Raise the rage: Supporters disappointed after failure to get $15 an hour

Task force’s ‘total compensation model’ could challenge California’s minimum-wage law

Low-income workers didn’t quite level up with the city’s minimum-wage plan.

Low-income workers didn’t quite level up with the city’s minimum-wage plan.


Once the yelling subsided and the police lockdown was lifted, all that was left inside Sacramento City Council chambers was disappointment.

Nine months after Mayor Kevin Johnson pledged to lead the way on income inequality during his State of the City speech, his hand-picked task force presented its opening offer: a modest increase to the city’s minimum wage, culminating at $12.50 an hour by the year 2020, but only for workers who don’t get loop-holed out of the equation under new guidelines.

The September 2 recommendation fell short of what’s been achieved in 10 other California cities—including smaller ones like Oakland and Richmond—and sets Sacramento on a path that could lead to the state Supreme Court.

Johnson, flanked at a podium by task force members, called the deal a “win-win” for his city. Even for a mayor who favors sports metaphors, it was a premature one to choose.

When the task force convened later, it greeted an angry crowd that had been screened at the doors of City Hall for weapons. Labor interests stormed out in a staged protest. At least one minimum wage worker, a mother with two jobs, cried and screamed. Police locked down the building.

In short, the reviews were negative.

“They were very difficult negotiations,” said Joseph Devlin, chief of staff for Councilman Jay Schenirer, who co-chaired the task force. “Not anyone got all of what they wanted.”

Perhaps, but the side that most signified its dissatisfaction was the one calling for a higher wage for the city’s poorest workers.

“It doesn’t value working people at any level,” said Brenda Ruiz, a chef at Biba.

So what happened behind the scenes of Sacramento’s Fight for 15 movement, and what comes next? Forget what you may have heard. This one was never going to be pretty.

$15 an hour was never really on the table.

The labor coalition that included Raise the Wage and Organize Sacramento publicly campaigned a hike to $15 an hour, but its leaders pressed for a smaller wage increase during negotiations.

“We care about Sacramento and wanted to make sure not to hurt the economy,” said Tamie Dramer of Organize Sacramento.

The coalition asked a UC Berkeley researcher to independently propose a tiered wage increase that the city could absorb. The researcher concluded that Sacramento’s minimum wage could safely reach $13.80 an hour by 2020, when it would then tie itself to the Consumer Price Index and increase nominally with inflation. Not only would it not be bad for Sacramento, the researcher concluded, it would actually be good for the economy.

Or, as Dramer put it, “We did science.”

But that approach may have hurt their negotiating power. Think of it this way: Under the most cliché negotiation principles, two sides open with unrealistic extremes, then meet somewhere in the middle. But when one side starts negotiations with a reasonable estimate, the other side has leverage.

“I think 12.50 is pretty close to 13.50,” said Devlin, who staffed the task force.

Asked whether $15 an hour was ever seriously considered, Devlin declined to discuss the talks in detail. “I can tell you it was brought up, as well as doing nothing,” he said.

According to Fabrizio Sasso, who sat on the task force as executive director of the Sacramento Central Labor Council, doing nothing dominated the negotiations. “If you look at the composition of the task force, $15 was never seriously going to be considered,” he said, “hard as I and a few other task force members tried to have that discussion.”

Ironically, Sasso described income inequality representatives as “completely outnumbered” by business interests on the Task Force on Income Inequality.

Of the 14 people on the roster, two were council members, six represented business or development interests, and the remaining six represented labor, minority and community groups.

Not everyone would get a raise, but the city could get a lawsuit.

Pressed by the state’s powerful restaurant lobby, the task force agreed to a “total compensation” model that could challenge California labor laws.

Basically, companies that show their employees make $15 or more an hour in taxable income wouldn’t have to pay these workers the city’s increased minimum wage rate. Instead, the companies would pay these employees the state’s minimum fare, which increases to $10 an hour in January.

Under this model, employers can count tips, commissions, even nonpayroll contributions like health insurance costs, toward their workers’ total salaries.

