June 11 2014 10:25 AM

Will minimum pay be the city's next divisive battle?

Taxpayer advocate Sean Karafin at last week’s press conference
Photo by Kelly Davis

On Tuesday, the California Restaurant Association rolled out the highlights of a study concluding that if San Diego were to raise the minimum wage to $13.09 an hour, "the results would be devastating"—5,500 fewer jobs and a $65-million hit to taxpayers.

A study released a few days earlier by the San Diego County Taxpayers Association (SDCTA) and San Diego Regional Chamber of Commerce was far less reactionary. "Cautionary" is how SDCTA interim President and CEO Sean Karafin described his organization's take on a proposed citywide minimum-wage hike being considered by the San Diego City Council.

At a press conference, Karafin said that a minimum-wage increase is a "blunt and inefficient" tool to solve poverty. City Councilmember Scott Sherman pointed to what he called the "adverse consequences of good intentions"—that employers who have to pay more in wages will be forced to lay off workers.

"There's a conservative side to economics and a liberal side to economics," says Alan Gin, professor of economics at the University of San Diego.

Nowhere is this more evident than in debates surrounding the minimum wage, where ideology-driven think tanks fund research that debunks whatever's being produced by the other side.

Gin spoke in favor of a wage increase at a Friday press conference organized by the left-wing Center on Policy Initiatives. He argued that a drop in consumer spending is dragging down the economy and has "set off a vicious cycle."

"Consumers are spending less," he said, "and as a result, businesses are seeing less in sales, and as businesses see less in sales, they're not hiring as quickly."

Raising the minimum wage could help solve this, Gin said: If people have more money in their paychecks, especially folks on the lower end of the income scale, they'll spend more.

"Workers will be helped by a increase in the minimum wage, businesses will be helped by an increase in the minimum wage and taxpayers will be helped by an increase in the minimum wage," he said.

Heading into a Wednesday, June 11, meeting of the City Council's Rules and Economic Development Committee, the proposal was to raise San Diego's minimum wage to $11.09 on July 1, 2015; to $12.09 the following year; and to $13.09 on July 1, 2017. At that point, any annual increases would be indexed for inflation.

The City Council will need to decide which route to take for a wage increase: It can vote to put it on the November ballot, or the council itself can vote on an ordinance, like the Seattle City Council did two weeks ago, raising the minimum wage there to $15 an hour with a phase-in of three to seven years, depending on the size of the business and whether it offers healthcare coverage.

Hanging over the City Council's decision are two recent victories for the Chamber of Commerce: a June 3 ballot measure that overturned a council-approved update to the Barrio Logan Community Plan and a threatened referendum that, in March, forced the council to rescind a developer fee that helps fund affordable housing.

A ballot measure would be more difficult to undo, says Michael Giorgino, a spokesperson for the City Attorney's office. City Council-approved measures can be overturned by referendum or by a vote of the council while "legislation approved by a public vote can't be changed absent a future public vote," Giorgino says via email.

And there's also a contentious City Council race on the November ballot. Republican Chris Cate opposes a minimum-wage increase while his opponent, Carol Kim, a Democrat, supports it. The outcome of that race will determine whether council Democrats maintain their veto-proof six-person majority.

Mark Cafferty, president and CEO of the San Diego Regional Economic Development Corporation, fears the proposed increase will turn into another polarizing political fight.

"I'm disappointed that this is starting to look like a third battle between the council and the business community," Cafferty says. "This is something that, from the get-go, we all should have been getting around the table to talk compromise on.

"Seattle's mayor got everybody into a room, and they came out after a month or two of kind of wrangling over it with what they agreed on," he adds, "and I just think that there has to be some moments in San Diego where we start to do the same thing."

City Council President Todd Gloria says he prefers the "public imprint" of a ballot measure. Gloria, who served as interim mayor after Bob Filner's resignation in August, proposed a citywide minimum-wage increase in his State of the City address in January. The $13.09 figure comes from a Center on Policy Initiatives study showing that a single adult living in San Diego would need to make that much—assuming a 40-hour work week—to meet basic needs. CPI research and policy analyst Robert Nothoff says a February poll of likely voters found that two-thirds of support increasing the minimum wage, though there was no number attached to the question.

Nothoff points to San Jose as an example of a city where a minimum-wage increase didn't lead to the job losses that opponents predicted—among them the California Restaurant Association, which, as it did for San Diego, commissioned a study. Unemployment is down in San Jose, Nothoff notes, and in the year after the increase took effect, 9,000 new businesses started.

Gloria says he's open to compromise—on the amount, to whom it applies and how it's phased in— especially given the chamber's recent victories. But opponents need to be willing to compromise, too, he says. Failing to do so could compel a 2016 ballot measure to raise the minimum wage, when voter turnout in San Diego is more likely to lean progressive.

"I think we can provide some certainty today on what a deal can be," Gloria says. "We're working hard to try to balance the needs and interests of both sides. That isn't necessarily achieved in a citizens' initiative.

"My plea to the business community has been, ‘Sit down with me now. Let's engage on this now. Let's come up with something you can live with.'" 

Karafin, the Taxpayers Association CEO, agrees.

"Sitting down to compromise at this point would be a good thing," he says.

Email kellyd@sdcitybeat.com or follow her on Twitter at @citybeatkelly.


See all events on Wednesday, Dec 7