Exhibit CC 09-20-2016 Item No. 9 Minimum Wage Presentation1
Background
•Last fall: Minimum Wage Advisory Committee convened
study economic impact
•April 4th: Governor Brown signs new CA Minimum Wage
Law
•May 17 th: Staff presents results of regional economic
analysis and employer survey
•June-August: Local employer survey and business
outreach
•June 9th: Cities Association recommends increase to $15
by 2019 followed by model ordinance on July 27th
Schedule of proposed minimum w age increases
State schedule
Calendar
Year
Business with more
than 25 employees
Businesses with 25 or
fewer employees
2017 $10.50 $10.00
2018 $11.00 $10.50
2019 $12.00 $11.00
2020 $13.00 $12.00
2021 $14.00 $13.00
2022 $15.00 $14.00
2023 $15.30*$15.00
Proposed
Increase
$12.00
$13.50
$15.00
$15.35*
$15.65*
$16.00*
$16.40*
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Increases minimum wage to $15 an hour
by 2019 with no exemptions
Cities Association Model Ordinance
* The scenario schedule after 2019 is indexed using the average annual increase in the CPI-W Bay
Area (Proposed Increase) of 2.2% and U.S. All Cities (State) of 1.7%.
Business Community Outreach
•Local Online Employer Survey
–Postcards
–E-blasts
•Article in Cupertino News &
Updates
•Presentations at Chamber of
Commerce
•Business Outreach Forums
–Chamber of Commerce
–Quinlan
–City Hall
Community-wide Efforts
•Website:
www.cupertino.org/wagewatch
–All staff reports
–Economic Analysis
–Employer Survey
•Cupertino Scene
•Fact Sheet
•Online Community Poll
Outreach Efforts Per Council direction, staff gathered feedback from business community
Regional survey and community poll respondents were more likely to agree that an increase makes sense and favor a regional approach compared to local employers
50%
32%
75%
76%
72%
74%
0%10%20%30%40%50%60%70%80%
FAVOR A REGIONAL APPROACH TO THE
MINIMUM WAGE
AN INCREASE MAKES SENSE GIVEN THE HIGH
COST OF LIVING IN SILICON VALLEY
Survey Response Comparison
Community Regional Employers Local Employers
Responses Across All Surveys
77%
14%
82%
30%
66%
21%
61%
65%
0%10%20%30%40%50%60%70%80%90%
LIKELY TO INCREASE PRICES
WILL HAVE TO CLOSE
WILL MAKE IT HARDER TO START BUSINESS
WILL HELP REDUCE INCOME INEQUALITY
Regional vs. Local Employer Survey
Regional Local
Community Tolerance for Price Increases
Majority of community poll respondents would
be willing to pay up to 3% more for goods and
services to help reduce income inequality.
0%10%20%30%40%50%60%70%80%90%100%
Agree Somewhat Agree Neutral Somewhat Disagree Disagree
Business Outreach Meetings
Suggestions for moving forward with increase:
•Exemption for new and temporary seasonal
employees, targeting summer jobs for teens.
•Exclude tipped employees from the ordinance, as
many tipped employees may already make
substantially more than the minimum wage rate.
•Look into policies to provide small businesses
with relief for increasing commercial rents.
•Advocate for state-level regulatory relief
Tradeoffs of Increasing Minimum Wage
Benefits
•Average increase in
earnings of 19.4% for
250,000 workers
•Largely benefits working
families that are near the
poverty level
•Nearly zero impact on
employment in 10 county
region
•Community indicated
tolerance for price increase
Costs
•Some employers would likely
close or relocate
•Slightly negative net effect
on employment at county
level (1,450 jobs)
•Increase average prices in
Santa Clara County by 0.2%
over three years (3.1% higher
for restaurants and retail)
Proposed Ordinance
•Model ordinance proposed by Cities
Association
–$15 by 2019, then increased by CPI-W up to 5%
–Includes ability to postpone increase for negative
economic conditions (similar to state)
–No exemptions
Exemptions Based on Feedback
•Learners (regardless of age)
–May be paid not less than 85% of the minimum
wage during first 160 hours of employment.
•Tipped employee exemption
–Must define tipped employee
–Combined cash and tip minimum wage or max tip
credit towards minimum wage
–Must still comply with State minimum wage law
Jurisdiction CurrentMin. Wage Response to Regional Approach/Next Steps
Campbell $10.00 Council consideration on October 4,2016
Cupertino $10.00 Council consideration on September 20,2016
Gilroy $10.00 Declined to consider
Los Altos $10.00 Second reading on September 27,2016
Los Altos Hills $10.00 Council determined that it was not applicable due to the absenceofcommercial/industrial zones on July 21,2016
Los Gatos $10.00 Mayor scheduling study session
Milpitas $10.00 Outreach efforts continuing through October
Monte Sereno $10.00 Council to consider in September or October
Morgan Hill $10.00 Council considered on August 24th., future reconsideration TBD
Mountain View $11.00 Adopted increase to $15 by 2018
Palo Alto $11.00 Council consideration on September 26,2016
San Jose $10.30 Council consideration TBD
Santa Clara $11.00 Council consideration TBD
Saratoga $10.00 Council consideration in November
Sunnyvale $11.00 Adopted increase to $15 by 2018
Regional Update
Fiscal Impact to City
•Increase in Personnel Costs
–Will need salary schedule amendment for PT staff
–$265,000 over three years (0.3% increase)
•Contract Costs
–Crossing Guards: $75,000 over three years (13.5% increase)
–Janitorial: $200,000 over three years (30% increase)
•Enforcement
–Both Mountain View and Sunnyvale contract with San Jose (Office of Equality Assurance) using a complaint-driven model ($5,000 annually)
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