Momentum for Local Minimum Wage

Since its establishment in 1938, the federal minimum wage has served as a floor below which no workers could legally be paid.[1] Many argue that it helped drive post World War II U.S. prosperity. Throughout the middle decades of the 20th century, the minimum wage also helped to economically unite disparate parts of the United States. The poorest state in the U.S. in 1929 (South Carolina) was 4.25 times poorer than the richest state (New York).[2] Today, South Carolina is only about 30 percent poorer than New York, and the gap between the richest and poorest state is less than 2 to 1.[3]

Yet, since the late 1960s, the federal minimum wage has not kept up with either cost of living or productivity. It is currently just $7.25 per hour; had it kept pace with inflation since its peak in 1968, it would be close to $11 per hour today. Economists contend more and more that the weakening of the minimum wage is one factor in the shrinking of the middle class, the rise of extreme inequality, and an ever more precarious prosperity. People care about this issue — it’s tangible for them — they recognize that low wages often mean a household is forced to rely on public services like food stamps just to make ends meet.

California first established a minimum wage in 1916 (several decades before the U.S. did so) and in recent decades, 22 states established a higher minimum wage than the federal minimum.[4] California’s minimum wage is now $9, and slated to increase to $10 per hour in 2016, compared with the federal minimum of $7.25 per hour.[5] But starting a little over a decade ago, a few of the nation’s more progressive cities such as Santa Fe (2004) and Albuquerque (2013) put in place a local minimum wage for their respective cities; in doing so, they established minimum wages higher than their state minimum.

In 2003, San Francisco became the first California city to pass a local minimum wage. The measure raised San Francisco’s minimum wage 26 percent above the state minimum wage. The increase was put on the ballot during economically soft years after the dot-com bust, and it faced considerable opposition, yet it still passed with 60 percent support.

It is important to note that for San Francisco, as well as for increasing numbers of cities today, raising the minimum wage was only one among a broad set of policies intended to improve working conditions citywide. Other policies included living wage and card check neutrality requirements for city contractors as well as requirements for sick leave and health care benefits for all workers.[6] While controversial and subject to some litigation (such as an unsuccessful lawsuit challenging the health care requirement), these local “mandates” became established and are now accepted in San Francisco.

In 2012, San Jose became the second Bay Area city to establish its own local minimum wage, initially at $10 per hour. The wage increases each year based on cost of living. Yet the wage levels in San Francisco and San Jose were quickly surpassed, at least in concept, when in the summer of 2012 fast food workers in New York City called for establishing a $15 minimum wage. Within reasonably short order, voters in SeaTac, Washington, approved a $15 minimum wage in November 2013, and the City Council of Seattle followed in June 2014.

Back in the Bay Area at the start 2014, a series of groups in San Francisco called for another bump in the local minimum wage to $15 per hour. Two separate measures were eventually merged and the final measure passed in November 2014 with 77 percent of the electorate, not to mention financial backing by major business organizations and a ground campaign supported by labor and social justice organizations. In Oakland, a local minimum wage measure that includes a provision for between five and nine sick days per year passed with 81 percent support. One interesting quirk: from March to May of 2015, Oakland’s minimum wage will be $12.25, higher than San Francisco’s (which increases to $12.25 in May 2015), since Oakland’s increases immediately from the state minimum to $12.25 and then by inflation thereafter.

Comparison of various minimum wage levels

A small group of cities in the South Bay are pursuing coordinated future minimum increases that would bring their local minimum to $15 per hour.

Beyond the three central cities, numerous other cities are choosing to increase the minimum wage directly via their city councils. Berkeley approved a minimum wage that will grow to $12.53 in 2016, and Richmond has a minimum that will grow to $13 in 2018. Despite some calls to align minimum wages across the East Bay, the three East Bay cities with a local minimum wage all have different wage levels. In contrast, both Mountain View and Sunnyvale in the South Bay approved local minimum wages that will be pegged to San Jose’s and will rise to $10.30 in 2015.[7] Both cities also signaled their interest in working with surrounding cities (like San Jose) to raise the minimum wage to $15 in 2018.[8]What are we to make of city after city passing a higher minimum wage? Higher minimum wages have become a win-win mainstream idea because the public senses just how prosperous we are as a region, as well as the difficulties so many who earn low wages face.

While the recent campaigns to increase the minimum wage in a few Bay Area cities were largely uncontroversial and not contested, the success of these measures is an important step toward raising the floor for wages and conditions for all lower-wage workers. Alone, this will not rebuild the middle class, but it is one among several important strategies to create broader economic prosperity.[9]

Our prosperous and interconnected Bay Area may well be the place where we can create and implement new model policies for low-wage workers. This region’s economy is driven by globally competitive industries with large numbers of high-wage workers. Yet our economy is maintained by a range of low-wage workers in fields like retail, childcare, landscaping and janitorial. Given the Bay Area’s high cost of living, a particular challenge exists for the over 1.1 million workers in the region who earn less than $18 per hour (half of whom earn close to minimum wage).

We succeed or fail as a region. In the coming years, to modernize the minimum wage we need establish common policies across our interconnected region to ensure that employers have consistent standards and that workers can more easily afford to live here.

[1] Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage, http://www.dol.gov/dol/aboutdol/history/flsa1938.htm.

[2] “Rich States, Poor States,” by Andrew Gelman, The New York Times, June 10, 2013.

[3] See: www.census.gov/compendia/statab/2012/tables/12s0681.pdf.

[4] History of California Minimum Wage, http://www.dir.ca.gov/iwc/minimumwagehistory.

[5] Ibid.

[6] Starting in 1996 a series of measures focused on city contracts and/or leases (such as equal benefits for domestic partners, card check neutrality and living wages). The minimum wage increase was the first citywide policy. In 2005 came the Working Families Credit, followed by the Health Care Security Ordinance and Paid Sick Leave in 2006. See Reich, Jacobs and Deitz. When Mandates Work: Raising Labor Standards at the Local Level.

[7] Sunnyvale follows Mountain View’s lead, targets $15 minimum wage,” by Lauren Hepler, Silicon Valley Business Journal, October 15, 2014

[8] See: http://www.mountainview.gov/council/study_issues/city_minimum_wage.asp.

[9] See SPUR’s Economic Prosperity Strategy for a series of strategies to connect lower-wage workers to economic opportunity. http://www.spur.org/publications/spur-report/2014-10-01/economicprosper….