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City Wage Hike Has Some Seeing Red Ink

Opponents of a local minimum wage hike were weighing their options, including a ballot referendum that would place the matter before voters, after the San Diego City Council’s recent 6-3 vote to raise the city’s minimum wage to $11.50 an hour by January 2017.

“All of the options are on the table,” said Mark Arabo, president and CEO of the San Diego-

based Neighborhood Market Association, a three-state organization of 2,400 small and independent grocers. “We have always said that decisions like this should go before the voters.”

Arabo, who is also a spokesman for the 3,500-member San Diego Small Business Coalition — which includes operators of stores, restaurants, dry cleaners and other service businesses — said an exemption in the minimum wage hike should have been made for businesses with 12 or fewer employees, similar to the city’s existing livable-wage laws.

Otherwise, he said the wage hike will likely raise overhead costs for small operators by more than 40 percent — creating added challenges for businesses like grocery stores that already operate on razor-thin profit margins. Small operators felt shut out of the recent City Council decision-making process, he said.

“We’re all in favor of keeping business in the city, but we’d like to see the city give the same attention to small companies that you see them giving to big companies to keep them here,” Arabo said.

As of press time, the San Diego Regional Chamber of Commerce was continuing to meet with members of the business community to decide on a next course of action, a chamber spokeswoman said. The chamber supported the recent ballot initiative that led to the rejection of a council-approved community plan for the Barrio Logan neighborhood that opponents said threatened the local ship repair industry. Similarly, a council measure to raise so-called linkage fees was withdrawn by the city after opponents collected enough signatures to force a ballot initiative. That initiative was led by the Jobs Coalition, which included the chamber.

The day after the City Council’s July 14 decision, chamber President and CEO Jerry Sanders said in a statement that the organization is already hearing from members about businesses raising prices and cutting jobs in response to the state’s move on July 1 to increase the minimum wage from $8 to $9 per hour, which is the city’s current minimum wage.

“Raising San Diego’s minimum wage and sick leave above and beyond what the state has already mandated puts San Diego at a competitive disadvantage compared to nearby cities,” Sanders said. “The chamber takes the position that regulations concerning wages should be initiated federally to ensure a level playing field, and at a minimum, they should be set at the state level to avoid city-by-city inconsistencies that would put San Diego’s job creators at a competitive disadvantage.”

Under the legislation passed by the City Council, San Diego’s minimum will rise to $9.75 in January 2015, $10.50 in January 2016 and $11.50 in January 2017. Additional wage increases tied to the local consumer price index are scheduled to begin in January 2019.

The ordinance also requires employers to award full-time workers five days of sick leave annually starting in January 2015, with part-time workers earning prorated sick leave based on the number of hours they work.

Supporters of the measure, including all six Democrats on the City Council, said the measure was needed to increase the ability of city residents to meet rising household expenses, and keeps the minimum wage lower than in some other cities, including Seattle and San Francisco.

In a statement issued the day of the vote, City Council President Todd Gloria, who supported the wage hike, cited figures form the Center on Policy Initiatives, estimating that 279,000 San Diegans will now earn sick leave on their jobs. He also noted data from the Center on Wage and Employment Dynamics at the University of California, Berkeley, indicating that 172,000 San Diegans will get raises effective Jan. 1, with those raises amounting to an average of $1,400 annually by 2017 for those now making minimum wage.

“San Diego prioritizes responsible business practices and healthy community members,” Gloria said. “San Diego is a greater city because of the action we took tonight.”

More than 100 people spoke before the City Council voted at its July 14 meeting. The Council opted to enact the measure rather than place a proposal on a future election ballot.

If a referendum takes place and sufficient signatures are certified, the city would likely need to choose between rescinding the wage hike, placing it on a special-election ballot before year’s end or in early 2015, or waiting until the next state election ballot in June 2015.

Officials and wage hike opponents have noted that a vote this November would be difficult to set up due to county petitioning and filing deadlines.

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