In response to concerns among local business owners, the Morgan Hill City Council at its Aug. 24 meeting declined to accelerate the statewide minimum wage increase that the legislature approved earlier this year.
Chamber of Commerce President John Horner applauded the council’s decision on behalf of his organization’s members.
“As a chamber, our view is that the most important area the community can further improve upon is relevant job training, particularly to address the acute need for middle skills employees,” Horner wrote in an email to chamber members Aug. 25. “We have local companies struggling to hire for jobs already paying $15/hr to $30/hr and we have local people struggling to live on less than those amounts. Directing our energies towards closing that gap is an area where government, businesses and educational providers can and must improve our efforts and results.”
Even before the state passed a law in April that will increase California’s minimum wage in annual increments to $15 per hour in 2022, Bay Area cities and counties—including Morgan Hill—have been studying proposals to raise the hourly pay rate higher and faster than that.
The council began discussing the possibility of a local minimum wage several months ago. For much of that time, city officials have awaited a consultant study on the impact of a regional minimum wage on Santa Clara County, funded by the City of San Jose. That report was completed in May.
In June, the board of the Cities Association of Santa Clara County recommended a regional approach that would raise the minimum wage in larger annual increments to $16.13 per hour by 2022. The board’s rationale for the accelerated increase is the cost of living rises faster in the South Bay than it does in other areas of California.
The current state and local minimum wage is $10 per hour.
No cities in Santa Clara County have yet adopted the association board’s regional, accelerated recommendation, according to Economic Development Coordinator John Lang.
The discussion came back to the council Aug. 24, so the elected body could consider adopting a minimum wage modeled after the Cities Association’s recommendation. After hearing from the Morgan Hill business community, and while commiserating the fact the discussion turned into a “one-sided” argument in which the employees who rely on a minimum wage are seldom heard, the council decided to let the state approach reign locally.
At the Wednesday meeting, business owners and their representatives warned that the higher and faster the minimum wage rises, the more likely they would be to lay off employees or increase costs.
Sean Rositano of Morgan Hill-based Gryphon Financial was one of several business people who told the council that Morgan Hill should not be lumped into the South Bay region with cities such as San Jose and Palo Alto, where high-tech jobs and higher prices dominate the market. Gryphon Financial pays many of its employees a starting wage of $12 per hour, plus health benefits.
“Don’t give in to being San Jose, where there are only high-end jobs and service jobs,” Rositano said. “Let’s keep providing mid-level jobs. We want to be an employer in Morgan Hill as long as we can, so we urge you not to accelerate the minimum wage.”
Other business owners who spoke at the Aug. 24 council meeting said raising prices paid by the consumer is not the best way to recover increased costs in Morgan Hill, where customers are not as affluent as they are in other parts of the region.
The chamber of commerce presented data it collected from its more than 500 members, indicating that local businesses are increasingly worried about the rising costs of labor. Of the 78 chamber members who responded to a survey on the topic, 63 percent said they would lay off employees if the city or region accelerated the statewide minimum wage increase.
As a result, the chamber as an organization opposed the Cities Association’s proposal. “Although Morgan Hill clearly is part of Silicon Valley, our economic model and demographics are significantly different than other Silicon Valley cities such as Palo Alto or Sunnyvale,” reads a letter to the council from chamber officials.
After the discussion, Mayor Pro Temp Rich Constantine lightly chided the bosses and owners who spoke against the regional proposal for not considering how lower-income residents might benefit from a higher minimum wage. He noted in the last 100 years, the federal minimum wage has risen only $9.84. A few years ago, a decision by the City of San Jose to raise its minimum wage to $10 per hour was preceded by the same threats regarding layoffs and business closures; but those fears never materialized.
“We need to start thinking about the people (who) make the minimum wage and what they go through, and how we as a society can help them,” Constantine said. “When people have more money in their pocket, they spend more money. And when people spend more money, your businesses make more money.”
Councilwoman Marilyn Librers said she is against accelerating the minimum wage increase because of its possible impact on the owners. “We need to encourage small businesses to come to Morgan Hill, be profitable and stay in Morgan Hill,” Librers said. “Let’s stay with what the state is doing. We are not the Peninsula. We are Silicon Valley, but we are a small town and we want to maintain that small town feel.”
