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Saturday, May 4, 2019

Emeryville Releases New Minimum Wage Study

Most Businesses Have Accepted the Minimum Wage Ordinance

Restaurant Sector is Still Angry 

Wages Up Regionally as Neighboring 
Cities Follow Emeryville's Lead

The City of Emeryville this week released a revised and recommissioned academic study for its minimum wage ordinance, the results showing a business community that has largely come to terms with the 2105 ordinance, excepting a defiant restaurant cohort who’s animosity towards the ordinance has grown since the release of the first business study in 2016.  The current data rich study, called the City of Emeryville Business Conditions Report and commissioned by the City, is comprised of a comprehensive city-wide business survey with an analytical academic investigation.  It was conducted by the Lorry Lokey School of Business and Public Policy at Mills College, the authors of the first Minimum Wage Ordinance (MWO) study.  This most recent study was completed last summer.

Unlike the first MWO study with it’s look exclusively into the effects on Emeryville’s businesses, the current iteration is more expansive.  Findings have been based on a survey focused on “…how City of Emeryville Labor Ordinances (i.e., Minimum Wage, Paid Sick Leave, and Fair Workweek) have impacted revenues, prices, and employment patterns among local businesses” according to the study’s executive summary.

The survey part of the Business Conditions Report included only Emeryville business owners or managers, workers were not surveyed. The survey, sent out to 319 private Emeryville businesses across the spectrum of business types netted 101 respondents.
All Business Owners' Sentiments About the MWO
as a Percentage

More are neutral and positive about it than against it

but more are against it than in 2016.

Most business owners in all cohorts responded that ‘business is worse’ at a rate of 33% over those who found business to be better (14%) since the MWO was enacted.  However most also found that their productivity had increased 22% versus 19% stating a decline.  Morale has been found to have improved dramatically because of the MWO at Emeryville’s businesses with 33% reporting an increase over 18% stating a decline.  Another factor that has improved for businesses the survey reports, is the number of job applicants for business owners to select from; a 27% increase.  This improvement comes against a generally improving employment rate in the Bay Area that is credited with driving down the number of job applicants in the aggregate at businesses outside Emeryville.
Emeryville businesses have been shown to have increased their prices in response to the challenges brought by the MWO’s implementation by wide margins, especially in the food service sector.

Emeryville's Retail Business Likes The MWO
The green pie slices represent those businesses that
like the MWO.  The red and yellow are those who don't. 
Business owners’ reaction to the ordinance is evenly split the study found, independent of their bottom lines.  After the Minimum Wage Ordinance wage increases hit $15 per hour for small businesses in 2018 ($15.69 for large businesses), business owners collectively responded favorably, seeing it as good or fair at a rate of 21% for those businesses affected by it with an additional 7% expressing favorability for those businesses not affected by the MWO. These numbers were offset by a rate of negativity about the MWO at 24% with an additional 4% of business owners responding negatively whom are not affected by the wage increase.

Food Service Sector Unhappy
Those most unhappy with the MWO, by far, have been shown to be restaurant owners/managers.  An entire section of the study is devoted to them.  Their overwhelmingly negative responses dragged down the overall rate of satisfaction for all business types citywide.  When viewed separately, restaurant owners were found to be dissatisfied with the MWO’s latest wage hike in 2018 at a rate of 67%, owners stating the wage increase negatively impacts their businesses. The category of taxes and regulation, which includes the MWO, are very unpopular with restaurant owners; 41% responding that is their biggest problem in Emeryville, closely following parking availability, 42% of whom found that to be their biggest problem running a business here.

For businesses not in food service, the study shows business owners as mostly favorable to Emeryville’s MWO.  The retail sector generally showed an acceptance of or even support of the MWO.  Overall, about 22% of the retail managers have negative feelings about the Minimum Wage Ordinance, while 47% report support for the ordinance.

