Petaluma considers early adoption of $15 minimum wage

Nick and Ashley Harris have tried to establish rules about bringing their work at Petaluma Coffee and Tea Company home, but sometimes it’s hard to avoid the spillover.

That can be especially true when it’s a conversation about finances. The married couple has hopes of starting a family soon and purchasing a home in Petaluma, but fiscal discipline in Sonoma County doesn’t have the kind of returns that it used to.

In order to realize their goals, the two Petaluma Coffee supervisors established a stringent budget that allows them to save what little they can while still navigating the area’s high costs of living, said Nick Harris, the company’s general manager.

Over time, though, they’ve realized their only realistic chance at purchasing a home might come under bleak circumstances, like when the market dives during a future recession.

“It’s kind of a weird place to be – the misfortune of others that you can capitalize on,” said Ashley Harris, Petaluma Coffee’s retail and marketing manager. “But it’s just the economic way of this country unfortunately.”

One movement that might provide speedier relief for working- and middle-class families in California is the upcoming minimum wage increase to $15 an hour, which local advocates are hoping to institute ahead of the 2022 deadline that state lawmakers agreed to in 2016.

North Bay Jobs with Justice, the regional chapter of a national organization on the frontlines of the issue, has been commissioning studies, meeting with business leaders and scheduling presentations with local governments across the region to try and convince cities to enact the increase next year.

The Petaluma City Council on Monday scheduled a workshop to explore the issue on April 8. Sebastopol, Sonoma, Novato, Cotati and Santa Rosa have either held or are planning a study session as well.

“While we’re trying to simultaneously think about housing, we need something immediate,” said North Bay JWJ executive director Mara Ventura. “This is such a small lift because it’s so much still dramatically farther than the actual cost of living. We use 23 bucks an hour, but (county officials) are giving presentations saying it’s actually closer to $25 an hour since the fires.”

According to The State of Working Sonoma 2018, a report commissioned by North Bay JWJ, nearly half of renters are devoting 30 percent or more of their income to housing, and a quarter are spending 50 percent or more.

Of the 13 total employees at Petaluma Coffee and Tea, the majority of which make more than minimum wage, four have to work multiple jobs so they can afford to live in Petaluma, Ashley Harris said.

Thanks to the tipping culture that’s become more commonplace in coffee shops in recent years, Nick Harris believes the combination of tips and an earlier jump to $15 an hour could potentially eliminate the need for those employees to work a second or third job.

“I think it’s a good thing,” he said. “It’s always good when people can be paid a fair wage. Even if it doesn’t actually fix the problem long-term, it’s a step in the right direction.”

A 2018 report by the UC Berkeley Labor Center identified approximately 192,000 workers - or about 36 percent of the North Bay’s workforce - that would receive a pay raise. Another 40,000 who earn just above the new minimum would also see an increase due to an anticipated ripple effect.

For most workers, that would result in an extra $2,900 annually, greatly benefiting people of color, who constitute about 60 percent of the applicable labor force, according to the report.

Data also shows that the benefits would be felt most by members of the retail, food and health service industries, half of whom have some college experience and are in their 30s or older.

“It’s not just a teen flipping burgers,” Ventura said.

While job growth and unemployment in Sonoma County have bounced back to pre-recession levels, the Working Sonoma report found that income inequality, housing affordability and commuting costs have only gotten worse.

Since 1979, wages have declined or stagnated for the bottom 60 percent of workers countywide, according to the report.

“Since 1989 we’ve seen the productivity of American workers - and particularly in California - go way up by almost ?90 percent,” Ventura said. “But the average wages have gone up by only ?3 percent. So people are producing more and more and they’re not being taken care of by the companies they’re making money for.”

In Petaluma, most businesses pay their employees above minimum wage, said Onita Pellegrini, CEO of Petaluma Area Chamber of Commerce. The Chamber’s government affairs committee invited North Bay JWJ for a presentation last fall, and is expected to form a stance on the issue in the coming months as policy discussions begin at City Hall, she said.

“We all are very much aware that minimum wage is not anywhere near to a living wage,” Pellegrini said.

Local businesses have also struggled to fill vacancies in recent years with affordable housing in scarce supply and management toying with their margins to try to offer more competitive wages.

Petaluma Coffee, which turns 30 years old in October, has endeavored to fill its part-time positions in recent years, often turning to high school students as opposed to older staffers like it did in the past, Nick Harris said.

In anticipation of the increase - whether it’s in 2020 or later - owner Sheila Bride said they’ve been expanding their wholesale production to sign more accounts, but expects a price surge once the costs for goods follows suit.

“Small businesses are getting hit with all of that, and taxes,” Bride said. “You see the bottom line shrinking, but we also very firmly believe that people should earn a living wage. In this area, even that’s not enough.”

However, raising wages will naturally lead to inflation elsewhere, and business owners have been reluctant to embrace a sudden hike. Although the UCB report contends the potential economic correction would be relatively minimal.

Depending on the cost structure of a business, which varies significantly by industry, the report pointed to several studies that determined increasing labor costs would result in modest upticks in operating expenses. Retail establishments would be most impacted by boosting wages, with a 9 percent gain in expenditures.

Since a higher minimum wage applies to all employers across a region, evidence shows higher costs can be passed on through price changes, which would also protect profits, except in extreme cases, the report said.

Employee turnover would also decline with better pay, saving companies money on hiring costs. Research shows that productivity and mental health improvements also correlate with wage increases.

Two-dozen cities have already enacted the early increase to keep up with the California’s rocketing cost of living, and Petaluma Councilman Mike Healy said this week that the city would merely be keeping up with the economic forces in play.

Larger companies tend to employ the most minimum wage workers, and many corporations like Whole Foods and Target have already moved ahead of local jurisdictions that are lagging behind.

“We’re just kind of doing what the market is doing already,” Healy said.

(Contact News Editor Yousef Baig at yousef.baig@arguscourier.com or 776-8461, and on Twitter @YousefBaig.)