Business Owners May Not Like the Wage Hike, But Fredi Martinez Is Smiling
Employees appreciate the higher minimum wage, which economists suggest will pay off in the long term.
Fredi Martinez, likes the extra money. But the manager of this Arco station says he’s had to reduce employees’ hours.
Photo by Ramona d’Viola
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Fredi Martinez can buy his brother school supplies and treat his family to dinner, thanks to Oakland’s new minimum wage increase.
Martinez, a 20-year-old Burger King employee, lives with his mother and brother in a studio apartment in East Oakland. They’ve lived around 77th Avenue and International Boulevard since he was in ninth grade. Martinez said his abusive father is long gone, and as a result, Martinez has had to work to keep his family afloat.
“I’ve been working since I was 10 years old,” said Martinez, who was born in Mexico but raised in the United States. “My mom takes care of the rent, but she doesn’t always have any money left over for food, so I can help with that. And my brother, who’s a different kind of person—he’s special—I can now buy him school supplies, like pencils, backpacks, and money for field trips. … When I have extra money, sometimes I take my mom and brother out for dinner.”
Martinez once wanted to be an architect. “I used to get good grades,” he said. But his family situation made it difficult to pursue that dream. “Books and school costs so much money,” he said, glad that the extra $3.25 an hour has allowed him to help out his family.
Other than a few more dollars in his pocket, nothing has changed with his employer since the new wage law went into effect in March, said Martinez, who was recently promoted to assistant manager, overseeing other employees.
Some local small-business owners, however, are feeling the pinch.
“It’s simple; my payroll increases, and so I’ve had to raise prices,” said Vikram Singh, manager of the Arco gas station at 52nd Street and Shattuck Avenue. “The problem is that we’re right on the border with Emeryville, so now people just go a few blocks away to get gas.”
Emeryville recently began considering raising its minimum wage to $14.42 per hour effective July 1.
Singh called the Oakland boost—which raised the minimum wage from $9 an hour to $12.25—too much, too quickly. He believes the increase should have been more gradual, explaining that he’s had to reconfigure his employees’ hours to keep margins high and Arco corporate happy. For their part, Arco’s higher-ups have told Singh that they’ll lower the cost of gas, although, he said they haven’t yet.
Enactment of Oakland’s new labor law prompted a somewhat predictable backlash from small-business owners. But experts agree that three months after it has taken effect, it is far too early to make sweeping judgments about the law’s efficacy and influence on local and regional economies.
Ultimately, those experts said, gas stations and other businesses will make more money. Since low-wage jobs are typically associated with high turnover and low morale, a wage bump will actually be a net positive for businesses in the long run, said William Rodgers, a professor of economics at Rutgers University.
“You may see employers that are very positive about the wage increase,” Rodgers said. “Bumping the wage above $9 an hour, employers will see better, harder-working employees, with better morale. Effort improves; productivity improves; growth is exceeding the wage growth. Employers shouldn’t mind the new growth and productivity. It’s not just Oakland—a whole host of low-income workers may head there to work.”
The law itself is straightforward. Oakland’s Measure FF raised the lowest wage and added a provision for sick days, accruing at the rate of one hour of paid time off for every 30 hours worked, capped at 40 hours for businesses with fewer than 10 employees and 72 hours for larger businesses. Future wage increases are tied to the Consumer Price Index, a basket of common items such as food and housing that economists use to measure cost-of-living changes.
The measure will have direct fiscal consequences for city government, a major employer that has carefully quantified the wage increase’s impact. The higher wage will mean about $500,000 in raises for the city’s lowest earners and an additional $1.5 million to raise wages for other city employees to maintain their pay-scale hierarchies within job classifications. This comes at a time when Oakland faces a major deficit.