CITY COUNCIL AGENDA
SPECIAL MEETING
CITY OF HALF MOON BAY
THURSDAY, NOVEMBER 30, 2023
ADCOCK COMMUNITY CENTER
535 KELLY AVENUE
HALF MOON BAY, CA 94019
Deborah Penrose, Mayor
Joaquin Jimenez, Vice Mayor
Robert Brownstone, Councilmember
Harvey Rarback, Councilmember
Debbie Ruddock, Councilmember
6:00 PM
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CONVENE SPECIAL MEETING
ROLL CALL
1.A MINIMUM WAGE ORDINANCE AMENDMENT
Staff Recommendation: Receive an update regarding the City of Half Moon Bay local minimum wage ordinance adopted on February 4, 2020, and provide direction for possible modifications to the wage and ordinance..
(STAFF REPORT ATTACHED)
ADJOURN SPECIAL MEETING
BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY
AGENDA REPORT
For meeting of: November 30, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Lisa Rossi, Administrative Services Director
Bryan Lopez, Senior Management Analyst
TITLE: MINIMUM WAGE ORDINANCE AMENDMENT
______________________________________________________________________________ RECOMMENDATION:
Receive an update regarding the City of Half Moon Bay local minimum wage ordinance adopted on February 4, 2020, and provide direction for possible modifications to the wage and ordinance.
FISCAL IMPACT:
There is no fiscal impact associated with this report. Future fiscal impacts will vary depending on any proposed amendments to the ordinance.
STRATEGIC ELEMENT:
This update supports the Healthy Communities and Public Safety and Inclusive Governance elements of the Strategic Plan.
BACKGROUND:
The City Council adopted Ordinance No. 2020-01 on February 4, 2020, establishing a local minimum wage in Half Moon Bay of $15 per hour. Effective January 1, 2021, and every January 1 thereafter, all businesses in Half Moon Bay are subject to a City-wide minimum wage that started at $15 per hour, increasing annually based on the Consumer Price Index* for San FranciscoOakland-San Jose from the Bureau of Labor Statistics (“CPI”). The minimum wage, effective January 1, 2024, will be $17.01 per hour and does not differentiate based on business size or type. City staff provides the oversight and enforcement of the ordinance, and to date only one claim has been filed, which is currently under investigation. *The CPI is based on the prices of food, clothing, shelter, utilities, fuels, transportation fares including DMV fees, charges for doctors' and dentists' services, drugs, recreation, pet expenses, education, personal care, and the other goods and services that people buy for day-to-day living and includes the taxes for those same items. The CPI covers the expenses of 93% of the population and includes expenses of wage earners and clerical workers, groups such as professional,
managerial, and technical workers, the self-employed, short-term workers, the unemployed, and retirees and others not in the labor force. The CPI does not include Income and Social Security Taxes that are not directly associated with the purchase of consumer goods and services. The CPI does not include investments such as stocks, bonds, real estate investments (it does calculate primary residence mortgage expense as a factor of rental equivalent), life insurance, or any other savings.
During their meeting on August 15, 2023, the City Council received an update on the City’s ordinance. They discussed the need to review the current minimum wage and bring the topic back for further consideration, as the cost of living in Half Moon Bay continues to rise for families. Ultimately, staff were directed to begin research and outreach on a proposed amendment to the ordinance that would increase the minimum wage to $19.00 per hour or more.
This discussion is not limited to Half Moon Bay, as across the country the question of whether to raise the minimum wage remains a spirited debate. Many believe that higher minimum wages would promote equity in terms of race, gender, and class. For example, statistics show in 2022, women on average earned 82% of what men earned and women and minorities are also more likely to hold minimum wage positions than white men. Thus, raising the minimum wage would promote equity by aiding those who are victims of the race and gender wage gap. It is believed the minimum wage exists to reduce poverty and narrow class divides.
