News

City could slow down minimum wage increases

Proposal asks Mountain View council to pause scheduled hike to $15.65 in January

Three years ago, Mountain View was in the vanguard of Silicon Valley cities boosting their minimum wage to balance out the area's high cost of living. But that enthusiasm may be waning -- on Tuesday night, the City Council will consider consider slowing down the wage increases.

In a plan spearheaded by Councilman John McAlister, the city is being asked to pause its minimum-wage increases that were approved in 2015. Back then, Mountain View's minimum wage was $10.30 an hour, and as of this year that hourly pay has jumped up to $15 an hour.

For every year going forward, the city's plan was supposed to increase its minimum wage by the cost of inflation. That means that as of Jan. 1, 2019, the minimum wage would increase to $15.65 an hour.

Speaking to the Voice, McAlister said the city's wage increases should be paused in order to align Mountain View's base pay with other nearby cities. San Jose, Palo Alto, Los Altos and other regional cities were all one year behind Mountain View, and aren't going to be at $15 an hour until next year, he said. Waiting one year would make it so Mountain View isn't a higher wage "island," putting its small businesses at a disadvantage, he said.

"Our minimum wage has gone up some 40 percent since this was initiated," McAlister said. "That's a really quick increase, and at some point we have to give our small businesses a break and move forward."

While Mountain View is ahead of other cities in increasing its minimum wage, the city is not entirely alone. The city of Sunnyvale is also currently at a $15-an-hour minimum wage, which it plans to increase by inflation starting next year.

McAlister has a stake in the issue as the owner of a Baskin-Robbin's franchise and a self-styled champion of small businesses. He gave assurances that there was no conflict of interest for him, and he said the city attorney had already vetted the issue.

The City Council will discuss the proposed pause to the minimum wage increases at its Tuesday, Dec. 4, meeting.

Comments

14 people like this
Posted by Observer
a resident of Old Mountain View
on Dec 4, 2018 at 2:05 pm

Wow, McAlister, the owner of a small business, is arguing against increasing the minimum wage because it hurts the owners of small businesses. Yay! Gotta love these politicians.


43 people like this
Posted by Pointman
a resident of Blossom Valley
on Dec 4, 2018 at 2:33 pm

Yeah but he's right anyway.


34 people like this
Posted by Small Biz Owner on Castro
a resident of Old Mountain View
on Dec 4, 2018 at 2:34 pm

While I certainly support a living wage, going from $7-ish/hour to $10/hour several years ago was already a 50% increase for small businesses. And then to go from $10 to $15/hour in another few years is ludicrous! Between the high labor costs coupled with high rents, increasing insurance, workers comp, employee benefits, increasing utility costs, etc, how much do you think a small business owner can take?! The question is... are people better off with these wage increases? And the answer is NO! The issue isn't the wage.. the issue is cost of living, specifically the HIGH COST OF HOUSING! No level of wage increase can keep up with the ridiculously high rents! So stop beating up the small business owners and start controlling the landlords who remain unchecked and can charge whatever rents they want!!! I applaud any council member/politician that understands this and has the guts to stand up for what makes sense for everyone!


33 people like this
Posted by Humble observer
a resident of Old Mountain View
on Dec 4, 2018 at 2:51 pm

Yes, he's right "anyway." You don't need to me a MV small business owner to realize that minimum-wage increases are always a two-edged sword. (To think otherwise requires the naive assumption that small employers all make huge profits, which the wage increase just incrementally reduces.) Some employees will end up with higher wages, others with zero wages for the labor they sell -- because the employer, in turn, depends on selling into another market, which may not accept an increase in prices to maintain the employer's already razor-thin and sometimes temporarily negative profit margin.

It's amazing that city councils congratulate themselves for minimum-wage hikes as if completely ignorant that it may help some workers while it harms small businesses and even sometimes kills them.

Like many policy questions, this isn't some kind of absolute good (as ideologists perceive and portray it), but rather a tradeoff between real-world alternatives none of which is an ideal.