Neighbor Cities Raise Theirs
The passage of Emeryville’s landmark Minimum Wage Ordinance caught many municipal neighbors by surprise and many have rushed in to effectively meet Emeryville’s challenge.  Beginning in 2019, the cities of Berkeley and El Cerrito have matched Emeryville’s small business $15 per hour rate while other neighbors have also raised their minimum wages in response to Emeryville’s lead.  This reaction, predicted by the Tattler in 2015, represents a new effective progressive regional minimum wage reflecting the shared values in the Bay Area and serves as a moral counter to previous calls for a ‘regional minimum wage’  at a much lower rate en masse by the business community.
Emeryville's minimum wage, formerly the highest in the nation, has recently been eclipsed by SeaTac Washington.  However, Emeryville's rate increase scheduled for July 1st could put it back on top by a few cents.

Emeryville's Minimum Wage Ordinance Elevates the Regional Wage
A 'regional minimum wage' can be poverty rates region-wide if no city
makes a move to raise theirs
region-wide livable rates if one city moves to raise theirs.

The City of Emeryville Business Conditions Report can be seen HERE.
The first MWO Business Study from 2016 may be seen HERE.
Actual Response From a Restaurant Owner to a Survey Question
The redaction provided by the City of Emeryville
...but you get the picture.


  1. I read the report and its much more serious then you say. Businesses are leaving town all over. This is nothing more then a government redistribution plan. Soon there will be no business left. Then you'll be happy? Who will pay for all your homeless programs then?

  2. You are correct. It IS a redistribution plan. The government, in this case the City Council has facilitated a plan to redistribute some wealth from the business owner/employers along with their customers to the working poor in our town. That’s also called ‘doing their job’ or ‘doing what we’re paying them for’.
    RE businesses leaving town- First, there’s no way to measure this, what you and Rob Arias are alleging. I’ve noted that doesn’t stop you guys from continuing to make the claim. But FYI, that’s all pretty transparent to just about everyone that’s not a Republican.
    Second, to those business owners that can’t make a go of it without paying their workers sub poverty wages, wages so low the government needs to step in and assist with living expenses as was the case before the MWO, to them I say ‘Don’t let the door hit you on your way out”.

  3. Former Emeryville resident here (moved our home and business last year, but not bc of minimum wage). I think the study fairly shows that most businesses can absorb the higher minimum wage, but restaurants can't. Their profit margins are already so low that it kills them. They can't afford the cost increases, and customers can't absorb the necessary price increases. It seems we're trying to redistribute from one have-not to another. If we want to redistribute from the haves to the have-nots, then we need to look at who's actually making all the money, and that's the property owners. As they hike up the rents and the city jacks up the wages, restaurants and coffee shops become unsustainable. Tightening the screws on retail and food service is like squeezing a dry sponge. All the capital is in the hands of the landlords. Cities should increase commercial real estate property taxes to subsidize wages instead of making small businesses suffer, when they're in the same boat as their employees.

    This may be less of a problem for places like IKEA, for example, but for small restaurants our local retail, which make a community tight and unique, it's the wrong approach.

    1. The have-nots are the workers (restaurants, retail, etc) earning minimum wage. The haves are the customers or the buyers. We know the haves have because they keep shopping, buying & eating. The number of restaurants has gone up every year in Emeryville since the implementation of the MWO.
      There is no reason all the capital should be in the hands of landlords. Sure rents are up, but they only go up as far as buyers are still willing to buy. Emeryville keeps growing as developers keep building. The rate of income to rent HAS crept up over the years…now up to 30-35%. But 60-65% of remaining income isn’t chump change and increasing that dollar amount, we know the aggregate income among Emeryville residents keeps going up. We’re getting richer (alas, not all are). So there’s more disposable income in actual dollars.
      These business owners just don’t want to pay more to their workers. The City Council shouldn’t be listening to those with material interest in lying. They should be listening to the residents and to academic studies using the scientific method with real data.