Studies also show that many workers whose families live below the poverty line will receive a pay increase if the minimum wage were raised. Much of the recent data corroborates the theory that minimum wage increases would have minimal negative impact on employment with some even suggesting an increase in employment. In addition, according to a report by Stanford University, it is suggested that higher minimum wages would not have the expected negative economic impact as “many situational simulations show that consumers would not alter their purchases of products and services produced by low-wage labor and consumers would bear the full cost of the minimum wage rise.” Several articles and studies addressing the issue at the national and state level are listed below.
Locally, the Coastside Chamber of Commerce recently conducted a survey of Half Moon Bay businesses, receiving twenty-three responses indicating perceived impacts of an increase to a $19.00 minimum wage. Retail, Restaurants, and Non-Profits were the largest majority of respondents. Seventeen businesses surveyed indicated they would need to increase pay with a change to the minimum wage. Eleven of the responding businesses indicated that if the minimum wage increased to $19.00, the additional costs related to that increase would need to be directly passed on to consumers. Six of the businesses surveyed indicated they would likely shut down for good if the minimum wage was increased to $19.00. Historically, the businesses in Half Moon Bay most concerned with increased minimum wages are those that employ both tipped and non-tipped workers. Tipped workers in Half Moon Bay often work in restaurants and hotels where the tips drastically increase the overall salaries of the workers. To establish some
level of parity, the hourly wages of the non-tipped workers are often significantly higher than minimum wage, and must be increased with each minimum wage to maintain the parity. Since the implementation of the local ordinance in 2021, the City is not aware of any businesses closing down specifically due to increased costs related to the minimum wage. Several businesses have been shuttered over the last few years, citing a variety of economic challenges.
Staff have also communicated with commercial landlords and real estate experts to discuss how commercial property owners may also play a role in assisting businesses impacted by an increase in wages. We are still in the process of receiving feedback and will share with Council as part of the presentation.
DISCUSSION:
As the cost-of-living continues to rise, Federal, State, County and many City governments are taking action to review and, in many cases, raise their minimum wage. The minimum wage established by Federal, State, and local government law sets the lowest wage an employer legally may pay to workers. The highest wages of any of these laws prevails in a particular jurisdiction.
Federal Minimum Wage
The Federal minimum wage for covered nonexempt employees has been set at $7.25 per hour since 2009. The Raise the Wage Act of 2023, introduced in the U.S. House of Representatives and U.S. Senate on July 25, 2023, would raise the federal minimum wage to $17 an hour by 2028. The bill would also gradually raise and then eliminate subminimum wages for tipped workers, workers with disabilities, and youth workers, so that all workers covered by the Fair Labor Standards Act (FLSA) would be at the same wage level.
State Minimum Wage
In 2016, legislation was approved which raised California’s minimum wage to $15 per hour by January 1, 2022, for employers with 26 employees or more. On January 1, 2023, the State minimum wage for all employers increased to $15.50 per hour. On January 1, 2024, the state minimum wage will increase to $16.00 per hour. Future wage increases will be tied to changes in the CPI, up to 3.5% per year. The increased minimum wage levels are applied uniformly across the state. The law also maintains existing exemptions in the minimum wage law.
Recently, the State of California approved major increases to the minimum wage for two specific workforce groups. One new law, signed in October 2023, will raise the minimum wage for all health care workers in the state to $25 an hour by 2028. The other law increases minimum hourly pay for fast-food workers to $20 an hour starting on April 1, 2024, and will increase on an annual basis at a rate tied to the CPI through 2029. The law applies to “fast food restaurants” which are defined as “restaurants in [California] that [are] part of a national fastfood chain.” It also establishes the Fast-Food Council, beginning in 2024, which will be appointed and may recommend regulations addressing other working conditions.
The state with the highest overall minimum wage is Washington, currently at $15.74, increasing to $16.28 on January 1, 2024.
Local Minimum Wages
Local governments retain the ability to adopt local minimum wage ordinances. Such ordinances can increase the minimum wage more rapidly than the statewide timeframe or can increase the minimum wage beyond the level set by the State. Locally, there are ten cities in San Mateo County with adopted local minimum wage ordinances (Belmont, Burlingame, Daly City, East Palo Alto, Half Moon Bay, Menlo Park, Redwood City, San Carlos, San Mateo, and South San Francisco).