27 people like this
Posted by Rob G
a resident of North Bayshore
on Dec 4, 2018 at 3:01 pm

Well said John McAllister.
As a small business owner and an employer of 10-15 employees everyone should realize that not only is the minimum wage going up but so are all the other costs of being in business.
Remember if I can't make a living from my business then my business will not survive.
If my business does not survive then those 10-15 jobs are gone irrespective of what the minimum wage is.
ps I have always paid above the minimum wage. I have found that there is competition for "qualified' labor
and therefore I pay more than is required.


Like this comment
Posted by Waverly Park
a resident of Waverly Park
on Dec 4, 2018 at 3:02 pm

Waverly Park is a registered user.

Since he owns a small business, should't McAlister be required to recuse himself on this issue? Still, he's right. Minimum wage levels should be regionally coordinated and administered, say by the Santa Clara County and not individual cities.


2 people like this
Posted by Robyn
a resident of another community
on Dec 4, 2018 at 3:12 pm

The tax man is the beneficiary of the wage increase. Skilled workers who actually earn the amount must receive an increase, too, even though there is no increase in value to the enterprise.
This is how the government justifies their wage increases even though service suffers or declines.


18 people like this
Posted by Resident
a resident of Old Mountain View
on Dec 4, 2018 at 3:14 pm

I'm surprised that minimum wage laws pass at all, because they're known to be net harmful. Read about Seattle, for an example of what they can do.

Look at it this way - minimum wage laws don't directly mandate paying $15, or whatever. What they do is make any job which pays less than $15 illegal. Some businesses will be able to pay more, and still remain profitable, those will likely remain, with a pay cut for the owners, since consumers are very inflexible on prices. If some job doesn't produce more than $15 in value, it will disappear - this particularly hits part time work, young people having summer or evening jobs, seniors doing part time work, etc.

I'd actually be interested in hearing from the small business owners in this thread about what portion of their employees are at the minimum wage. The national statistics that I've seen are that few people remain perpetually on minimum wage, and tend to get paid more as they build up a skill set. Is this the case here in Mountain View?


19 people like this
Posted by Mtviewresident
a resident of North Whisman
on Dec 4, 2018 at 3:50 pm

Mtviewresident is a registered user.

Seriously, the minimum wage is impossible. Here’s a consequence you’d never imagine! Medicare home care companies won’t send home health care givers to Mountain View because the minimum wage is so high. Add to it that these workers go from house to house and they live in lower cost areas, so have to spend more time and gas getting to Mountain View. So what’s the answer? At least if the minimum wage were (lower) within what Medicare pays, Homecare companies would be willing to send workers to our city.



8 people like this
Posted by Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 8:10 pm

Remember the days when minimum wage jobs weren't meant to be "living wages"? They were entry level jobs for unskilled workers, mostly kids that were just starting out or in school. What subset of the population has these jobs now?


10 people like this
Posted by @Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 8:12 pm

Wait, so you think there should be full-time jobs that don't provide a living wage?


14 people like this
Posted by Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 8:19 pm

I'm saying that it didn't use to be the case that workers that received minimum wage were typically supporting a family or often, even themselves. They were young people that were just starting out and either living with their parents or they had roommates that they shared expenses with. They had no skills so weren't valued at higher wages. Once they were trained and gained skills, their wages increased. Also, not all minimum wage workers are full time. Many are part time but still collect the higher minimum wage.


11 people like this
Posted by @Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 8:38 pm

The minimum wage was always envisioned as a living wage. FDR said: "It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country [...] and by living wages I mean more than a bare subsistence level-I mean the wages of decent living."


9 people like this
Posted by Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 9:03 pm

That may have been FDRs's philosophy but that was not the reality a generation ago. Kids had those jobs. Not so anymore.


7 people like this
Posted by Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 9:10 pm

Besides, a "living wage" is ill-defined. A single person living with roommates can live on the minimum wage. A person with a spouse and 3 kids would struggle with the same wage. Living wage for one, poverty for the family.


