EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: October 4, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Patrick Heisinger, Interim City Manager
BY: Jessica Caballero, Management Analyst II
SUBJECT: Proposed Increase to City's Local Minimum Wage by the Consumer Price Index Recommendation
Adopt a resolution confirming:
1. The adjusted Local Minimum Wage of $16.50 per hour for all employers in the City of East Palo Alto to be effective January 1, 2023; and
2. The bulletin to be finalized and distributed to employers in the City of East Palo Alto.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 2: Enhance Economic Vitality
Background
On September 1, 2020, the City Council adopted a Local Minimum Wage Ordinance (LMWO), Chapter 5.10 of the City of East Palo Alto Municipal Code (Attachment 2), that established a minimum wage of $15.00 per hour for all employers in the City of East Palo Alto to be effective January 1, 2021. In accordance with the ordinance, the hourly minimum wage is to be adjusted annually by the Consumer Price Index (CPI).
On October 5, 2021, the City Council adopted a resolution confirming that the Local Minimum Wage was increased to $15.60, effective January 1, 2022. A City webpage was created to describe the adopted LMWO and to make updated materials available online (Webpage link:
https://www.ci.east-palo-alto.ca.us/econdev/page/local-minimum-wage).
The purpose of this staff report is to provide an update to City Council on the annual increase that will take place on January 1, 2023.
Analysis
An escalator was built into the LMWO so that the hourly wage can be simply updated each year. Section 5.10.030(B) of the LMWO includes the following instructions:
“Beginning on January 1, 2022, and each January thereafter, the minimum wage shall increase by a percentage amount equal to the prior year's increase, if any, in the Consumer Price Index (CPI) for San Francisco-Oakland-San José, as determined by the United States Department of Labor. The change shall be calculated by using the August to August change in the CPI to calculate the annual increase, if any, and rounded to the nearest nickel. A decrease in the CPI shall not result in a decrease in the minimum wage.”
On September 13, 2022, City staff accessed the Consumer Price Index for the San Francisco Area1, and the report shows area prices were down 0.5 percent over the past two months but were up 5.7 percent from a year ago or August 2021. Prices in the San Francisco area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), declined 0.5 percent for the two months ending in August 2022, the U.S. Bureau of Labor Statistics reported (see Attachment 3 for further tables and information).
Using this CPI report, the updated Local Minimum Wage calculation is as follows:
$15.60 X 5.7% = $0.8892
$0.8892 is rounded up to $0.90
$15.60 + $0.90 = $16.50
Next Steps
The City must publish and make available to employers a bulletin notice announcing the adjusted minimum wage rate by November 1st, in order to take effect January 1 of the following year (EPAMC section 5.10.040(A)). Staff are drafting outreach materials to inform the business community and other stakeholders of the new requirements related to the LMWO. Please see draft bulletin notice under Attachment 4 of this staff report.
Assembly Bill 257
On September 5, 2022, the Governor signed AB 257. AB 257 establishes until January 1, 2029 the Fast Food Council (Council) with the Department of Industrial Relations.
The Council will have 10 members with specified powers. This Council will establish minimum standards for the fast food industry on wages, working hours, and other working conditions related to employees’ health, safety, and welfare. If the Council raises the minimum wage for eligible workers, City staff will update the City’s website, accordingly.
1 Western Information Office, U.S. Bureau of Labor Statistics (bls.gov) Consumer Price Index, San Francisco Area August 2022:
https://www.bls.gov/regions/west/news-release/consumerpriceindex_sanfrancisco.htm Fiscal Impact
There are no fiscal impacts associated with the contents of this staff report.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
A. Local Minimum Wage Ordinance
B. Resolution
C. News Release of U.S. Bureau of Labor Statistics Report D. DRAFT LMWO Noticing Materials for 2023