Sacramento’s minimum wage needs more work

A national movement for a $15-an-hour minimum wage has won victories in Los Angeles, scene of this rally, and in San Francisco. A proposal to go to $12.50 is more balanced and better suited for Sacramento.
A national movement for a $15-an-hour minimum wage has won victories in Los Angeles, scene of this rally, and in San Francisco. A proposal to go to $12.50 is more balanced and better suited for Sacramento. Los Angeles Times

The minimum wage proposal before the Sacramento City Council could very well hit that sweet spot of rewarding hard work and lifting families out of poverty without burdening local businesses too much.

Certainly, an increase to $12.50 an hour by 2020 – starting with a 50-cent hike over the state minimum on Jan. 1, 2017 – is more tailored to Sacramento than the $15 scheduled in Los Angeles and San Francisco, both far more expensive places to live.

The proposal on the council agenda for review Tuesday and up for a vote on Oct. 27 – excludes workers under 18, job training program participants and certain disabled employees. That makes more sense than a blanket wage hike.

Crediting companies for helping their employees pay for health care coverage is fair. So is giving the smallest businesses – those with fewer than 40 employees – six more months to comply with each increase.

But even if it means delaying a final decision, council members should take a harder look at the most problematic and controversial provision – “total compensation.”

That would exempt employers from paying the higher wage to employees who make more than $15 in salary and tips or commissions – a $2.50 premium over the final minimum wage. It would cover many restaurant workers, but also employees at hotels, nail salons and others who rely on tips, as well as those who are on commission.

Setting aside whether it’s really fair, it could be a nightmare for businesses to keep track of who is a “total compensation” employee and who isn’t. It could also complicate enforcement by the city, which already expects to hire three employees at a cost of $450,000 a year to oversee a local minimum wage.

There’s also a legal issue. Labor unions and advocacy groups insist that total compensation isn’t allowed under state law. Last week, they were backed up by the Legislature’s chief lawyer.

But the California Restaurant Association, which is championing this idea, is confident enough it would prevail in court that it has agreed to pay the city’s legal costs for the lawsuit that is sure to come.

The battle over this exemption threatens to unravel the entire package, a compromise crafted by a task force appointed by Mayor Kevin Johnson that included business and labor representatives. Under the proposed ordinance, if one provision is tied up in court, the rest would still go into effect. However, the restaurant association and the Sacramento Metro Chamber say that without total compensation, they will oppose the plan.

That would be too bad because in Sacramento and the rest of the country, worsening income inequality is a legitimate concern. In 2013, nearly one in five workers in Sacramento County earned less than $10 an hour (the statewide minimum wage starting Jan. 1), according to a Sacramento State analysis.

Yet city officials should be careful about getting too far out of step with other cities in the region.

The task force recommends that city officials review the impact on the local economy each year, and report to the council. That shouldn’t be window dressing. If there’s a real drag on local businesses, council members should be prepared to pull back on the next scheduled increase.

There’s a chance that whatever happens in Sacramento will be superseded, either by legislative action or an initiative on the November 2016 ballot to increase the statewide minimum wage to $15 by 2021.

Still, the City Council doesn’t need to wait to approve a plan that makes sense for Sacramento.