To Ruiz, a single mother who’s spent 20 years in the fine-dining industry, the proposed model amounts to a sneak attack on workers. “The public needs to understand what that is code for,” she said. “It’s not even only tips anymore. Total compensation is everything. This has the potential to touch everyone’s lives.”

Businesses that adopt this model would have to start paying their nonexempt minimum wage workers $12.50 an hour by 2018, two years ahead of those that don’t.

The idea is the brainchild of the California Restaurant Association, which argues that tipped workers such as servers and bartenders already make too much and shouldn’t benefit from minimum-wage increases.

“Total compensation would help create income equality between these highly compensated front-of-house workers—who often make more than double the minimum wage per hour when combining their wages and tips—and untipped heart-of-house workers” like bussers and line cooks, CRA spokeswoman Lauren Carpenter wrote in an email.

But, according to the U.S. Bureau of Labor Statistics, servers, bartenders and other minimum-wage workers in the Sacramento area make a median hourly wage of less than $10 per hour—including tips and commissions.

The CRA says it doesn’t believe those figures and cites its own study.

“The restaurant association has been trying to create a tip credit system in California for a long time,” said Ty Hudson, a Unite Here Local 49 research analyst who closely observed minimum-wage battles in the East Bay.

He’s watched some of those attempts flounder up close. In Oakland last year, voters in that city approved raising their minimum wage to $12.25 starting this past January, and then tying the rate to the Consumer Price Index. But before that happened, restaurant and business interests pressed the Oakland City Council to sponsor a competing ballot measure that was “eerily similar, actually” to the one advanced by Sacramento’s task force, Hudson said.

Oakland’s council refused.

In Sacramento, the CRA finally found a city to carry its water. (The mayor’s chief of staff, Daniel Conway, is a former director at the CRA. Neither he nor Johnson responded to a request for comment.)

“What came out of the Sacramento process was much worse” than in other California cities, Hudson said.

But will it work? Depends on who you ask.

Sasso and other labor advocates point to Section 351 of the California Labor Code, which says any gratuity that employees receive belongs to them, and can’t be considered part of their income by their employer. There’s also a 1988 California Supreme Court ruling that came down against two-tiered wage systems.

The CRA believes it’s created a hybrid model that’s in the legal clear.

Meanwhile, Devlin says anyone who pretends to know the answer is full of it. “This is potentially uncharted legal territory,” he added. “There is no case precedent on this.”

The next step is for the city attorney’s office to draft an ordinance based on the task force’s recommendation, and a separate legal opinion. The city council could consider both next month. The accelerated timeline was politely insisted on by the mayor. “Mayor Johnson wants this thing done. He wants the council to hear this,” Devlin said. “So we’re shooting for October.”

When Johnson announced the formation of the task force during his State of the City speech, he said the goal was ensuring “that working adults can earn enough to support their families.”

That’s not just folksy politician speak. According to materials from the task force’s meetings in August and July, 70 percent of minimum-wage workers in the county are over the age of 24 and 61 percent work full-time.

Indeed, this whole effort was unfolding because rising inflation had outpaced sluggish increases to the minimum wage, to the degree that the current $9 hourly wage is worth two bucks less, in terms of buying power, than it was in 1968.

Devlin said the task force doesn’t pretend it can solve income inequality simply by adjusting the minimum wage. “And that’s why this task force wants to continue to work,” he added.

While it’s issued its final word on the minimum wage front, the task force indicated last week that it wants to press forward on issues like early childhood education and affordable housing.

The announcement was awkwardly timed, as the task force made it only a day after the Sacramento City Council weakened its affordable housing policy.

Dramer views the two things as linked. “We tried to give them the benefit of the doubt, to do the right thing, and they blew it,” she said.

There’s now talk of circumventing the city council and going straight to the voters in 2016 with a ballot measure. Citing a poll that showed 70 percent of regular voters supported an immediate wage increase to at least $13.50 an hour, Dramer believes her side has the votes.

Sasso, who works at the CLC but also belongs to the broader wage coalition, says he can’t say what’s next. “But I believe that every option is on the table,” he added.