COMPARATIVE ANALYSIS OF MUNICIPALITY EFFORTS TO PASS MINIMUM WAGE INCREASE LEGISLATION: IMPLICATIONS FOR CONTRA COSTA COUNTY

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1 COMPARATIVE ANALYSIS OF MUNICIPALITY EFFORTS TO PASS MINIMUM WAGE INCREASE LEGISLATION: IMPLICATIONS FOR CONTRA COSTA COUNTY By Molly Hogan For Ensuring Opportunity Campaign Mills College Public Policy Program April 21, 2015 i

2 Executive Summary Income inequality has become a pressing issue in the last decade. Due to stagnating wages, many Americans are struggling to make ends meet. The gap between the wealthy and the poor has also been growing. This gap is demonstrated in the fact that 400 Americans have more wealth than 50% of the U.S. population, and the purchasing power of the minimum wage has decreased significantly since 1968, meaning minimum wage workers in 1968 made more than minimum wage workers today indexed for inflation (Kornbluth, 2013). In 2013, after failing to pass a minimum wage increase bill through Congress, President Obama called on states and cities to increase minimum wages locally. Currently, 29 states have minimum wages higher than the nationally mandated amount. California is among these states and in 2013 passed AB 10 which raises the state minimum wage to $10 per hour by The Bay Area has been a leader in the movement to lift the wage floor with seven regional cities passing legislation to increase their municipal minimum wage: Berkeley, Oakland, Richmond, San Francisco, San Jose, Mountain View, and Sunnyvale. The City of Emeryville is presently considering an ordinance on the issue. Ensuring Opportunity Campaign, a cross sector collaboration organization with the mission to alleviate poverty in Contra Costa County has the objective of raising the minimum wage county-wide. Because Bay Area workers commute across city and county lines, a broad regional effort to boost the minimum wage in all jurisdictions will help distribute the various benefits throughout communities. Using the federal poverty level guidelines to measure poverty in communities, especially in an expensive state like California, is becoming increasingly less useful to determine how families are faring economically. As an alternative, Insight Center for Community Economic Development (Insight) created the Family Economic Self- Sufficiency Standard. The standard measures the minimum income necessary to cover the actual cost of living in each county, taking into account the varying local costs of goods, different family sizes, and ages of children. It measures only the costs of covering basic needs, such as housing, food, childcare, transportation, out-of-pocket medical expenses, and other necessities. The Self- Sufficiency Summary for Contra Costa County released in 2014 concluded that a self-sufficiency income for a family with two adults, 1 preschool age child and one school age child is of $71,711, which is $17 per hour if both adults work full time. The report found that 26.1% of Contra Costa households live below the standard even though 86% of these households had one or more family member working (UWBA, 2014). That is more than double the estimated 10.5% of households living under the federally measured poverty level in Contra Costa County (US Census, 2013). The 2015 federal poverty level for a household size of four is $24,250, which is $47,461 less than the Contra Costa Self-Sufficiency Standard (FamiliesUSA, 2015). ii

