After a strong start, the effort to quickly adopt an aggressive minimum wage ordinance for Richmond faltered. I have written several E-FORUMS about this:

·         Contra Costa Times Editorial: Richmond's Minimum Wage Effort Misguided, March 27, 2014

·         Public Favors $11.00 Minimum Wage, March 11, 2014
·         Your Thoughts on Increasing the Minimum Wage in Richmond? March 06, 2014
I think the basic problem is that this initiative never benefitted from a thorough public discussion. The proponents changed it from a ballot measure to an ordinance at the last minute, which may be a good idea but it eliminated the opportunity for several months of debate prior to the election.
As currently written, the ordinance would not have any effect until January 2015, so what’s the hurry?
Here are some questions I am asking:
1.       How many people employed in Richmond will be affected by this? It would be a subset of total Richmond employees and would include those otherwise paid less than the California minimum wage working for employers with 10 or more employees.
2.       How many of those affected are Richmond residents, as opposed to non-residents working in Richmond?
3.     How much additional money would it put into the Richmond economy (No. of Richmond resident FTE x  additional income per employee)

4.     How many jobs would be lost? Several people who testified and those I have talked to said that the result would be fewer people working but those remaining working harder. One employer said that he would have to cull out his lower-performing employees and keep fewer higher-performing employees, requiring that the be more productive. Marginally productive workers would lose their jobs, or the jobs would be outsourced.
5.     How  many employers would move out of Richmond or outsource to avoid the new minimum wage?
6.     Income for service jobs, particularly food service, depend on a combination of salary and tips. Many workers make quite good income form tips, often exceeding what they make in salary. Why not consider the combination as income;? The IRS does.
7.     We have heard from several employers About how it would adversely affect them. Can we have someone credible verify whether their claims are bound to be accurate or not?
8.     Wouldn’t a rise in the minimum wage for some also raise prices for other consumers as the cost is passed on, thus reducing the discretionary income of some purchasers?
9.     Some economists suggest that the minimum wage imposes a wage floor that prices cheap labor out of the market, reducing the pool of low-wage jobs. Daniel Mitchell of the Cato Institute, a libertarian think tank, suggests that "businesses are not charities and that they only create jobs when they think a worker will generate net revenue. Higher minimum wages ... are especially destructive for people with poor work skills and limited work experience. This is why young people and minorities tend to suffer most."
Put differently: If an employer needs someone to perform odd jobs, and he values the work at $2 per hour, he will not hire a person if the minimum wage is $7 per hour, thus keeping unemployment in low-wage brackets higher than it would otherwise be.
10.  James Sherk, a senior policy analyst at the conservative Heritage Foundation, argues that "the evidence shows that (1) a higher minimum wage causes employers to cut back on the number of workers they hire and employees' working hours; (2) the beneficiaries of higher minimum wages are unlikely to be poor because most minimum-wage earners are not poor; and (3) few individuals living in poverty work at minimum-wage jobs or any job." Federal labor statistics suggest that minimum-wage earners are more often part-time youth, including college students and working parents, who may be laboring for additional money but not for their survival. There is little evidence that heads of households work at minimum-wage jobs.
11.  Liebler also suggests that minimum wage laws pool low-income, low-skill work into an artificially high floor, removing opportunities to learn new skills and advance in a job or trade. "Instead of raising their income, the actual effect of the law is to cut off the bottom few rungs of the employment ladder, rendering it harder for low-skilled workers to achieve moderate-paying jobs," he said, in a 1995 study. The logic is straightforward: If all low-wage employees are pooled into a single wage bracket, developing employees will not receive crucial training, because the jobs will go to people who can already perform the work without training. Thus, the developing employees will enjoy fewer advancement opportunities.
12.  Most studies have found that the entire net effect of an increase in minimum wage results in a slight decrease in employment. A 10 percent increase would most likely lead to only a 1 percent reduction in employment. The more pressing issue is the matter of a livable wage. Even the state with the highest minimum wage does not meet the criteria for a livable wage. Over 24 cities throughout the United States have enacted a livable wage requirement, in order that people are able to meet their basic needs, such as food, shelter, heat, and clothing. This requirement has resulted in a minor cost increase for employers and a 2.2 percent decrease in employment. For a single person to meet his/her essential needs while living in Vermont, the person would need to make at least $7.98 an hour, and for a family of four it would need to make at least $19.82 an hour. (http://www.uvm.edu/~vlrs/doc/min_wage.htm)
13.  Joseph Sabia, an economics professor at San Diego State University, said his research on the effects of the proposed jump in the federal minimum wage found that fewer than 15 percent of minimum-wage workers live in poverty. “In contrast to the myth that a common minimum- wage worker is a poor single mother head-of-household struggling to make ends meet, the typical minimum-wage worker is actually a second- or third-earner in their 20s from a nonpoor household,” Sabia said. http://seattletimes.com/html/localnews/2023116005_wageimpactsxml.html ).
14.  The analysis of the data reveals that, from an economic perspective, there is a strong correlation between a higher legislated minimum wage rate and a higher unemployment rate. The results of this study suggest that, because of this disemployment effect, minimum wage laws indeed may frustrate the goals advanced as their justification, and that alternative forms of aid to workers, who are at (or below) the poverty line, should be explored. (http://www.law.gonzaga.edu/law-review/2011/09/07/minimum-wage).

