RICHMOND -- The City Council took its latest stab at implementing a local minimum wage hike this week, unanimously agreeing to phase in an increase to $13 by 2018 and link the wage to inflation thereafter.

But the new minimum wage hike schedule, which is expected to be formally adopted later this month and start at $9.60 on Jan. 1, includes two key exemptions that were opposed by labor leaders.

Businesses that pay less than 800 hours of employee wages over a two-week period will be exempt from the rules but must still pay the state minimum wage, currently $8 per hour but set to rise to $10 per hour by Jan. 1, 2016, the highest of any state.

Also, Richmond businesses that "derive more than 50 percent of their income from transactions where the point of sale is outside the city" will be forced to pay an "intermediate wage," defined as halfway between the city's minimum wage and the state minimum wage.

Critics, including Mayor Gayle McLaughlin, said the law should be simple and clear and that exemptions would create unfairness and confusion. McLaughlin voted for the version with exemptions as a "compromise," she said, after her stronger version of a minimum wage failed a council vote in April.

"This new law is so convoluted, it would take a Philadelphia lawyer to figure it out," Richmond resident Bea Roberson said during public comment.


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Councilman Jim Rogers, the main proponent of the exemptions, said the exceptions were needed to ensure that businesses don't relocate elsewhere.

"The argument that we should do it simply is simply wrong," said Rogers, who pushed hard to exempt certain businesses. "Business have said they will leave."

After months of back and forth over whether and how to increase the city's minimum wage, the council's latest version puts Richmond on track to have the state's highest minimum wage, although there is growing momentum for an increase that suggests other cities will likely follow suit.

Seattle recently raised its minimum wage to $15 by 2017, which would be the nation's highest. San Francisco's $10.74 minimum wage is currently the state's highest.

The new law will phase in the minimum wage hike over several years, increasing to $9.60 on Jan. 1, 2015, then going to $11.52 in 2016, $12.30 in 2017 and $13 in 2018, with the wage pegged to inflation after that.

The council grappled for months over what course to take on an increase, with the business community mounting increasing pressure against it and labor unions and other progressive activists vowing to initiate a November ballot measure if the council failed to act.

Tuesday's vote looks likely to quell those rumblings.

"I hope that those folks calling for a ballot measure will think about doing it elsewhere rather than in a city that has one of the toughest (minimum wage) ordinances in the state," Rogers said.

The exemption of 800 hours per two weeks replaced a provision in an early draft of the law that would have exempted businesses with fewer than 10 employees.

Rogers said the new metric would better gauge business size and reduce the likelihood that firms would cut employees or resist hiring to avoid the minimum wage.

Business groups and owners have complained for months that a local minimum wage above state or national wages, especially in an economically depressed city such as Richmond, is bad policy and will impede economic growth.

"It's absolutely silly to be looking at a minimum wage on a municipal level," businessman Tom Waller said. "There will be consequences. Employers will let people go, and some will decide to pick up and go."

Councilman Tom Butt, who has vacillated in his support of the ordinance, said the exemptions and the phase in should sap any impact either way.

"I'm skeptical that (the law) will really have any impact, but I'm willing to go along to get along," Butt said after the meeting.

Contact Robert Rogers at 510-262-2726. Follow him at Twitter.com/sfbaynewsrogers.