Jamba Juice recently announced its intent to move from its EmeryBay office complex headquarters to Frisco, TX. 120 Emeryville jobs will be impacted. AAA also recently announced it would move its employees to Walnut Creek next year to consolidate its Northern California operations. AAA occupies the top four floors of The Towers complex on our Peninsula where it’s been since 2011. Meanwhile, the struggling Leapfrog Enterprises has yet to announce what it will do after being acquired by VTech. This compounds some recent bad news of a rash of restaurant and business closures in our town.
Commercial rents are rising as fast or faster than residential rents and businesses are susceptible to increases the same way household renters are. Jamba was reportedly looking at a 30% increase in its $1.2 million annual rent at its Emeryville location. Companies are also being impacted by rapidly rising labor costs in tandem with California’s spiraling cost of living. Combined, these are causing companies to look to reduce costs elsewhere according to this LA Times piece. “As a whole, the restaurant sector is struggling to deal with higher labor costs. If those chains can’t pass those costs on to consumers, which many have been unable to do, they have to reduce costs in other parts of the business” notes Nick Setyan, senior vice president of equity research at Wedbush Securities. The piece also notes that Carl’s Jr. recently announced it will move its Carpinteria headquarters to Franklin, TN next year.
Jamba Juice will leave Emeryville, move HQ to Texas
By George Avalos
The owner of Jamba Juice will move its headquarters out of Emeryville and defect to Texas, partly driven by the cost of doing business in the Bay Area, according to company statements Thursday and a regulatory filing.
About 120 employees in Emeryville are affected by the relocation, according to Jamba, a maker and retailer of smoothies and other beverages.
“As we continue to spread our healthy living mission globally, it has become increasingly clear that a relocation of our support center will better position the company to extend our brand,” said David Pace, chief executive of Jamba, whose subsidiary is Jamba Juice.
Emeryville-based Jamba will move its headquarters and support center to a Texas suburb called Frisco, which is in the Dallas area.
Read more on East Bay Times →
AAA Northern California will move its head offices to Walnut Creek
By George Avalos
AAA’s Northern California corporate headquarters and hundreds of employees will relocate in 2017 to Walnut Creek, where it had been based for a number of years, the auto club said Friday.
The new Walnut Creek head offices of AAA Northern California, Nevada and Utah will include the company’s roadside assistance and travel agency operations, as well as an array of administrative functions.
Potentially more than 350 employees of AAA Northern California, Nevada and Utah will move next spring to Walnut Creek, Cynthia Harris, a spokeswoman for AAA, said. The auto club will move to the Treat Towers office complex that’s perched next to Interstate 680.
Read More on MercuryNews.com →
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Face it. Emeryville’s now a really horrible place to run a business. All the City Council needs to do now is find a way to drive out all the retail and the massacre will be complete.
What else could our council possibly do to show their ignorance and hatred of small business?
Is anyone keeping track of how many jobs have been lost so far in Emeryville since they raised the minimum wage? Based JUST on the businesses reported by the EvilleEye, a conservative estimate would be that we’ve already lost over 400 jobs.
That would be a conservative estimate because it covers only the many businesses that have closed. Most of the restaurants and retailers have cut staff as well. Get rid of the bus boy or the security guard to pay for a raise for the servers who were already making $20/hr with tips. Our city council completely blew it.
Increasing the minimum wage prevents turnover (good for small business), and promotes loyalty. Good employees make customers keep coming back. Further, putting money into the local economy via wages ensures that local business has customers. (as opposed to rent increases, which may go to out of State investors)
Put another way, do you want good employees fleeing E’Ville to better environments like SF or Oakland?
Further still, if a business is harmed by paying its employees a slightly higher wage (the minimum has not kept up with inflation), it is in essence a truism that all employees of any rank should return a percentage of their wages to their employers. Let’s all give 5-10% cash back to our benefactors, since we are privileged to even work for them. Right?
Except that none of these things actually happen. The increase comes out of the pocket of other workers who lose their jobs and customers who pay higher prices. So there’s no new money and sales actually fall (ask around, that’s what’s happening).
Fewer employees are now trying to do the same job with less people which results in unhappy employees as does the reduction in hours, reduction in scheduling flexibility, and decreased job security.
Higher salaries are distributed from people who’ve earned them to those who haven’t which lowers morale and increases turnover. And the extra pay is largely offset by reductions in tax and other benefits.
The Emeryville minimum wage is now over 40% higher than the minimum wage has ever been at its highest point in its 80 year history. This isn’t about keeping up with inflation. If you wanted to do that, then you’re looking at a minimum wage of between $10 and $11.25 to align with the high end of historical norms.
“then you’re looking at a minimum wage of between $10 and $11.25 to align with the high end of historical norms.” Norms of what? The pricey Bay Area or the Federal MW? In any case, conservative estimates still put the FMW at $12/hr. http://www.economist.com/blogs/graphicdetail/2015/05/minimum-wages More liberal estimates are as high as $22/hr.
“Myth: Increasing the minimum wage will cause people to lose their jobs.
Not true: In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.”
“Myth: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would lead to restaurant job losses.
Not true: As of May 2015, employers in San Francisco must pay tipped workers the full minimum wage of $12.25 per hour before tips. Yet, the San Francisco leisure and hospitality industry, which includes full-service restaurants, has experienced positive job growth this year, including following the most recent minimum wage increase. ”
The concept that an employer simply reduces his/her workforce would depend on that employer already being a bad business person. It assumes that the employer had fat to cut (which meant wasted profits), and that they prefer to make their employees who weren’t before, eligible for overtime, benefits and other perks.
“customers who pay higher prices”. Sounds good to me, since as I said, the discount we’ve enjoyed has come from the pockets of the employees. There is tremendous wealth in the area, so most of us won’t miss an extra .25 per toilet paper roll or an extra dollar per sandwich.
Never trust a political site pushing an agenda for your myth busting.
“Myth 1” – almost all studies and the vast majority of economists suggest that increases in the minimum wage cause job loss. What the studies also conclude is that modest increases to the minimum wage cause minimal effects on employment. Leaving out the word ‘modest’ is important. The Emeryville minimum wage increase is not modest and completely unlike any increase ever done before. The site you reference is advocating for a $10.10 minimum wage over a period of years not an increase of 60% in 30 days. The non-partisan Bureau of Labor Statistics estimated the increase to $10.10 would cost 500,000 jobs. That’s the group tasked with analyzing these things for Congress,
“Myth 2” – Actually most economists believe restaurants and retail and their workers are hardest hit by these increases because they are low margin and have large numbers of entry level workers. What your site did was avoid the negative impact by pointing to an increase in jobs. That’s like saying wars don’t kill people because the population increased during the war. If the economy and restaurant employment is growing at 5% a year and suddenly drops to .1% a year when you increase the minimum wage, you’ve lost thousands of jobs. But a political group can still mislead people by saying “see, there are more jobs today than yesterday”. See what they did there? Kind of makes you distrust their motives.
Political groups and political think tanks mislead with the facts to achieve a political outcome. Talk to the businesses in the community, talk to the people who have lost their jobs or had their hours cut, look at all the businesses closing and for sale. That’s the reality. And it sucks for Emeryville.
The idea that cutting staff when you have an increase in labor costs means you’re a bad business person is silly.
Let’s say you have an employee that adds $12 an hour of value to the company (sells widgets that create an extra $12 after cost). He’s paid $11 an hour (including taxes and benefits) to do that job earning $1 per hour profit for the company.
Now, the Emeryville City Council raises the price to hire this worker to $15. Employing this guy now results in a loss of $3 an hour. The employer was wise to employ this guy before at $11 but not at $15.
In fact, now no one can hire the guy because he’s required to be paid more than he can produce. The minimum wage acts as a threshold for skills. If you don’t meet the threshold, you’re kicked out of the workforce for life. Remember how hard it was to get a job when you were fresh out of high school and had no skills. Imagine if your employer had to pay you nearly twice as much for the honor of employing you.
Hiring is economically the same as any other good or service. When you go shopping for food, you’ll buy a lot of it when it’s cheap and cut back when it’s expensive. You’re not a bad shopper because you reduce your gas consumption when it’s $4 per gallon instead of $2.
Again, the answer is not to balance your books by effectively reducing your lowest paid workers’ wages. If that were so, companies could with a clean conscience simply lower their employees’ wages and voila! Instant profit.
The pricing mechanism is not a result of inputs + reasonable profit. Companies inherently charge as much as the market will bear. In any case, productivity has been consistently rising since the 70s, yet the marginalized have gotten substantial pay reductions. Therefore, profits enjoyed over that time have come at the EXPENSE (partly) of the lowest paid workers. And we wonder why there was overleveraging via HELOCS, and a massive slump in demand?
The simple answer to your $12/hr employee example is to RAISE prices. The market will indeed bear it, since the bay area consumer is wealthy, and made wealthier by the raising of the wage floor.
Consumers aren’t entitled to practically free service, whether in hospitality or any other industry. They already enjoy the smallest input costs for food in the industrialized world, certainly they don’t need to screw those who prepare it to drive that cost even lower.
In any case, see here:
* Small Business MW: $12 in 2015, $13 in 2016, 14$ in 2017, hitting $15 all the way out in 2018. Hardly sudden.
* Seattle, on a similar trajectory, has not experienced the fallout predicted by the right.
* In E’ville, I still buy my Pizzas from Rotten City, who seem to move a lot of pie at $30-40 each. Shouldn’t they have gone out of business by now?
These employees don’t even get a COLA for the last several years, almost certainly dooming them to a lack of housing anywhere in the Bay Area. How far should the working poor drive in from to satisfy the desire to keep profits up and food at a ridiculous bargain?
Seriously. Nevada? What does that do to the business model? Like I said, if the old minimum wage helps profitability, why not lower it further still? A profitable business would be made even more so!
Each employee contributes to the profitability of the store, and adds to GDP. I don’t recall the employees agreeing to work harder for a shrinking slice of that lucre.
A few different points:
1) Employers CAN’T lower salaries below market value. If they could, lawyers would be paid $5 an hour. If an employer is paying less than an employee is worth, the employee quits. If an employer is paying too much, he goes out of business. Changing the minimum wage does not change the value of the employee, so the employer is now paying above market rate for the employee…his options are to find better employees who are worth higher amounts (displacing entry level workers), only operate during high margin periods (eliminating jobs and hours), automate (replacing entry level workers), or find some here-to-fore undiscovered business model magic that suddenly makes a $12 employee worth $15. And since the employees no longer have to work to go up the ladder, for this increase in salary, the employer generally sees a decline in work quality.
2) Productivity stats carefully avoid identifying where productivity gains have occurred. While productivity has soared in areas that don’t require labor (think, high tech). Productivity in service jobs like fast food has increased by about 1% in the past 30 years. In other words, if you wanted to pay minimum wage workers according to their productivity gains, you’d have to pay them LESS today than 30 years ago because they produce less today per worker.
3) Have you noticed the changes at Rotten City? Can you guess what’s behind those changes? Lanesplitter raised its wages and saw a drop in sales of 30%.
4) People in poverty spend almost all of their money on low-priced goods. They shop at WalMart and McDonalds and others. These are the exact same places that are being targeted to increase their wages and prices while at the same time are highly sought after jobs (over 10,000 people applied for 400 jobs when the Oakland Wal-Mart opened). The well-meaning middle class drives WalMart out of Oakland, drives the people living in West Oakland out of their jobs, and then says “Look what a great guy I am for supporting a $15 minimum wage”. The poor are left holding the bag, and Emeryville gets more hipster beer joints and fewer poverty level workers.
Our city council failed the community by getting caught up in the hype, listening only to the people who told them what they wanted to hear, and failing to do the analysis and due diligence you expect from government.
Do you contend that the wages are set by the Market? If so, what do employers do when they suddenly have a glut of desperate workers (post Great Recession), or the workers from behind the newly fallen bamboo curtain? What about when economic forces conspire to tilt the advantages to the capitalists via tax breaks, tax credits and expenditures? The MID is a gigantic giveaway to the haves at the expense of the have-nots.
Answer: the “market” dictates slave wages, because..where will you go anyway? This is also why we steadfastly avoid full-employment (and its inflationary pressures)
The system is designed to line the pockets of the already-wealthy, which is how we are harming our mobility.
(Interesting read on the poors’ spending habits)
I went to CVS in Berkeley yesterday, and saw 2 employees in the whole store. I assume there may have been security cameras on the self-checkout, as well as the assistant who stood there as a physical impediment (the other employee was stocking shelves and answering questions).
1) Technology displaces jobs AND increases productivity. Many of the advances that reduce the labor costs are created by the boots on the ground, or is investor driven if from outside the firm.
2) If companies see a benefit from automation, they choose automation. In the current laissez-faire climate, it is a universal truth that the boss-class is negligent if they do not pursue such labor savings. Do any of them employ people just to be nice?
Watch http://www.imdb.com/title/tt0734633/ if you get a chance. It has been ever thus, except we’ve finally reached Twilight Zone-esque abilities to replace large swaths of workers.
There is a disturbing willingness of the “haves” to toy with the livelihoods of the “have-nots”.
What right does a wealthy person have to say that a poor worker’s job isn’t good enough or that he shouldn’t be allowed to earn his living as he sees fit?
What right does a well paid skilled worker have to say that a low income unskilled worker’s job shouldn’t exist?
At what point did “worker’s rights” come to mean taking away a worker’s right to choose for himself what is best for his life, for his future, and for his children?
We feel a moral disgust when we see developers go into a poor neighborhood, determine the houses are too small and rundown to satisfy middle class standards, and evict the poor from their homes to make way for something ‘better’ for the middle class.
We apparently feel nothing at all when we go into poor communities, decide the salaries are too low, and evict the poor from their jobs to make way for restaurants and stores for the upper class.
Who “decides” that? The consumers! For every displaced homeowner there is both a buyer AND a seller. The neighborhoods change because the landed sold their lots.
What prevented the newly wealthy former residents of West Oakland from buying another home in West Oakland with their new-found winnings? I don’t like gentrification, but I find it largely indistinguishable from “capitalism”.
People with money move in, the private enterprises move in to service the needs of the new arrivals. If your product doesn’t sell in that new environment, one should sell what does.
Alternatively, cities that are down-in-the-mouth often hear right and left both decry the corporations (I do too) who move their industries and factories abroad, when they “could be building them right here in Detroit!”.
What pray tell would the impact be to the communities where such entrepreneurship thrived? Rising wages, home values, rents, cost-of-living, gas, taxes?
And yes, the displacement of workers and low-income families, unless we could raise the wage floor.