9 people like this
Posted by @Nostalgic
a resident of Monta Loma
on Dec 4, 2018 at 9:18 pm

That may be how you remember it, but reality is quite different (nostalgia is funny like that).

The Economic Policy Institute states: "Up until the early 1980s, an annual minimum-wage income—after adjusting for inflation—was enough to keep a family of two above the poverty line. At its high point in 1968, the minimum wage was high enough for a family of three to be above the poverty line with the earnings of a full-time minimum-wage worker, although it still fell short for a family of four." Sounds like some lucky kids if they were living at home and earning wages that supported a family of two or more!


4 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Dec 4, 2018 at 9:21 pm

@Nostalgic is right. Minimum Wage is supposed to be a living wage. The idea that it's supposed to be for kids or short-term jobs is a recent retcon to justify not having it keep pace with inflation.

If your business can't be competitive without paying workers below minimum wage, then that's totally fine. Another business with a better business model will take your place.


6 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Dec 4, 2018 at 9:23 pm

Also, as far as Seattle's minimum wage hike being a net negative:

Web Link


5 people like this
Posted by Nostalgic
a resident of Monta Loma
on Dec 5, 2018 at 1:42 am

@Yimby - Yes, you're right - small businesses will fail and be replaced by the likes of Walmart, Amazon, etc. And yet I'll bet you scorn those companies.


2 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Dec 5, 2018 at 2:02 am

Whether it's minimum wage, safety regulations, or consumer protection laws, saying "this is going to put me out of business and then Amazon wins" is not an excuse to skimp on any of those.


8 people like this
Posted by Unclear
a resident of Bailey Park
on Dec 5, 2018 at 4:49 am

The UW study merely points out that there are winners and losers from a MW. Like rent control, winners are those that already had jobs , similar to those already living in an apartment. Losers are new entrants into the marketplace. Also the study points out that an increase in labor demand reduces the impact of a MW. It doesn't mean the MW has no impact.


4 people like this
Posted by Resident
a resident of Old Mountain View
on Dec 5, 2018 at 1:24 pm

This may be a bit too much of a tangent, but here goes. The minimum wage debate is actually a proxy for something more tricky. Over the last few decades, Federal Reserve policy has had a large shift from the policies which made a dollar a strong world reserve currency. The credit backed dollar has resulted in a massive transfer of wealth from society, to Wall St and institutions with close relationships to the Fed. The rich got richer and poor got poorer.

People are feeling this pain by seeing the purchasing power of their wages dropping, so they fight for a higher minimum wage. This puts local companies out of business, and replaces them with big chains that have better economies of scale to soak up these costs.

If you want to fix the problem of basic jobs providing a living wage, you have to start much higher up the politics pyramid than raising wages, they're just a symptom of a larger problem, sadly.


5 people like this
Posted by MV Mark
a resident of Blossom Valley
on Dec 5, 2018 at 2:44 pm

I think that the real test of local and regional minimum wage policies will come in the next significant economic downturn, when businesses will be stressed and forced to confront choices of how and where to reduce costs in order to survive. Jurisdictions with high relative minimum wages will likely experience failure and flight of businesses relying on low-skilled labor, as well as automation where that is a viable alternative. Entry-level, seasonal and part time jobs availability will plummet.

Regarding calls for John McAlister to recuse himself from votes regarding this issue in Mountain View, I think that if those who vet such matters are unwilling to force recusal, his voice as a small businessperson residing in the community is valid, should be heard and carry some weight in the deliberations and decisions.


2 people like this
Posted by Nostalgic
a resident of Monta Loma
on Dec 5, 2018 at 9:31 pm

@YIMBY- the problem is that the wage earner doesn't win by raising MW. It puts small businesses out of business so some lose their jobs all together then big corporations monopolize everything, and either send their jobs offshore or raise their prices to offset the increased wages. As a result the workers don't have increased purchasing power. It's a lose-lose situation.


4 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Dec 6, 2018 at 4:43 pm

"You want two whole days off every week? That will put us out of business!"


Posted by Name hidden
a resident of Bailey Park

on Dec 7, 2018 at 4:48 pm

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


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