Local restaurant owners are resigning themselves to tightening their belts as they face an almost certain hike in the state minimum wage sometime next year.
And none are more concerned than restaurateurs in Santa Monica, who face a potential double-whammy.
Not only could restaurants on the trendy Third Street Promenade be subjected to a proposed statewide minimum wage hike totaling $1 an hour over the next two years, they also could face a city living wage ordinance requiring them to pay workers $10.69 an hour. That would represent an 86 percent hike from the current minimum wage.
“We recognize that the minimum wage on the state level is going to go up, and we’ll deal with it as we have every increase for the last 50 years by trying to reduce costs wherever we can,” said Jeff King, owner of Long Beach-based King’s Seafood. The company owns two restaurants in Santa Monica and the Water Grill downtown.
“But this crazy idea for a living-wage law in Santa Monica is ridiculous,” he said. “To go up $5 (an hour) overnight is simply insanity.”
The impact of the so-called coastal zone ordinance could easily spread beyond the four blocks closest to the ocean that it now targets.
“If that (coastal-zone wage hike) goes into effect, I’m going to have to pay my entry-level workers as much just to keep them from going to restaurants in the zone,” said Jack Srebnik, owner of 17th Street Caf & #233; on Montana Avenue and president of the Beverly Hills/Westside Chapter of the California Restaurant Association.
Srebnik, King and other restaurant owners in the area are supporting an initiative on the November ballot that would limit imposition of a living wage to companies doing contract work for the city. The measure would also subject any broader wage hikes to a citywide vote.
That initiative has, in turn, generated intense opposition from living-wage advocates, who see it as an end-run around the coastal zone living wage proposal, which is now under study and would require approval by the Santa Monica City Council to go into effect.
“Living wages are designed to cover businesses that have benefited from public investment,” said Stephanie Monroe, president of Santa Monicans Allied for Responsible Tourism, or SMART. “The whole area around the Promenade has reaped the benefits of tens of millions of dollars in public funds; it’s only fair that those business should give some of those dollars back to the community.”
More work, less people
While Santa Monica restaurant owners gird for what could be a costly battle, restaurateurs around the state are taking a lower-key approach to a new proposal from the Industrial Welfare Commission calling for a $1 minimum wage increase to $6.75 an hour over the next two years.
The plan has encountered little business opposition, but the California Chamber of Commerce is pushing for a delay in implementing the increase. As a result, it stands a good chance of passing, particularly since it stems from a five-member panel appointed by Gov. Gray Davis. A series of hearings will be held over the next three months to review and possibly revise the plan before a final vote, possibly as early as this fall, is taken by the commission. That vote is seen as significant, since the commission can enact the hike without approval from the Legislature.
If approved, the plan would be enacted with two 50-cent hikes; the first would kick in on Jan 1, 2001, the second on Jan. 1, 2002.
The California Restaurant Association opposes the $1 increase, saying it prefers a hike in the range of 50 cents an hour.
“We hope that any increase in the minimum wage is small and phased in over time,” said John Dunlap, the CRA’s president and chief executive. “Contrary to popular perception, we’re not fat cats here. These are small-business folks, many of whom will have to lay off staff and spend more time themselves doing multiple jobs.”
One restaurant owner who anticipates cutting staff is Connie Barron-Trimble, co-owner of Barron’s Family Restaurant in Burbank.
“They (the state) will do what they’re going to do and I’m going to have to try to keep open,” Barron-Trimble said. “It’s not just the minimum wage. I’ve also been hit with a large rent increase. And we can’t raise our prices very high. So after I go through and eliminate every non-profitable item on our menu, I may end up having a smaller staff or giving my staff fewer hours and doing more of the work myself.”
Barron-Trimble said that during the last round of minimum-wage rate hikes a series of four successive increases over 18 months from late 1995 to 1997 she reduced her workforce from about a dozen to the current nine employees.
“A wage increase means less money for me and more work for those of us who are left,” Barron-Trimble said.
Still insufficient
But Tom Rankin, president of the California Labor Federation, said that on the whole, employment in the restaurant industry has increased following hikes in the minimum wage. He pointed to a recent study on Oregon’s minimum wage, which now stands at $6.50 an hour, as an example of that trend.
“If anything, what’s being proposed by the (California) Industrial Welfare Commission is grossly insufficient,” Rankin said. “We feel that the minimum wage should bring a family up to the poverty level, which is why we are putting forward a proposal for an increase to $8 an hour over three years and then indexing the minimum wage to inflation.”
Srebnik, owner of 17th Street Caf & #233;, said he has no problem with paying entry-level workers a minimum wage of $6.75 an hour, as long as waiters and waitresses who earn tips are exempted.
“Most of my entry-level workers stay at minimum wage for six to nine months before getting promoted and getting an increase,” he said. “But waiters and waitresses receive tips of up to $20 an hour, so they are nowhere near the range that entry-level dishwashers and busboys are.”