Staff expanded their research and out of all Bay Area Cities with a minimum wage ordinance, the City of Half Moon Bay ranks lower than the median wage of $17.35. The highest minimum wage in the Bay Area is in Oakland with their Hotel Worker Minimum Wage of $23.94 (it should be noted that the general minimum wage in Oakland is significantly lower than the City of Half Moon Bay at just $16.51). The second highest minimum wage and highest general minimum wage is the City of Emeryville which will increase to $19.30 on January 1, 2024. The attached Minimum Wage Comparison Table (Attachment 1) compares the 2023/24 minimum wages across different jurisdictions in the greater Bay Area. The table also indicates some differences among minimum wage ordinances. The tables and research exclude Bay Area cities/towns that do not have an active minimum wage ordinance.
Effective in 2024, two cities in the Bay Area have a minimum wage ordinance that dictates all or some workers would have a minimum wage at or above $19.00. Four cities have a minimum wage between $18.00 - $18.99. Most cities, including Half Moon Bay, have a minimum wage between $17.00 and $17.99 for a total of twenty-two Cities. Twelve cities have a minimum wage ordinance with all or part of employees at the State minimum or up to $16.99. There are additional cities/towns that do not have an active minimum wage ordinance which would by default follow the state required minimum wage laws.
The city with the highest local minimum wage in the country is West Hollywood, currently at $19.08, which will increase with the CPI on July 1, 2024.
Other Considerations
Initially, many of the Bay Area City Minimum Wage Ordinances were developed to differentiate the minimum wage required by small and large businesses and in some cases by industry type.
Differentiation delays or reduces the cost increase over a longer period for certain businesses, and in some cases, the different types would eventually equalize at the same minimum wage for all businesses. This approach can help reduce the pressure on smaller businesses and sensitive industry types and reduce the likelihood of business failure. Most of the cities that initially split the minimum wage based on business size or type now have equalized, so they are now all paying the same minimum wage. Just five cities currently have a different minimum wage based either on employer size, or industry type. The attached Minimum Wage Comparison Table also highlights some differences among other aspects of the minimum wage policies that the City
may want to consider, including a cap on the CPI to prevent extreme year over year increases, which can be challenging for small businesses to manage. If a cap were to be adopted, the Council may also want to consider allowing for a catch-up provision to allow for the wages to eventually realign with inflation.
Staff are prepared to continue outreach to the community regarding any proposed amendments to the minimum wage ordinance. Staff will take the guidance provided by Council and reach out to workers, business operators, commercial landlords, and any other identified stakeholder to any minimum wage ordinance amendment. If directed, staff will return with a revised ordinance for consideration in January 2024.
ATTACHMENTS:
Minimum Wage Comparison Table - San Mateo County/Bay Area REFERENCE ARTICLES:
• https://ogletree.com/insights-resources/blog-posts/california-governor-signs-fast-foodindustry-minimum-wage-law/The impact of the Raise the Wage Act of 2023 (Economic Policy Institute)
• Raise the Wage Act of 2023 Fact Sheet (U.S. House of Representatives) • How raising the federal minimum wage would help working families and give the economy boost (Economic Policy Institute, Issue Brief #341) • Small Businesses and the Minimum Wage (Institute for Research on Labor and Employment, Working Paper #102-23)
