A $15-an-hour minimum wage by 2022 seems inevitable for California. That sounds good in theory because who doesn’t want low-income people to live better? It’s certainly good politics from Gov. Jerry Brown, who cut the $15-an-hour deal – pending legislative approval – before it headed to what surely would have been an expensive ballot fight this fall and an odious campaign of class politics over workers’ wages.
But in practice – and on the ground in Sacramento, a city that passed its own minimum-wage increase in October – the inexorable move toward $15 an hour could have unintended consequences that ultimately undermine the stated goal of helping workers.
The state capital is not San Francisco or San Jose. There is no local tech boom creating wealth, pushing wages higher and resulting in an economy that could absorb raising the minimum wage from $10 an hour to $15 over six years.
Moreover, Sacramento has wrapped its identity in the farm-to-fork movement. Locally grown food costs more, and those costs usually are passed on to the consumer. But you can taste the difference when you eat at Mulvaney’s, Hot Italian, DeVere’s Irish Pub, Ella or any other of the other wondrous restaurants that have helped to transform the city.
As a 26-year-resident of Sacramento, I long ago decided that paying more for quality food was worth it, and I have been lucky enough to be able to do so. Locally sourced food is more flavorful, is better for me and supports area businesses and farms. It also supports a food, wine and beer culture that is a source of civic pride and energy and an economic driver for this region.
How will Sacramento’s growing farm-to-fork movement be affected by a significant spike in the minimum wage? How will restaurant owners across the board handle the increases in payroll, payroll taxes and workers’ comp expenditures?
The truth is, nobody knows right now. But what is also true is that many voices – voices that are important to our local economy and identity – didn’t have a spot at the table when the $15-an-hour deal was being discussed.
Furthermore, to express concern about the potential negative impacts of a higher minimum wage is to be called insensitive to working people.
“Whenever I discuss reality, people say, ‘Oh Henry, are you going over to the dark side?’ ” said Henry DeVere White, proprietor of Devere’s Irish Pub and chairman of Region Restaurants.“When I talk to people about it, they see it a different way.”
Many businesses in Sacramento would be affected by the higher state minimum wage, which, under the current deal, would go to $10.50 an hour next year and then gradually to $15. Nonprofit groups, for example, could have a hard time ultimately paying $15 an hour.
But those increases could hit Sacramento’s restaurant and hospitality industries especially hard. Restaurants in particular live and die on tight margins, and raising menu prices won’t necessarily bridge the gap created by higher wages.
“There are only so many discretionary dollars in Sacramento,” said Josh Wood, executive director of Region Business, the umbrella organization representing several trade organizations in the state capital, who questions the wisdom of $15 per hour statewide largely because the cost of living is not uniform across California.
“In smaller markets like Sacramento, a $15-an-hour wage will be like $20 in other markets,” he said. “(This deal) is terrible, reckless.”
By various measures, the cost of living in San Jose is 30 to 35 percent higher than Sacramento. It’s more than 40 percent higher in San Francisco. When restaurants in those cities pass the cost of higher wages on to consumers, there are more people with more disposable income able to absorb it.
In Sacramento, it could become about hard choices. “I’m already at the top of what I think I can charge for a hamburger,” said Chris Jarosz, owner of Broderick Roadhouse in West Sacramento.
Andrea Lepore, owner of Hot Italian, agrees: “We can’t keep passing costs on to consumers. Our market is not the Bay Area. We have to look at other things, such as doing more with less people.”
Even advocates for a higher minimum wage acknowledge that higher unemployment may be a consequence.
In the end, will we see more counter service at our restaurants? Will we see iPads do away with servers altogether? Will we see more restaurants close? Will the bigger chain restaurants have an even greater advantage over smaller local restaurants because of the way they can control costs to deal with higher employee wages? Will farm-to-fork, often already an expensive endeavor, become even more cost prohibitive?
“I would hope that as we move forward with farm-to-fork that we embrace what that all means,” said Mary Kimball, executive director of the Center for Land-Based Learning, a nonprofit that trains young people for careers in local agriculture. “I would hope that we would decide, ‘Yes, this is what we want.’ It’s going to be a hard choice, and I would hate to see us lose our momentum.”
Local concern about a higher minimum wage is a missing piece of this argument. It’s not about being against workers’ rights. It’s about real concerns being ignored in an issue that is far more complex than advertised.