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California Approves Minimum Wage Increase to $15

No April fool’s here folks. Today, California lawmakers approved a plan to increase the state’s minimum wage to $15 over the next six years. According to reports by Nation’s Restaurant News and other media outlets, New York state is preparing for a similar move, submitting their own plan to raise the minimum wage. THE VOTE […]

No April fool’s here folks. Today, California lawmakers approved a plan to increase the state’s minimum wage to $15 over the next six years. According to reports by Nation’s Restaurant News and other media outlets, New York state is preparing for a similar move, submitting their own plan to raise the minimum wage.

THE VOTE

The Senate voted 26 to 12 along party lines this morning – two democrats voted “no” as did republicans in both houses; one democrat withheld his vote. Earlier on Thursday, the proposed legislation passed through the Assembly with a 48 to 26 vote.

California isn’t the first state to have cities like Los Angeles increase their minimum wage over the federal minimum wage. Over the past two years, 29 states and D.C. have increased minimum wages above the federal minimum wage of $7.25. What makes California different is that they are the first to increase it to $15 statewide – up from the current $10.00 – making them the state with highest minimum wage.

THE WAGE INCREASE

The increase will happen incrementally, starting with a $0.50 increase on January 1, 2017 for businesses with over 26 employees. Another $0.50 increase will happen in 2018, followed by a $1 per year increase through 2022. Smaller business will be given an extra year to implement the $1 increase.

The deal also stipulates that wages will increase according to the national inflation rate each year after the minimum wage reaches $15. Until the time it reaches $15, a “pause” option is written into the deal allowing the governor to put a hold on the annual increases if there are negative budgetary or economic conditions. Governors would need to decide each September whether to suspend increases coming the following January.

THE IMPACT

Gov. Jerry Brown estimates that the bill will impact 7 million hourly workers in California although other reports say economists estimate it will be more like 5.6 million – or 1 in 3 Californians.

Several of those hourly workers came forward to share how the rise in minimum wage would have a positive impact on their lives. Restaurant operators have also raised their voices, expressing their concern that the increase is “too much, too fast” and that the wage hike is too steep and could have negative consequences for both employers and their employees.

There’s no denying the implications are real. For a company with 100 locations and 1,000 total hourly employees, a rise to a $15 minimum wage could result in an extra $7 to $13 million in labor costs.* That doesn’t include any additional overtime costs associated with overtime (as it stands today) or overtime costs if the new law to raise the salary threshold were to pass.

Proponents of the hike, including Gov. Brown, acknowledged that an increase to a $15-an-hour wage would have to be done carefully, heeding costs to employers and the state.

WHAT PEOPLE ARE SAYING

“California is proving once again that it can get things done and help people get ahead. This plan raises the minimum wage in a careful and responsible way and provides some flexibility if economic and budgetary conditions change.”

– Gov. Jerry Brown

“This is too much too fast. It is unfortunate the Legislature didn’t take advantage of the opportunity to address the issue in a more balanced manner.”

– CalChamber President and CEO Allan Zaremberg.

“The credit for making history today belongs to the workers who spoke out and risked it all, the labor unions and community organizations who supported them, and elected leaders here in California who listened.”

– Laphonza Butler, Service Employees International Union Local 2015 President

“We have systemic, decades-long double-digit unemployment. While $15 an hour probably isn’t even high enough for areas like San Francisco and parts of Los Angeles and our other urban centers, it’s too high for some small businesses and some communities.”

– Democrat, Assembly Member Adam Gray

“Workers are struggling. Two point two million Californians are currently earning minimum wage, and they are struggling in poverty because it is a sub-poverty wage.”

– Sen. Mark Leno (D-San Francisco)

“California may be the first state to pass a $15 minimum wage, but it will also be the first to find out why that’s a bad idea. This pain from a $15 minimum wage will only be exacerbated in more troubled counties in the state.”

– Michael Saltsman, research director of the Employment Policies Institute

“I have to choose between feeding my child, buying bus passes and paying rent,” she said. “It’s not fair. I love my job, yes, I do. But I love my family more and I should not have to struggle daily to support them.”

– Holly Diaz, seven-year Burger King employee

Image Credit (Rich Pedroncelli / AP)

LOOKING FORWARD

The minimum wage hike is just one in a wave of legislation directly impacting the restaurant, retail and hospitality industries. Employers looking to counteract the impact on their people costs are turning to technology solutions to find food and labor savings wherever possible.

And as we’ve heard from our customers, solutions like HotSchedules makes it easy to realize those labor savings.

” you can hold your operators accountable to a specific variance. It’s all integrated so you can go deep and be very detailed in the way you manage your labor numbers.”

– Abelardo “Abe” Ruiz, Chief Operating Officer (COO), Famous Dave’s

Read the Case Study

“We made a pretty big decision to move everybody in the company to $11 an hour because we’ve saved so much. We wanted to give some of that back to the employees to help with retention. I often tell the managers that we want to run the perfect schedule and the reason why is because I want to pay people as much as we possibly can. The more efficient we are and the better schedule we have, the more we can pay everybody.”

– Steve Bradshaw, District Manager at Centertwist, Inc.

Read the Case Study

“The report most fundamental to me is the labor pro forma, where we compare hours used vs. the schedule. I also use the roster report, which shows the hours of each person so you can make adjustments to the schedule at any point in time. And HotSchedules has great tools to help prevent you from generating schedules with overtime built in, as well as tools to alert you if you do. This really helps ensure you are staffing appropriately and effectively.”

– Adam Karveller, Newk’s Director of Information Technology

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