Emeryville Now Has the Highest Minimum Wage in the Nation ... At Least for the Time Being

Rudy's Can't Fail Cafe, an Emeryville mainstay, is one of the small restaurants in the city that, for now, has to start paying its workers a higher minimum wage of $16.30. (Heatherawalls/Wikimedia)

When Douglas Smith, one of the owners of Rudy’s Can’t Fail Cafe, a popular Emeryville diner, returned to work on Wednesday after a week off, he had no idea what he was supposed to be paying his employees.

The minimum wage was $15 an hour when he had left the week before, but there were murmurings that it had since shot up to $16.30 overnight, which would make it the highest in the nation.

Indeed, the controversial increase, which has divided city leaders and the business community, had gone into effect on Tuesday night, at least temporarily, following the City Council’s acceptance of a petition to immediately implement it.

Smith and other small-restaurant owners had opposed the increase, arguing that it would put undue strain on their businesses and lead to layoffs, higher prices and possible closures.

"Our main concern is being sustainable and viable," Smith said. "We're a diner. If you come in here, we don't want to charge $20 for a hamburger. ... We're all in the same boat with high labor costs already."

But the higher wages could all be short-lived.

Some background:

In 2015, Emeryville's City Council passed a measure that established an annual minimum wage increase through July 2020 (when it would rise to $16.42). Until now, those scheduled increases had been steeper for businesses with more than 55 employees. But they were set to level off across all businesses, regardless of size, on July 1 of this year, making the city’s minimum wage — of $16.30 — the highest in the country, more than $4 over the statewide minimum. By contrast, Oakland's minimum wage is $13.80, while Berkeley's is $15.59.

But in May, as the date approached and concerns escalated, the council narrowly passed an amendment to stall the increase for "small independent restaurants" — those with 55 employees or fewer. Under that plank, the $15 wage would remain intact for those small restaurants until October of this year, then gradually increase over the next eight years until it was on par with other businesses.

The move to delay implementation of the higher wage incensed labor advocates, who have argued that it would disproportionately impact low-income employees — those most in need of a pay bump. Opponents of the delay quickly collected enough petition signatures from residents to force the City Council to reconsider the plan, and potentially put it before the city’s voters to decide.

"As of that moment, when we accepted [the petition], that’s when the wages rose," said Councilman Scott Donahue, who had voted in favor of the gradual wage phase-in. But he admitted that the current situation is confusing, and that even he “could be wrong” about some of the details.

The issue will be taken up at the next council meeting on July 23, when council members will likely vote whether to scrap the May amendment altogether or put it on the ballot for residents to decide its fate, Donahue said. But the latter option, he added, could be tricky.

"Workers have already gotten a raise, living on that raise for some amount of time," he said. "If we choose to put it on the ballot, now it would be to lower their wages. That’s an entirely different vote."

In other words, if Emeryville residents voted to the retain the council's phase-in amendment, workers’ wages would drop to where they had been.

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Emeryville, a small East Bay city sandwiched between Oakland and Berkeley, is home to a handful of major companies, including Pixar Animation Studios, Peet’s Coffee & Tea and several large technology and software firms, all of which have attracted a slew of restaurants and cafes catering to their workforce. But fewer than 50 of these eateries are considered "small independent restaurants" with 55 or fewer employees.

The labor advocates behind the petition to overturn the phase-in amendment say that many low-income workers have long been counting on this wage increase.

"Workers have been expecting this since 2015," said Andrea Mullarkey, a librarian and organizer with Service Employees International Union (SEIU) Local 1021, which represents some restaurant workers. "It was only at the last minute that they're working on a carve-out, and it's not fair. Workers have been planning for this increase. They've been arranging their lives around it. And then they decided to pull the rug out from under them."

Councilwoman Dianne Martinez, who in May voted in favor of delaying the increase, said that while she supports a living wage for all workers in the city, she's concerned that such a rapid spike will threaten the ability of small-business owners to maintain staffing levels and keep their doors open.

"I literally think that some jobs and hours will be lost as a result of the steep increase," she said.

But Mullarkey believes these fears are overblown.

"I’m sympathetic to small businesses,” Mullarkey said. “But this has been a planned increase for a very long time. I’d like to believe they were preparing for this increase. ... I don’t think this wage is actually going to do what they fear it’s going to do."

The city, she added, could also take action to alleviate the initial financial pressure on small businesses by introducing tax breaks and other incentives, while still ensuring that workers she represents receive a fair wage.

"What's at stake is the ability to pay their bills and manage health care costs and stay in the communities that they've been in," she said. "We really believe that the minimum wage is fair and that one job should be enough to pay your bills and take care of your kids."

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