When Fremont councilmembers resume a discussion next week for raising the city’s minimum wage to $15, they will be presented with a new wrinkle intended to protect small business owners.
Under a two-tiered schedule, which the council directed staff to study at its Dec. 4 meeting, Fremont business owners with less than 25 employees would buy themselves one year before increasing wages to the employees to $15 an hour, starting in 2021, according to a staff report.
Furthermore, according to the two-tiered schedule, Fremont’s current $11 minimum wage would raise to $13.50 in July 2020 and $15 in July 2021.
Businesses with more than 25 employees would begin an expedited schedule to $15 an hours, starting next July, at $13.50 an hour and $15 in July 2020.
A single-tier schedule backed by Fremont Councilmember Vinnie Bacon, who first referred the matter to the council last July, includes a similar timeline to the large business two-tier timetable, but without differentiating between small and large businesses.
In both the single and two-tier timelines, when the minimum wage reaches $15 an hour, increases in subsequent years would be based on the Consumer Price Index.
People will be spending money on food and services, said Fremont Councilmember Vinnie Bacon. “They aren’t going to be investing in stock buybacks.”
A third option is to do nothing and continue following state law. For businesses with less than 25 employees, the state minimum wage is set to increase $1 every year before hitting $15 in 2023, and 2022 for larger businesses.
Despite Fremont’s relative prosperity in recent years as opposed to other East Bay cities, it has lagged behind efforts to increase local minimum wage ordinances. Emeryville, Alameda, San Leandro did so in recent years ago by staggering the increase over several years. But because of its late arrival to the game, Fremont is not afforded the same time frame to spread out the increases.
Fremont’s business community have expressed worries that increasing the minimum wage could adversely affect small business owners, leading to cuts in staff and even closures, especially if the economy heads into a downturn.
At the December council meeting, Bacon said raising the minimum wage in Fremont will have a “multiplier effect,” not only increasing paychecks of low-wage earners, but also for small business owners, who stand to benefit from residents having more disposable income.
People will be spending money on food and services, said Bacon. “They aren’t going to be investing in stock buybacks.” Bacon also recognized any increase would affect local businesses in some way, but added, “People are out struggling to find a home. I think they’re having trouble adapting, too.”
Fremont Mayor Lily Mei and Councilmember Rick Jones voiced skepticism last month over the existence of a multiplier effect connected to raising the minimum wage, although both agree larger businesses can more easily absorb the additional payroll. “I absolutely feel for both sides, but this increase is not livable,” said Mei, during the Dec. 4 meeting.
But Mei added any increase in the minimum wage would not translate to additional spending by workers. Instead saving their money “would be a wiser choice rather than spending it,” Mei said last month. A ripple effect could also spread to employees with more seniority also demanding increased wages, she added.
Jones, in reference to the single-tier schedule, questioned the damage a 36 percent increase payroll over a time span of 18 months will have on local businesses. “I think a lot are going to struggle,” he said.
The array of proposals coming before the Fremont City Council next Tuesday also include a “youth exemption” to the potential minimum wage ordinances to “preserve opportunities for youth, students, and trainees, the proposed ordinances exempt employees up to 25 years of age who are employed by a non-profit or governmental entity for after school or summer employment, student internships, paid volunteer activities, or job training programs (no longer than 120 days),” according to the staff report.
The exemption was mentioned briefly last month by Councilmember Raj Salwan, who worried about the potential loss of jobs for teenagers and young adults. Such an exemption would also save the city money for its recreational programs, the report added, since most are high school or college students.