July 1, 2016 Increase to $12.00 on July 1, 2017 Increase to $13.25 on July 1, 2018 Increase to $14.25 on July 1, 2019 Increase to $15.00 on July 1, 2020 Increase according to CPI July 1 each following year. Exemptions: Businesses with 25 fewer employees will have until 2021 to reach $15 an hour, versus 2020 for businesses with greater than 25 employees. Employees, who are "Learners",are years of age, during their first 160 hours of employment. After more than 160 hours of employment, Learners shall be paid the applicable minimum wage pursuant to this section. An Employer that is a Non-Profit Corporation with 26 or more Employees may be considered for the deferral rate.

32 San Diego, California Previous Minimum Wage: $9.00 New Minimum Wage: $11.50 Increase: 27.8% ($2.50) Increase awaits review by voters in Median Household Income, : $64,058 Timeline: Increase to $9.75 January 2015 ($.75) Increase to $10.50 January 2016 ($.75) Increase to $11.50 January 2017 ($1.00) Phased in by Minimum wage increased annually -based on Consumer Price Index.

33 San Diego, California Cont. Exemptions: The following contracts are exempt from the requirements of this Division: Contracts subject to federal or state law or regulations that preclude the applicability of this Division s requirements Contracts that involve programs where the City shares management authority with other jurisdictions, unless all the signatory jurisdictions agree Contracts for services by any other governmental agency Contracts for public works construction Cooperative procurement contracts, Contracts for the purchase of goods, property, or the leasing of property; Professional service contracts such as design, engineering, financial, technical, legal, banking, medical, management, operating, advertising, or other services. contracts where compliance with this division is not in the best interests of the City as certified by the City Manager and approved by the City Council. The following businesses, even if otherwise qualified as a covered employer, are exempt Businesses,employing twelve or fewer employees. 501(c)(3) organized to provide community-based social services, other than child care services, and whose highest paid officer earns a salary that, when calculated on an hourly basis, is less than eight times the hourly wage rate of the lowest paid full-time employee.

34 WHAT OTHER CITIES HAVE DONE In the US

35 Seattle, Washington Previous Minimum Wage: $9.32 New Minimum Wage: $15.00 Increase: 38% ($5.68) Enacted in June 2014 by a council vote. Median Household Income, : $65,277 Timeline: Beginning April 2015 Increase Yearly Rate depending on Schedule # of Employer. Done by Example: Schedule 1 Employers - $11.00 by April 1, 2015 ($1.68 increase), $13.00 by January 1, 2016 ($2.00), $15.00 by January 1, 2017 ($2.00) Exemptions: Schedule 1 businesses (>500 employees in the US) must raise wages to $15/hr over next 3 years: Schedule 1 businesses that pay toward an employee s medical benefits plan can have an extra year to reach $15/hr Schedule 2 businesses (<500 workers in the US) must raise wages to $15/hr over next 7 years The Director of the Department of Finance and Administrative Services may issue special certificates authorizing an employer to pay learners, apprentices, messengers, disabled persons a wage less than the Seattle minimum wage, but above the Washington state minimum wage.

36 Chicago, Illinois Previous Minimum Wage: $8.35 New Minimum Wage: $13.00 Increase: 55.6% ($4.65) Enacted in December 2014 by council vote. Median Household Income, : $47,270 Timeline: Increase $8.25-$10 July 2015 ($1.75) Increase to $10.50 in 2016 Summer ($.50) Increase to $11.00 in 2017 Summer ($.50) Increase to $12.00 in 2018 ($1.00) $13.00 in 2019 ($1.00) Exemptions: Tipped employees increase from $4.95 (current minimum wage) to $5.45 in 2015 and $5.95 in 2016, indexed to CPI after Employees taking part in government-subsidized temporary youth employment programs. Employees taking part in government-subsidized transitional employment programs. Employees of any governmental entity other than the City. Employees under 18 years of age. Employers are authorized to pay these employees a wage 50 cents below the state minimum hourly wage. Adult employees in the first 90 days of employment. Employers may pay these employees a wage 50 cents below the state minimum hourly wage. Disabled employees, pending state approval.trainees taking part in a program for no more than six months, pending state approval. Employees working at a business with four or fewer employees, not counting the employer s parents, spouse, children or other members of the employer s immediate family.

37 Washington, D.C. Previous Minimum Wage: $8.25 New Minimum Wage: $11.50 Increase: 39.39% ($3.25) Enacted in 2013 by a council vote. Median Household Income, : $65,830 Timeline: Increase to $9.50 in July 2014 ($1.25) Increase to $10.50 in July 2015 ($1.00) Increased to final $11.50 in July 2016 ($1.00) Exemptions: Handicapped workers may be paid less only when the employer has received an authorizing certificate from the U.S. Department of Labor. Persons employed under provisions of the Workforce Investment Act shall be paid pursuant to that Act. Persons employed under provisions of the Youth Employment Act shall be paid pursuant to that Act. Persons employed under provisions of the Older Americans Act shall be paid pursuant to that Act. Adult Learners: Newly hired persons 18 years of age or older may be paid the minimum wage established by the United States government for a period not to exceed 90 calendar days. Students employed by institutions of higher education may be paid the minimum wage established by the United States government. Individuals under 18 years of age may be paid the minimum wage established by the United States government. The minimum wage provision does not apply to persons o employed in a bona fide executive, administrative, professional, computer, or outside sales capacity o engaged in the delivery of newspapers to the home of the consumer.

38 PUBLIC COMMENT

39 Next Meetings: Task Force on Income Inequality Timeline Date Agenda Location Wednesday, Aug. 12 4:00pm - 6:30pm 3rd Public Meeting New City Hall Wednesday, Aug. 19 4:00pm - 6:00pm Task Force Internal Meeting -- Wednesday, Aug. 26 4th Meeting Old City Hall