California appears to be headed toward a political showdown over the $15 per hour minimum wage law.
A widening chorus of restaurant chains, individual eatery owners, small businesses, nonprofits and even municipal and county governments are joining the call for a rethink of the $15 per hour timetable.
We editorialized in the June 23rd edition of the Business Times that a freeze or pause in the Fair Wage Act of 2016, which mandates the $15.00 minimum wage by 2021, might be advisable.
However, in just one week’s time, there’s more evidence to suggest the Fair Wage Act should be suspended or replaced because it is not fair at all — especially to the working people it is designed to help.
A widely quoted study from Seattle suggests that as minimum wages approach $13 per hour, business owners begin to cut back on hours for staff, causing what amounts to a net reduction in gross earnings per worker.
Evidence from Santa Barbara’s State Street restaurant corridor, as well as from Ventura and Santa Paula, suggests that restaurants are shedding staff, converting to quick-serve models or reducing hours.
The restaurant industry is hit particularly hard because there is no carve-out or allowance for tips. Workers at many restaurants already earn more than $15 per hour, so as the minimum wage rises they face fewer hours or a “no tips” restaurant policy, which effectively is a wage cut.
We’ve been talking to several political and business types who think that reforms to the Fair Wage Act, if not a move toward outright repeal, could be in the cards. Some further thoughts:
• One of the problems with artificially high minimum wages is that high school students are priced out of the market. A reduced minimum wage for students under age 21 might be a valid path forward.
• Very small companies suffer disproportionately. Some cities partially exempt companies with fewer than 25 or 50 employees from minimum wage laws.
• Restaurants are a difficult case but the net effect of the status quo will be fewer restaurants serving a middle class clientele and more ultra high-end eateries or quick- serve outlets.
The best way to head off the unintended consequences of artificially high minimum wage rates is to cap the current Fair Wage Act minimum wage at something like $12.50 or $13 per hour and then automatically raise wages in the future based on inflation.
ANTIOCH UNIVERSITY LEADER WILL BE MISSED
In less than a year in the top leadership role at Antioch University’s Santa Barbara campus, Bill Flores created the blueprint for success.
He put together an impressive MBA program and was making inroads with community leaders. The Business Times named him one of our Latino Business Awards honorees for 2017.
However, Flores will only be able to cheer from the sidelines as his blueprint gets turned into reality. A previously diagnosed cardiovascular condition, which flared up during a trip to Seattle recently, has prompted Flores to step down from his post.
Flores, 69, told us he’ll be moving back to Houston, where he hopes to resume his consulting practice and author a book. He’s formed many friendships in our region in a short time. We wish him the best.