• The Distributional Impact of the Minimum Wage in the short and long run (Stanford Institute for Economic Policy Research, Working Paper No. 22-21, July 2022) • Consumer Price Index, San Francisco Area — October 2023 (U.S. Bureau of Labor Statistics)
Attachment A:
Minimum Wage Ordinance Comparison Tables - San Mateo County/Bay Area 2023 Min Wage 2024 Min Wage
Average $16.95 Average $17.51
Median $16.75 Median $17.35
High $23.15 High $23.94
Low $15.50 Low $16.00
Half Moon Bay $16.45 Half Moon Bay $17.01
Cities Differentiating by Business Size/Type
City Method Current Status
Oakland Industry Type Differentiated
Emeryville Business Size Equalized
Sonoma Business Size Differentiated
Petaluma Business Size Equalized
Santa Rosa Business Size Equalized
Fremont Business Size/Type Equalized/Non-Profits Exempted Hayward Business Size Differentiated
Novato Business Size Differentiated
Greater Bay Area City Wages by Year 2023 CPI = 3.40%
Locality: Adjusts Annually & Method 2023 2024
Oakland, CA (Measure Z - Hotel Min
Wage Without Health Benefits)
Annually by CPI $23.15 $23.94
Emeryville, CA large & small businesses Annually by CPI $18.67 $19.30 Mountain View, CA Annually by CPI $18.15 $18.75
Berkeley, CA Annually by CPI $18.07 $18.68
San Francisco, CA (July 1st - June 30th) Annually by CPI $18.07 $18.68 Sunnyvale, CA Annually by CPI $17.95 $18.55
Oakland, CA (Measure Z - Hotel Min
Wage with Health Benefits)
Annually by CPI $17.37 $17.96
El Cerrito, CA Annually by CPI $17.35 $17.92
Palo Alto, CA Annually by CPI but not greater than
5.0%
$17.25 $17.80
Cupertino, CA Annually by CPI $17.20 $17.78
Milpitas, CA Annually by CPI $17.20 $17.78
Los Altos, CA Annually by CPI $17.20 $17.75
Santa Clara, CA Annually by CPI $17.20 $17.75
Redwood City, CA* Annually by CPI max 5% rounded to 5
cents
$17.00 $17.70
Sonoma, CA large businesses (26 or more
employees)
Annually by CPI but not greater than
3.5%
$17.00 $17.58
San Jose, CA Annually by CPI max 5% rounded to 5
cents
$17.00 $17.55
Petaluma, CA large & small businesses Annually by CPI $17.06 $17.45 Santa Rosa, CA large & small businesses Annually by CPI $17.06 $17.45 Fremont, CA large & small businesses Annually by CPI Non-Profit exempt $16.80 $17.37 Belmont, CA* Annually by CPI $16.75 $17.35
San Mateo, CA* Annually by CPI max 3.5% w/catch up
clause rounded to 5 cents
$16.75 $17.35
South San Francisco, CA * Annually by CPI $16.70 $17.25 East Palo Alto, CA* Annually by CPI $16.50 $17.10
Alameda, CA Annually by CPI $16.52 $17.08
San Mateo County, CA* Annually by CPI $16.50 $17.06
Burlingame, CA* Annually by CPI $16.47 $17.03
Half Moon Bay, CA* Annually by CPI $16.45 $17.01
Foster City, CA* Annually by CPI but not greater than
3.0%
$16.50 $17.00
Hayward, CA large businesses (26 or
more employees)
Annually by CPI but not greater than
5.0%
$16.34 $16.90
San Carlos, CA* Annually by CPI But not greater than
3.5%
$16.32 $16.87
Novato, CA very large employer (100 or
more employees)
Annually by CPI but not greater than
3.5%
$16.32 $16.86
Richmond, CA Annually by CPI (-$1.50) for Employer
provided Health Plans
$16.17 $16.72
Menlo Park, CA* Annually by CPI but not greater than
3.0%
$16.20 $16.70
Daly City, CA* Annually by CPI $16.07 $16.62
Novato, CA large employer (26 to 99
employees)
Annually by CPI but not greater than
3.5%
$16.07 $16.60
Sonoma, CA small businesses (25 or
fewer employees)
Annually by CPI but not greater than
3.5%
$16.00 $16.54
Oakland, CA (Measure FF - General) Annually by CPI $15.97 $16.51 Novato, CA small employer (25 or fewer
employees)
Annually by CPI but not greater than
3.5%
$15.53 $16.04
Hayward, CA small businesses (25 or
fewer employees)
Determined by State of California $15.50 $16.00
San Leandro, CA Determined by State of California $15.50 $16.00