TITLE
Recommendation to receive and file the recommendations of the Economic Development Commission and the report from the Los Angeles Economic Development Corporation titled "Considering Minimum Wage Policy in the City of long Beach: Theory, Practice and Potential Implications;" or
Direct City Manager to provide additional information relative to the implementation of a minimum wage policy in the City of Long Beach; or
Direct City Attorney to prepare an ordinance for the implementation of a minimum wage policy in the City of Long Beach to be returned to the City Council for its first reading. (Citywide)
DISCUSSION
On August 11, 2015, the City Council directed the City Manager to request a report from the Los Angeles County Economic Development Corporation (LAEDC) regarding:
• The feasibility and potential benefits and risks of implementing a Citywide minimum wage policy in the City of Long Beach (City); and
• Proposals for incentives, tax breaks, fee reductions and/or process improvements to assist businesses and non-profit organizations in complying with a higher minimum wage; and
• Working with the City's Economic Development Commission to take public input, review the study's findings and make recommendations to the City Council.
On September 15, 2015, the City Council authorized the City Manager to execute an agreement with LAEDC to conduct and deliver a report regarding the potential implications of a minimum wage policy for the City (Report) (Exhibit A). The scope of the Report included a public outreach and participation model in the form of six public meetings for the receipt of public comment on issues or concerns regarding the implementation of a minimum wage policy in the City. Three of the meetings occurred during the preparation of the Report and were hosted by the Economic Development Commission, the Office of the Mayor, and the Economic Development and Finance Committee. The remaining three meetings were hosted by the same entities after the release of the Report. The LAEDC was in attendance at all six public meetings and tracked the comments and concerns raised in public testimony.
The Report was released on November 13, 2015, and was distributed to members of the City Council, Economic Development and Finance Committee and the Economic Development Commission. Additionally, the Report was made available on the City's website at:
At its regularly scheduled meeting on November 24,2015, at which the Economic Development Commission continued to discuss the impacts of a minimum wage policy, and solicited additional public testimony on the issues, the Economic Development Commission scheduled a special meeting on a minimum wage policy for December 14, 2015.
At the December 14, 2015 meeting, the Economic Development Commission further discussed the benefits, detriments and unintended consequences of increasing the minimum wage, and solicited additional public testimony. At the conclusion of the December 14, 2015 meeting, the Economic Development Commission then scheduled another special meeting to be held on January 6, 2016.
On December 22, 2015, the LAEDC released a memorandum regarding Supplemental Information related to the Report (Supplemental Memo) (Exhibit B). The Supplemental Memo distributed the original survey results included in the Report, weighted by the size of the businesses surveyed. It was expected that the weighted survey results would more specifically identify impacts of a minimum wage policy on businesses by the number of employees. Additionally, the Supplemental Memo included a summary of public comment and testimony from the public meetings held on November 17, 20 and 24, 2015, as a companion to the Report.
On December 31,2015, City staff released a memorandum to the members of the City Council titled "Minimum Wage Ordinance Fiscal Impact and Recommendations" (Fiscal Impact Memo) (Exhibit C). The Fiscal Impact Memo broadly analyzed the impacts of a minimum wage ordinance that mirrored the City of Los Angeles Minimum Wage Ordinance. Four areas of potential budget impacts were analyzed: 1) staffing costs due to increasing City employee salaries to minimum wage, 2) contractor costs from City contractors potentially passing through increased cost of their staffing to the City, 3) costs from City enforcement program options related to minimum wage, and 4) potential impact of possible small business minimum wage incentives.
On January 6, 2016, the Economic Development Commission held a special meeting to further discuss a minimum wage policy, and formulate recommendations to be submitted to the City Council for its consideration. Spanish translation services were made available. Two presentations were made at that meeting. The first was from the Economic Roundtable regarding their October 2015 report titled "Long Beach Rising, A City That Works for Everyone." The second was from the Long Beach Council of Business Associations, in conjunction with the Downtown Long Beach Associates, titled "Survey on Organization Impacts of a Minimum Wage Increase in Long Beach." Considerable public testimony was received at this meeting. The Economic Development Commission considered all of the relevant data and testimony, deliberated for some time over benefits, deficits and unintended consequences of a minimum wage policy and formulated recommendations for submittal to the City Council for its consideration of a minimum wage policy in Long Beach.
Recommendations of the Economic Development Commission
The following elements of a proposed minimum wage policy are submitted to the City Council from the Economic Development Commission for its consideration:
• Beginning on January 1, 2017, the minimum wage in the City shall be $10.50 per hour;
• Beginning on January 1, 2018, the minimum wage in the City shall be $12.00 per hour;
• Beginning on January 1, 2019, the minimum wage in the City shall be $13.00 per hour;
• Small businesses and non-profit corporations shall receive a one-year delay in implementing each of the elements of the minimum wage policy; and
• Small businesses shall be defined as a business with 25 or less employees.
In addition, the Economic Development Commission requests the City Council's consideration of the following items in their discussion:
• City Council to take a leadership role in seeking to change State legislation regarding tipped employees and evaluate whether this can be controlled at the local level;
• City Council to consider sick days and wage theft enforcement;
• City Council to consider requesting a report to be presented to City Council in 2021 that evaluates the impacts of the minimum wage policy after complete implementation; and
• City Council to consider and explore actions that would help mitigate negative effects on businesses and training programs resulting from a higher minimum wage.
Considerable time has been invested by residents, businesses, corporations, employers and employees in providing testimony, guiding the process, identifying the benefits, detriments and unintended consequences, and helping the Economic Development Commission in articulating recommendations. While opinions on a minimum wage policy are wide and varied, and data on the economic impacts of minimum wage policies are few and imprecise, the preponderant position of the stakeholders was to support a reasonable minimum wage policy.
In that regard, staff believes the recommendations of the Economic Development Commission as presented herein are a viable framework from which the City Council may start its deliberations on a minimum wage policy for the City.
This matter was reviewed by Deputy City Attorney Amy R. Webber on January 7, 2016 and by Budget Management Officer Victoria Bell on January 8,2016.
TIMING CONSIDERATIONS
City Council action is requested on January 19, 2016, in order to provide sufficient time for smooth implementation of the elements of a minimum wage policy.
FISCAL IMPACT
The potential costs of a minimum wage policy for the City was analyzed and documented in the December 31,2015 Fiscal Impact Memo. Cost estimates on staffing, contracts, enforcement and incentive programs were included in the report based on various assumptions. In general, costs were based on mirroring the City of Los Angeles Minimum Wage Ordinance that increases minimum wage to $15.00. The report also provided some preliminary costs for increasing the minimum wage to $13.00. If the City Council directs the City Attorney to prepare a minimum wage ordinance for the City, the costs and potential budgetary impact will be updated based on the specific parameters of the Ordinance, and provided to the City Council for the first reading of the Ordinance.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
MICHAEL P. CONWAY
DIRECTOR OF ECONOMIC AND PROPERTY DEVELOPMENT
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER