The Chamber’s Flawed Minimum Wage Measure

An alternative ballot measure pushed by the chamber of commerce and backed by Oakland Councilmember Pat Kernighan is badly written and could exempt some large corporations.

The grassroots coalition Lift Up Oakland had no trouble gathering the signatures necessary to qualify its minimum wage measure for the November ballot. And that’s not surprising, considering that raising the minimum wage is an overwhelmingly popular idea — not just in liberal Oakland, but also throughout the state and nation. Plus, Lift Up Oakland’s proposal is simple and fair: It would raise the minimum wage in the city to $12.25 an hour for all workers beginning March 1, 2015. Thereafter, the minimum wage would rise each year by an amount equal to the increase in the cost of living.

But ever since the measure qualified for the ballot, the Oakland Metropolitan Chamber of Commerce has been lobbying hard for an alternative plan that would exempt numerous businesses from having to comply with a minimum wage increase. The chamber contends that the Lift Up Oakland measure might harm small businesses that won’t be able to afford to pay their workers $12.25 an hour. But the chamber’s alternative proposal, which is now being pushed by City Council President Pat Kernighan and is scheduled to be taken up by the council next week, is badly flawed and unnecessarily complex. It would create a multi-tiered system for categorizing employees that likely would be burdensome and costly for the city to enforce. It also would exempt most low-paid workers in the city from receiving the minimum wage and could end up exempting some of the largest corporations in the country from having to pay it, including fast-food companies that peddle the unhealthful products that are contributing to the current obesity and health-care crisis.

Under the Kernighan-chamber plan, the minimum wage would increase more slowly than the Lift Up Oakland measure. For small businesses with twenty or more full-time employees, the minimum wage would rise to $11 an hour on July 1, 2015, $12 an hour a year later, and $13 a year after that. For an employer with fewer than twenty full-time workers, the minimum wage in Oakland would not rise until July 1, 2017, and at that point, would only go up to $11 an hour. It would then increase to $12 a year later. Thereafter, the tiered-minimum wage would be tied to inflation.

The problem is that most minimum-wage employees in Oakland currently work for businesses that employ fewer than twenty full-time workers. As result, those folks stand to lose out on about a half-billion dollars in earnings over the next five years if the council puts the chamber’s plan on the ballot and it defeats the Lift Up Oakland measure, as we noted in last week’s cover story, “A Battle for Profits.”

There also are many other reasons to oppose the Kernighan-chamber plan. For example, it exempts tipped workers from receiving the minimum wage, along with many health-care workers who provide care to the elderly and physically disabled residents in the city. It also exempts people who participate in the city’s job-training programs and people who are 21 years old or younger and employed by nonprofits for summer or seasonal jobs.

And all these exemptions and multi-tiers — also known as carve-outs — likely will make it difficult for the city to keep track of which business is supposed to be paying what wage, especially considering the fact the Kernighan-chamber plan includes no funding for enforcement. Plus, the carve-outs are unfair. “I have an issue with different companies having a different minimum wage. I just think that’s wrong,” Councilmember Libby Schaaf told the Express earlier this month. “The value of someone’s labor is the value of their labor.”

Schaaf’s right, of course. The Kernighan-chamber plan also fails to recognize what academic studies have repeatedly shown: that raising the minimum wage is one of the best ways to boost the economy and to help small businesses, because it provides workers with more money to spend at those businesses.

Moreover, the Kernighan-chamber plan could end up being a boon to some big businesses that the City of Oakland should not be helping — specifically, fast-food companies. The proposal includes a provision that attempts to require minimum-wage compliance from corporations that employ only a small number of people in Oakland — but, as the Port of Oakland has discovered, such provisions can be impossible to enforce. The reason is that many fast-food chains structure themselves as individual franchises that have been defined as small businesses in the courts — even though they’re actually part of a large corporation — and thus are exempt from certain tiered-wage laws because each franchise employs a small number of workers. In fact, that’s how the Subway and Jamba Juice franchises at Oakland Airport have avoided complying with the port’s living wage law, which, like the Kernighan-chamber plan, exempts small businesses.

As such, the Kernighan-chamber plan could force the city into costly lawsuits in an effort to get fast-food companies to pay the minimum wage. Moreover, it’s just wrong for the council to green-light a plan that could give the fast-food industry an advantage over other businesses. The Alameda County health department recently estimated that the obesity epidemic is expected to cost the county nearly $3 billion a year in health-care and lost productivity costs. And the primary culprit for the epidemic is soda and other sugary beverages, like the ones sold at fast-food franchises.

Finally, the Kernighan-chamber plan reeks of favoritism. The Lift Up Oakland coalition put in the time and effort to gather more than 33,000 signatures from city voters to qualify for the ballot. But now, the council is considering a proposal that has the potential to defeat the Lift Up Oakland measure simply because a powerful group like the chamber demands it. That’s unfair. If the chamber wanted its own ballot measure, then it should have collected voter signatures, too.

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