3 The cost of basic necessities in the county is high, and rising. From 2011 to 2014 housing costs have risen 4%, food prices have increased 8.1%, and healthcare has increased 15.4% (UWBA, 2014). Meanwhile, wages in the region have stagnated for low-income earners. A report from California Food Policy Advocates documented that in 2012, 53% of adults in low-income households are food insecure, meaning that those families run out of food before they have funds available to buy more (cchealth.org, 2014). Although Contra Costa County is the fifth wealthiest in the state, the wealth is not evenly distributed throughout the region. Economists have noted that raising the minimum wage benefits the middle class as well as the low-wage workers directly affected (Weissmann, 2013). Raising the wage floor lifts up the entire community. There are strong economic arguments in support of raising the minimum wage. Nearly 75% of leading economists agree that the benefits of raising the minimum wage outweigh the costs (ChicagoBooth, 2013). Economists that oppose a raise believe that firms will hire fewer employees, and even lay off employees, if the wage floor is lifted. Thus, those opposed to a higher minimum wage claim that wage and employment equity will be decreased. Proponents of the increase argue it will increase equity. An equity argument exists in favor of increasing low wages, as insufficient livable wages disproportionately affect people of color and women. In 2011, 42% of all working families had at least one racial/ethnic minority parent, but 59 % of low-income working families had one or more minority parents (Roberts, 2013). In Contra Costa County, African Americans and Latinos are disproportionately represented among households living below the Self Sufficiency Standard, as are households with single mothers (UWBA, 2014). In addition, higher wages can improve health and wellness for one million lowincome families in the Bay Area (BARHII, 2014). Studies in economics and epidemiology link low income to health problems, including depression, diabetes, heart disease, arthritis, and premature mortality (Leigh, 2013). Wage levels have also been shown to have correlations with youth crime rates; lower wages result in higher crime levels (NBER, 2015). The overall economy can benefit through increased consumer spending, increased tax revenue and reduction in spending on social safety net programs. A recently released report from the UC Berkeley Institute for Research on Labor and Employment found that 73% of those enrolled in major federal and state publically supported programs are in working families (at least one working member) and therefore tax payers are subsidizing low wages (Jacobs, 2015). This report offers a comparative analysis of several city and county efforts to pass minimum wage legislation in recent years. The following jurisdictions were examined: Richmond, Oakland, Berkeley, San Francisco, San Diego, Eureka, Seattle, and the DC Region. I interviewed a total of 13 different stakeholders from all locations, including: elected officials, legislative aides, nonprofit advocates, and labor organizers. By looking iii

4 at what has and has not worked in these locations, this report makes recommendations for strategic plans and actions that could be employed in the campaign to increase the minimum wage in Contra Costa County. I also make recommendations about what to include in proposed minimum wage legislation. Strategic Recommendations There are early strategic concerns the Contra Costa minimum wage increase working group should consider: Identify industries with the largest concentrations of minimum wage workers in all cities (and unincorporated areas) for targeted outreach. Conduct polling to survey level of public support. Determine strategic concentration on strictly minimum wage vs. including earned sick leave & medical benefits. Decide between ballot initiative & ordinance process. In deciding whether to use ballot initiative or ordinance process key considerations are: Ballot initiatives are more expensive. Ballot initiatives take longer: must wait until elections. Compromise from the ordinance process can lead to more exemptions, lower dollar amount, and longer phase-in periods. Misalignment in political leadership support can complicate and make ordinance process difficult. If ballot initiative is used: Draft initiative with supportive stakeholders. Include supportive business actors. Include workers directly affected by the policy. Strong base: Labor & CBOs. Quality data with message, including reframing hourly wage to annual salary for better relatability in wealthy communities. Faith & business advocates. Low wage workers lead campaign. If ordinance process used: Include all stakeholders. Approach opposition early, particularly business. Send communicator with positive working relationship. Convene two committees (West County and East County) of representatives for each jurisdiction. Representatives from local government, business, nonprofit, iv

5 and labor communities. Six month time frame to reach compromise on guidelines for local ordinances: dollar amount, exemptions, phase-in periods. Representatives from each of the two committees convene to agree upon county-wide guidelines; one month time frame. Individual jurisdictions draft and pass local ordinances. Recommendations for law content $15 per hour, phased in over 3-4 years, annual CPI increases. No small business or non-profit exemption. No tipped worker exemption (illegal under state law). Include youth training program exemption. Include Welfare-to-Work participants. Include language explicitly protecting undocumented workers from being threatened if they report noncompliant employers. If exemptions included, state clearly in separate section. County Specific Arguments Decreased utilization of county funded social services could help offset increased cost of higher IHSS wages. Businesses with higher minimum wage at competitive advantage. Opponents' argument that businesses will move elsewhere is unlikely to be a significant factor. Geographic and infrastructure barriers reduce the likelihood of businesses moving, and customers often unwilling to travel farther to a new location. Because residents spend money in various jurisdictions throughout county, it benefits all cities if low wages are increased. Save on costs of implementing law by sharing enforcement workers. Contra Costa County is positioned to execute a unique endeavor. Coordinating multiple jurisdictions and county territories to reach a compromise on passing higher minimum wage legislation will no doubt be a labor intensive project. Examining the efforts of several other communities around this issue has produced observations of strategies and actions that resulted in positive outcomes and others that met with challenges. These case studies and consequent recommendations can help inform Ensuring Opportunity Campaign and their strategic partners in their attempt to achieve successful passing of minimum wage increase legislation across the county. v

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