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Paul Zimmerman

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Minimum Wage Hike Hikes Pressure on Bay Area Small Businesses

On May 7, 2015, the Emeryville, California, City Council initially approved a new minimum wage increase for employers in its city that will surpass the recently passed minimum wage hikes in nearby San Francisco and Oakland, and will result in baseline pay of $16 per hour by 2019, making it the highest minimum wage in the United States.  While characterized by Emeryville’s mayor as a lifting of the floor on poverty for Emeryville’s estimated 2200 minimum wage workers, the May vote is a clear response to recently approved minimum wage increases to $12.25 per hour in the two neighboring big cities, and may reflect a “David versus Goliath” political strategy to attract labor into the small community. 

Although Emeryville has a population of just over 10,000, it is home to numerous large employers, including Ikea, Home Depot, Pixar and several big box retailers, many of whom employ workers at or just above the current minimum wage of $9 per hour.  Some city employees and municipal employees are covered by Emeryville’s Living Wage Ordinance, currently $14.03 per hour.  Measure C mandates a wage of at least $11.08 per hour for workers at the city’s four hotels.  Increasing the minimum wage in Emeryville may well lure workers residing in nearby Oakland and San Francisco, but its long-term impact is unclear. Facebook, headquartered in nearby Menlo Park, has already announced a minimum wage hike to $15 per hour for its contract workers, but its competitors haven’t rushed onto the bandwagon, yet.

Emeryville’s minimum wage escalation is of significant concern to the small business owner, mainly restaurant owners with fewer than 55 employees, who will face an increase in wages of nearly 40 percent if the new minimum wage goes into effect as planned on July 1, 2015. We will continue to monitor minimum wage changes and their impact on the hospitality industry in general, and restaurant owners in particular.

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.