San Mateo City Council capping minimum wage

“These small businesses have been paying fair wages for a long time, and now we are looking at an inconceivable increase. I think it makes sense to have some cap with a catch-up provision,” Councilmember Eric Rodriguez said.

Cities use CPI because it is predictable for employers and workers and keeps pace with the rising cost of living. The CPI increase would be about 7% to 8% in 2023 amid significantly higher costs, potentially taking the San Mateo minimum wage to between $17.33 and $17.50. Three cities in San Mateo County and the state currently have a CPI cap at 3.5%, which is on what the council based its number. Capping the index would prevent a large yearly increase, which can be challenging for small businesses. A city staff report noted that a significant CPI increase could increase library and parks and recreation staffing costs. However, no cap could help minimum wage workers and lessen income disparities. Belmont, San Carlos and Daly City are the three San Mateo County cities with a CPI increase cap. The country is currently amid rising inflation at a new four-decade high. Consumer prices have risen steadily, ranging from food, gas, airline tickets and new cars. The Federal Reserve recently increased interest rates to slow the tide, with worries about a potential recession adding concern.

Mayor Rick Bonilla disagreed with the council majority on a 3.5% cap, calling it too low and suggesting higher rates of around 5%. Bonilla noted minimum wage workers are most affected by a CPI cap and have the most challenging time.

“The businesses will take care of themselves. The workers don’t have any other way. There’s nobody else to help them.” Bonilla said. “It’s us. If we don’t, nobody else will.”

Cheryl Angeles, the San Mateo Chamber of Commerce president, said the business community had divided points of view. Nonprofits favor no cap because of the extreme economic hardship people face. However, a CPI increase of 8% would put further strain on small businesses that are already operating on the margins. Angeles said the chamber was open to surveying members for preferences. Most Bay Area cities have higher minimum wage rates than the state, given the high cost of living. California’s minimum wage in 2022 is $15 an hour for companies with 26 employees or more and $14 for businesses with 25 or fewer employees. The minimum wage will rise to $15 for all businesses in 2023.

While the council indicated it wanted a catch-up provision, no timeline has been set for when it would occur or at what rate. City Manager Drew Corbett said a provision would likely happen over several years, with market conditions determining when it would occur. None of the cities in the area with a CPI cap currently have a catch-up provision. The council also decided against decreasing the minimum wage through a downward adjustment through the CPI.

curtis@smdailyjournal.com

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