Guest ContributorIn light of recent discussions regarding a $14.42 livable wage ordinance in our city that would be the highest in the nation, The E’ville Eye wanted to provide a forum for small business owners and stakeholders to speak out on the impacts this will personally have on them and their opinions on how best to implement this. Our first entry is Actual Cafe & Victory Burger’s proprietor, Sal Bednarz.
Photo: Shelby Pope/KQED Bay Area Bites
Sal was a pioneer in the Golden Gate area of San Pablo having opened Actual Cafe in 2009. The success of his establishment created a neighborhood anchor that other businesses have gravitated toward including the adjacent James and the Giant Cupcake, A Verb for Keeping Warm and thriving art gallery scene that includes Grease Diner & The Compound Gallery. Sal has also been instrumental in neighborhood strengthening events like the annual Love our Neighborhood open streets event and he even recently appeared alongside Oakland Mayor Libby Schaaf to help launch and transition the March implementation of Measure FF. Sal is married to Liba Falafel proprietor Gail Lillian whom he lives with in North Oakland. Actual & Victory combined employ approximately 35 full & part-time people.
Dear Emeryville Councilmembers and others,
I’m sure you’re aware that in Oakland, we recently passed and implemented Measure FF, with a new minimum wage of $12.25/hr – this was an increase of 36% from the California $9/hr minimum wage.
This is a huge benefit to Oakland workers, and for this reason, I was an early and vocal advocate for the measure. This despite the fact that it was and continues to be a huge challenge for my own business and others like mine. Independent small restaurants exist on incredibly small margins – often in the single-digits as a percentage of revenue. Also, because our operations are so labor-intensive, generally counting payroll as our single biggest expense, small fluctuations in labor cost have an outsized impact.
For my business, if we had done nothing to adjust, most or all of my profit would have gone to paying higher wages. This is true largely because of the inclusion of tips in our employee compensation – even though virtually all our employees already made more than $12.25/hr in total compensation, the increase in minimum wage required that we give additional increases to our service staff. This requirement led to a wide-ranging conversation in and around Oakland about restaurant wage equity and the difference in pay structures between kitchen and service employees, and to many restaurants experimenting with doing away with tips entirely, partly to help alleviate these differences.
We raised our prices by about 9%. This was necessary to recoup the costs of minimum wage and sick leave on our payroll. This number might seem large, but it includes several overhead factors like merchant processing, workers compensation, employers’ payroll taxes, and the inevitable elastic effect of price increases – some customers will buy less, come less often, or go elsewhere.
We did this just two weeks ago, and it’s too early to tell what the long-term impact will be. I, along with many other Oakland restaurant owners, are still worried that price increases will decrease traffic and spending, and leave us unable to meet the new expense requirements. I’m optimistic, and doing all I can to continue to keep the issue in the public eye.
If we had to implement an increase almost twice the size, as I understand you are considering, I likely would not have been able to support the measure, and would worry a whole lot more about the ability of my business to negotiate the transition without leaving me bankrupt.
This is not hyperbole.
I believe in the projected macroeconomic benefits of increasing the wages of residents and feeding local economy, which supports higher prices, but these effects take time to manifest. This is especially true in light of the small population of Emeryville in relation to the regional economy.
I urge you to consider instead working in concert with surrounding cities to move toward a higher wage in stages. If Emeryville, Berkeley, and other smaller cities adjusted wages to match Oakland’s, we’d have a much larger effect on the local economy, along with cost-leveling and minimizing competitive advantages (and disadvantages) between cities.
I suspect that if a $14.42/hr wage is implemented in Emeryville, my restaurant would benefit, as those in Emeryville would be forced to raise prices substantially higher, and we’re just across the border. But my own self-interest is not my motivation in this matter – the continued ability of small local restaurants in all East Bay cities to thrive, along with increasing support for hourly wage workers across the region, is the common goal toward which I think we all ought to be working.
Thank you for your consideration of my input on this matter.
Kind Regards,
Sal Bednarz
Owner, Actual Cafe and Victory Burger
Thanks Rob for opening this avenue for discussion so we can hear all points of view. Hopefully, City Council members will read it before tonight’s meeting. sue Kelly
If they really cared about small business in our city, they would read it. This is not my voice & opinions but of those that are on the “front lines” of making our city livable & vibrant (Things they claim to want).
Ditto to Sue Kelly’s comments. Also, thanks to Sal for supporting and implementing Oakland’s 36% Minimum Wage increase and for being willing to come forward to voice concerns about Emeryville’s proposed 60.02% increase (from $9 to $14.42). A friend from Oakland told me yesterday that he voted for the $12.25 increase, but would have voted against the measure if it had been for $14.42. Oakland would be more likely to get more business if Emeryville went to $14.42 since Emeryville restaurant costs would be higher and would likely need to be passed on to customers in the form of even more significant increases in prices. A regional approach that would keep Emeryville businesses competitive with its neighboring cities makes a lot of sense to me. I hope that the City Council takes into consideration the views of Emeryville residents and businesses when making their determination about how to most effectively and fairly implement a Minimum Wage for the city.
The discussion on the present proposed starting wage of $14.42 [$14.03 plus annual July cost of living increase] was prompted by a comment to the effect of, With the Living Wage Ordinance, we’re currently at $14.03, I [Ruth Atkin] would like a wage package that is consistent with our Living Wage Ordinance…… Later, this segued into $14.42 for a Minimum Wage.
The Emeryville Living Wage Ordinance includes a credit towards the living wage for amounts paid by an employer towards an employee’s health insurance. The Proposed Minimum Wage Ordinance does not include a credit for health insurance paid by an employer. Thus, an employer who pays a significant portion of an employee’s health insurance is essentially penalized by the proposed ordinance because they will be required to pay the minimum wage in addition to the health insurance that they are already paying, whereas an employer who does not pay towards their employees health insurance is simply going to pay the minimum wage. Having an employer provide health insurance for their employees benefits everyone. It particularly benefits the employee because the part of the wage package that comes from health insurance paid by the employer is currently not taxed to the employee. If the employee paid the health insurance directly, they would only be able to deduct it from their federal taxes if they itemize and if the amount they pay towards health expenses exceed 10% of their Adjusted Gross Income and they can only claim a deduction on the amount over 10% of the AGI. (This is my understanding, but anyone should check with the IRS if they want more detailed info on how this is handled.)
My personal request to the City Council is that they adopt the San Francisco model of their Minimum Wage Ordinance that starts at $12.25 in May 2015 and increases incrementally to $15 in 2018. This would allow businesses, employees and residents to adjust to a gradual increase which amounts to 67% over 2.5 years. -Betsy Cooley
Please make note that the above discussions we initiated by Rob, not by Small Business