Business & Real Estate

Business group opposes Sacramento minimum-wage hike

Members of Unite Here show their support for raising the minimum wage before the Los Angeles City Council vote on May 19.
Members of Unite Here show their support for raising the minimum wage before the Los Angeles City Council vote on May 19. Los Angeles Times

Sacramento’s proposed minimum-wage increase was designed as a delicate compromise, crafted in an effort to rally support from business and labor.

Now the plan is under fire from both groups. On Monday, a broad business alliance led by the Sacramento Metro Chamber came out against it.

The group, in a letter to Mayor Kevin Johnson and the rest of the City Council, said raising the minimum wage to $12.50 an hour “would undermine our capital city’s economic momentum.” The letter was signed by the leaders of 13 business groups, including the chamber of commerce and the California Restaurant Association, collectively calling themselves Keep Sacramento Working.

With a week left before the City Council is set to vote on the plan, business joined labor in speaking out against the plan. While each side has different reasons for criticizing the proposal, their combined opposition could weaken the plan’s chances of being enacted.

“It’s not often that you see business and labor agree on an issue of this importance,” chamber President Peter Tateishi said in an interview.

Opposition is growing largely due to questions about a controversial “total compensation” clause. The clause would excuse businesses from paying the higher wage if they could prove their employees make at least $15 an hour including tips, commissions or other forms of compensation.

The clause was designed to unite business and labor around the higher minimum wage. Now, however, that compromise looks like it’s in danger of unraveling. The state Office of Legislative Counsel said Oct. 9 that the “total compensation” provision probably violates California’s labor laws.

The business group said the “total compensation” clause provided an essential economic buffer to certain sectors of the economy. “Without total compensation protection, the retail, restaurant and hospitality sectors, which have dominated job growth in the region, will suffer,” the business group said in the letter.

Until now, the Metro Chamber wasn’t an enthusiastic supporter of the higher wage but wasn’t actively campaigning against it, either. Tateishi was a member of the task force that made the minimum-wage recommendation to the City Council.

“We did support the process; we sat in the room and negotiated in good faith,” Tateishi said in an interview. “There was a framework that we tacitly agreed to.”

He added that he’s hearing that some members of the task force are cooking up alternative plans, including a blanket exemption for certain types of restaurants regardless of how much money their employees make. He said such an exemption would be too narrow and go against the grain of the compromise plan, which covers a broader array of businesses.

The letter from Keep Sacramento Working also complains that the higher minimum wage would be phased in too quickly under the ordinance being considered by the City Council.

“Details matter,” Tateishi said.

The restaurant association’s chief executive, Jot Condie, said his group supports “the consensus compromise of the task force. ... We oppose any deviation from that consensus.” Others who signed Monday’s letter include the heads of the California Retailers Association, Downtown Sacramento Partnership and Old Sacramento Business Association.

The City Council is scheduled to vote on the plan Oct. 27.

The wage plan has come under attack from labor as well. Two workers’ groups, including the Sacramento Central Labor Council, have said they would sue to block the “total compensation” provision. The head of the labor council, Fabrizio Sasso, has said the council is obliged to fight any proposal that “hurts workers.”

Johnson’s press secretary, Ben Sosenko, said the mayor “remains optimistic that an agreement can be worked out so that all working families have a path into the middle class and small businesses can continue to succeed.” The mayor has championed the idea of raising the city’s minimum wage.

The plan would raise wages to $12.50 an hour by 2020. As it is, California is raising the minimum wage to $10 effective Jan. 16.

Dale Kasler: 916-321-1066, @dakasler