Small businesses worry as city votes to raise minimum wage

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While Berkeley’s City Council unanimously passed a city ordinance Tuesday night to raise the minimum wage, some local businesses are concerned for the future.

A second and final reading of the minimum wage ordinance — which will increase the city’s minimum wage to $12.53 per hour in the next two years — passed with no amendments or modifications. Berkeley’s minimum wage will rise to $10 by October, $11 in 2015 and finally $12.53 in 2016. On July 1, the state is raising the minimum wage in California to $9.

The ordinance to increase Berkeley’s minimum wage of $8 was hatched at the council’s May 20 meeting and unanimously passed on its first reading June 10.

Councilmember Kriss Worthington argued that $12.53 is not a living wage but acknowledged that Berkeley is helping to create an East Bay minimum wage standard by joining other East Bay cities, which are also considering plans to raise their minimum wages.

“For my constituents, it’s definitely positive because across the country, most of the people on minimum wage are elderly and female, but in Berkeley, there are quite a few young people and students who get the minimum wage,” Worthington, who represents District 7 — which is largely composed of student-aged residents — said.

But Worthington agreed with the view of the Commission on Labor that large businesses should increase the wage immediately, while small businesses should be allowed more time to adjust.

Smart Alec’s Intelligent Food, a restaurant on Telegraph Avenue, is concerned about keeping its operations afloat as employee wages are increased. Smart Alec’s manager Maribel Perez anticipates that she will have to increase the wage of half of her employees.

“It’s good for the employees but not for the business,” Perez said. “We barely make enough profit to pay rent and everything else.”

Councilmember Gordon Wozniak expects that small businesses and restaurants in particular may struggle with the minimum wage increase. Pappy’s Grill and Sports Bar, located on Telegraph, may not have enough money to distribute evenly to its kitchen staff.

“What I think will likely happen is that service will get worse in Berkeley,” said Alex Popov, the owner of Pappy’s. “Businesses don’t have extra money to go around.”

But Wozniak is confident that the city has ample opportunity to come to the aid of its small businesses. If the city can facilitate decreasing worker compensation costs and negotiate notoriously high commercial rent with property owners, there will be more resources to raise the minimum wage, he said.

“It’s important that the city works with the business community to find greater ways to help them thrive and look at the range of problems they face,” Wozniak said. “The community loves small businesses.”

Contact Natalie Meier at [email protected] and follow her on Twitter @nat_meier.