I realize there are studies that show no job loss from minimum wages, including:

·         http://www.raisetheminimumwage.com/pages/job-loss
·         http://www.cepr.net/documents/publications/min-wage-2011-03.pdf
·         http://seattletimes.com/html/localnews/2023116005_wageimpactsxml.html
·         http://www.huffingtonpost.com/peter-dreier/raising-the-minimum-wage-_b_2750336.html
Richmond leaders delay minimum wage hike, seek further study
By Robert Rogers
Contra Costa Times
Posted:   04/16/2014 01:14:34 PM PDT0 Comments | Updated:   a day ago

RICHMOND -- What seemed like an inevitable move to raise the local minimum wage hit a snag this week as several City Council members rejected Mayor Gayle McLaughlin's push to enact the wage hike without a staff study into possible effects.
"I am generally in favor of raising the minimum wage, but I don't like the way you have rammed it down our throat and refused to listen to anybody's ideas," said Councilman Tom Butt, criticizing McLaughlin and her Richmond Progressive Alliance allies who sought to raise the wage Tuesday.
Tuesday's agenda item to raise the minimum wage had appeared a formality -- it was a second and final reading of an ordinance that passed 6-1 on March 18 -- but four of seven council members decided the wage hike deserved more input from small businesses and a full study by city staff.

Richmond Mayor Gayle McLaughlin (Ray Chavez/Staff File)
Council members Butt, Corky Boozé, Nat Bates and Jim Rogers formed the coalition to halt the law's passage at least until May 6.
The proposed law sets a transition period beginning with the effective date of the ordinance, usually 30 days after passage, and ending Dec. 31, during which the minimum wage would be $9. The wage would rise to $9.60 in 2015, $11.52 in 2016 and $12.30 in 2017, which could be the highest in the state.
The ordinance includes a provision that would peg the minimum wage to the Consumer Price Index for the Bay Area each Jan. 1, beginning in 2018.
The state's minimum wage is set to bump to $9 per hour in July and to $10 per hour in January 2016.
Tuesday's vote looks more like a delay than a turn in a new direction. Butt and Boozé said Wednesday that they still support the idea but want more input from businesses and more study on possible effects before making the final decision.
"We have plenty of time, we don't need to rush," Boozé said.
City Attorney Bruce Goodmiller also advised the council that further clarification of the law's wording was needed.
Tuesday's move was surprising to most onlookers and even elected leaders. The RPA sent out campaign mailers in recent weeks touting the law as though it had already been decided.
"The minimum hourly wage for all workers in Richmond was raised to $12.30, the highest in the Bay Area," the mailer said.
One business owner spoke in opposition to the wage hike Tuesday, and another raised similar concerns at the March 18 meeting.
Louis Buty of American Textile and Supply, which employees about 30 people, said the hike would put him at a disadvantage compared with businesses in nearby cities, and that the council didn't do enough to inform business owners of the ordinance.
Butt said Wednesday that the key for him was to get a detailed analysis from city staff. McLaughlin pointed out that members of the council had conferred with labor economists from UC Berkeley who assured them that the law would benefit the local economy.
"There is some evidence that on a local basis this isn't necessarily good for everybody," Butt said. "We need to get a study, get the statistics, so we can go into this with our eyes open."
Contact Robert Rogers at 510-262-2726 or rrogers@bayareanewsgroup.com. Follow him at Twitter.com/SFBaynewsrogers.
Minimum wage increase stalls

(File photo by: Tawanda Kanhema)
By Sukey Lewis and Nancy DeVillePosted April 16, 2014 11:37 am
To learn more about the minimum wage debate in Richmond, you can listen to this report from Nancy DeVille.
Richmond’s effort to pass a minimum wage hike has stalled. A general increase to the minimum wage gained support from the city council on March 19, but the proposed ordinance failed to pass a second reading after some councilmembers felt the wage hike deserved more input from small businesses.
Councilmembers Corky Booze, Nat Bates, Tom Butt and Jim Rogers said the issue required further study and input from businesses in Richmond.
If passed, the ordinance could have made the city’s minimum wage at $12.30 the highest in the state. Ken Jacobs, head of the U.C. Berkeley Labor Center, said Richmond would be the 10th city in the country to pass a local minimum wage law. But the issue isn’t dead, and the council plans to reconsider it in future sessions.
Neighboring cities Oakland and Berkeley are also considering minimum wage hikes. San Francisco’s minimum wage of $10.74 went into effect on January 1. California’s state minimum wage is set to increase to $9 in July.
“There’s quite a bit of momentum out there and many cities are looking at this now,” Jacobs said. “By the time you get to 2017, the difference between Richmond and the rest of the state won’t be that big.”
At the city council meeting on Tuesday night, one small business owner, Louis Buty of American Textile and Supply, Inc., which employees 28 people, said the wage hike would put him at a serious competitive disadvantage. He said council has not done enough to inform business owners of the ordinance.
“We just got wind of this.” Buty, said, adding that he might have to lay off employees or move his business to another city. “People have been with me 20 years, I feel obligated to keep them employed,” he said.
Councilmember Nat Bates asked why the ordinance needed to be passed right away; the first wage hike to $9.60 wouldn’t go into effect until January. “Let’s kick this thing over for a few weeks,” Bates said. “There’s no urgency in it.”
Mayor Gayle McLaughlin, Vice Mayor Jovanka Beckles and Councilmember Jael Myrick, who co-sponsored the item, argued that passing the ordinance now would signal council’s intent and allow businesses ample time to adjust.
“There is an urgency,” Beckles said. “People are struggling.”
Councilmember Tom Butt voiced concern that McLaughlin, Myrick and Beckles were rushing ahead without allowing time for appropriate discussion by the council.
“I’m just resentful about this,” Butt said. “Try to bring council along. Try to educate people.”
In the end, the council voted to discuss the item at next week’s study session. The ordinance will be brought back to the city council for a first reading in early May.
Stephen Ramm, owner of Palace Furniture on Macdonald Avenue, said the council made the right decision to delay the ordinance vote. He said the effects the hike will have on business owners should be considered before it is passed.
“The cost of the minimum wage hike will be passed on to the community. We are trying to come together and make sure we have a voice,” Ramm said.