Wage hike hits Petaluma restaurants

As roughly 9,000 Petaluma workers open their first pay checks of the year reflecting the new minimum wage increase, some business owners are voicing disapproval with how the city implemented the ordinance.

On Jan.1, Petaluma’s wage hike took effect, giving employees of larger businesses a $2 pay increase from $12 to $14 an hour, while those employed by smaller ones saw a $4 bump from $11 to $15 an hour. A citywide rate mandating a flat $15 an hour minimum wage is to follow in 2021, and will continue to rise annually with the addition of a cost-of-living index.

More than two dozen local businesses, the majority of them restaurants, say the five-month preparation window provided by the city was not adequate time to deal with increased costs. They also expressed frustration after they say staff offered up to a 6-month reprieve only to take it off the table 10 days before the new year, naming risk of litigation for the decision.

“It really left us all in a pinch,” said owner of Pongo’s restaurant Kathleen Stafford, who joined a working group with more than 20 other restaurateurs following the council’s July 15 approval. “We were told we would get a bit of a break, and we were all meeting to try to figure out how we would get through this.”

Stafford’s main complaint, echoed by a handful of other business leaders including those from Lace House Linen and United Cerebral Palsy of the North Bay, is over what they see as a hurried timeline and the offer of a delay that was later revoked.

“I do think that was regrettable, I think that staff may have gotten out in front of itself on that one,” Mayor Teresa Barrett said. “When they realized there wasn’t a majority on the council that wanted to change that (date) back, they realized they had maybe gone too far without the right direction. That’s just a learning curve thing, I think that’s the only misstep that has happened in the past year.”

In order to absorb heightened labor costs, Stafford said she’s had to cut her teenage employees’ hours and warns regulars may notice the price of some main dishes now cost up to a dollar more.

Petaluma became the second city in the county alongside Sonoma to increase minimum wage this year, and joined more than a dozen other California cities that also decided to go further than the state’s yearly wage increase in order to match a skyrocketing cost of living. This year’s state-mandated hourly rate stands between $12 and $13 an hour, and will rise a dollar each year until it reaches $15 an hour in 2023.

Of the California cities that welcomed a wage bump on the first of this year, Petaluma’s $4 increase is the steepest, followed by $3 in South San Francisco and Menlo Park. More than a dozen other cities across the state are scheduled to raise their minimum wage this summer.

CEO of the Petaluma Chamber of Commerce Onita Pellegrini said the minimum wage hike is an especially hard blow for restaurants, and said Petaluma diners will likely see not just a rise in prices, but may also witness new flat fees on their bills. This could come in the form of a “backroom charge,” or may follow in the footsteps of Petaluma restaurant Pearl, which prices dishes higher in lieu of tips.

“Do I support higher wages? Absolutely,” Stafford said. “But as a small business, it’s such a struggle in this town already. Our rents are extremely high, and we’re in this new era of PG&E shut downs.”

Pellegrini said members of the restaurant community have expressed concern over projected costs of expected Styrofoam and single use plastic bans, priorities for both the City Council and the Climate Action Commission.

“If it’s an important issue, there’s going to be people on both sides of it, and I totally understand that,” Barrett said. “But I do feel that the decision itself had been out there for quite a bit of time, and staff’s role in thinking they could delay it was an unfortunate misstep.”

Council unanimously passed the wage hike July 2019 in a joint effort with North Bay Jobs with Justice, a union rights organization. According to the group’s 2018 State of Working Sonoma report, the rent-to-income gap has widened between 2000 and 2016 while wages have either declined or stagnated since 1979 for the bottom 60% of workers. The report also found workers of color constituted a majority of low-wage earners in 2016, despite being a third of the entire workforce.

Petaluma’s ordinance includes subsequent wage increases of no more than 3.5% to match a rising cost-of-living, with current rates projecting a jump from $15.53 in 2021 to $17.21 in 2024.

Editor’s note: A previous version of this story erroneously misidentified 2019’s small business minimum wage with that of large businesses.

(Contact Kathryn Palmer at kathryn.palmer@arguscourier.com, on Twitter @KathrynPlmr.)