A hotly debated proposal to boost the minimum wage for most San Diego tourism workers to $25 an hour will move forward, a City Council committee decided Wednesday following a hearing that drew dozens of supporters and critics, among them the Padres and SeaWorld.
If enacted, the wage mandate would affect thousands of workers in San Diego, from hotel housekeepers to ballpark ticket takers and zookeepers, some of whom would see their hourly pay rise by as much as 45% from the city’s current minimum wage of $17.25 an hour. In many cases, hospitality industry workers already earn well over the existing minimum wage.
The council’s Select Committee on Addressing Cost of Living voted unanimously to have the City Attorney’s Office work with Councilmember Sean Elo-Rivera’s office to draft a final ordinance that could eventually be brought before the full council later this year. Elo-Rivera, who chairs the committee, has been leading the push for such a measure since the beginning of this year.
“To be clear, San Diego is not great because of its weather or its attractions,” he said. “It’s great because of San Diegans — the housekeepers, the janitors, the audio visual technicians. These workers are the foundation of our local economy and too many of them are working full time and still living in poverty.
“… You’re why we’re here, to raise the wage for workers at San Diego’s largest hotels, event centers and amusement parks to $25 an hour. This is not radical, it’s what basic dignity demands in a city where it takes more than $30 an hour to just cover basic expenses of a single adult.”
Elo-Rivera’s office said it is hoping that a final draft of an ordinance, after discussions with interested stakeholders, could be ready by as early as September for council review. While the current draft calls for the wage hike to go into effect by the first of the year, with yearly increases tied to the consumer price index, Councilmember Marni von Wilpert asked that a phased-in approach be considered. That is the approach taken by the city of Los Angeles, which has approved a new minimum wage for hotel and airport workers that would gradually climb to $30 an hour by 2028.
While San Diego’s tourism worker wage proposal has broad support from local labor unions, the business community has fought it from the day it was unveiled, predicting job losses, business closures, and higher prices at hotels, amusement parks and games played at Petco Park.
A consultant’s analysis conducted for the local lodging industry predicted that a $25 minimum wage would eventually lead to the loss of 4,500 jobs.
“We’re committed to remaining in dialogue (with the city) about ways to mitigate the harmful effects of this proposal, and we will work as hard as we can to get the best outcome possible,” San Diego County Lodging Association Chairman Robert Gleason said after the hearing. He also is president of San Diego-based Evans Hotels. “We’ve prepared a legal analysis about a way to exclude tipped workers that would be compliant with California law and we will circulate that with the council offices and City Attorney’s Office shortly.
“The intent of the ordinance is to help the lowest paid workers, and the only ones who receive minimum wage at our hotels are the tipped workers who make between $40 and $60 an hour.”
For now, the business community is taking a wait-and-see approach as conversations continue about the final shape of the proposed wage law, said Chris Cate, president of the San Diego Regional Chamber of Commerce. But all possibilities are on the table, even a referendum, depending on what action the council decides to take.
“What we need to do as a coalition is meet and discuss as to what do we do next,” Cate said after the meeting. “I think that given the direction from the committee, there absolutely will be support to adopt a minimum wage for these industries. The question becomes what are we willing to do to respond to that. That’s part of the conversation, discussing petition gathering, a referendum, there will be all kinds of discussions we’re going to be having.”
A political action committee already has been formed by the California Hotel & Lodging Association to fight the wage proposal, and as of March, $50,000 had been raised.
Elo-Rivera’s proposal has undergone some changes since it was first proposed, including one that would exempt smaller hotels with fewer than 150 rooms. Some smaller businesses, though, in addition to large event venues like Petco Park, Snapdragon Stadium and Viejas Arena, would be affected, says Steve Pinard, owner of Action Sport Rentals. His business is a sub-lessee of several hotels on Mission Bay and San Diego Bay.
“We are not a multibillion-dollar out-of-town corporation,” he told the committee. “We are just a family-owned and operated water sports company that’s been around for over 30 years. My locations are at resorts but one issue I have is that other water sports companies that are right next door or across the street and not at a hotel will not be part of this wage mandate and that will cause a hugely unfair playing field going forward.
“Most of my employees are kids that are in high school home for the summer. For many of them it’s their first job. I simply cannot pay $25 an hour and survive and keep or create these jobs.”
Supporters of the $25 wage argued repeatedly during the hearing that those who are complaining the loudest about the proposal are large, well-heeled companies that can easily afford to pay their workers more.
“San Diego’s hospitality workers are the backbone of our tourism economy, but they’re barely surviving in the city they help make thrive,” said Greg Sowizdrzal, who heads the local International Alliance of Theatrical Stage Employees labor union. “This isn’t just about housekeepers and servers. This includes AV technicians, skilled professionals who run the systems behind our region’s largest conventions and live events. Companies routinely bill clients $165 an hour while paying technicians a mere fraction of that. That’s not a wage gap. That’s exploitation.”
A lengthy analysis of the wage proposal was prepared by the city’s Independent Budget Analyst, which acknowledged there are varying studies that draw different conclusions about the impacts of an industry-specific minimum wage hike. While it’s unlikely such a proposal will have much of an impact on the hotel room tax revenue the city receives, there will likely be higher costs that both consumers and companies will bear, but there will also be clear benefits for workers, the office concluded.
While the proposal would apply to thousands of workers, the Independent Budget Analyst doesn’t yet have an estimate of just how many, given the various categories of workers and changing definitions of what would be included as an event center, the office said on Wednesday.
“There are benefits to providing higher wages to affected workers, including an increased quality of life amid high costs of living, potential improved employee retention, and increases in consumer spending,” its report concluded. “There are also tradeoffs such as higher labor costs, potential job losses, and challenges for businesses to remain competitive.”
A gradual, phased-in approach, the report said, would help ease the effects of a “sharp 45% increase.”
The Padres pointed out during the meeting that the team already complies with the city’s living wage ordinance and will soon be paying its workers a minimum base wage of $21.06 an hour, making it “the highest mandated minimum wage in all of Major League Baseball,” said Diana Puetz, spokesperson for the Padres.
“This proposal would force our minimum wage to $25 an hour, potentially making Petco Park the highest wage venue in all of professional sports. No other team in a comparable city is held to this standard. The ordinance targets only certain venues and industries … and the city is exempting hundreds of its own employees, including janitors and event staff. If $25 an hour is what it truly what it takes to afford to live in San Diego, why doesn’t that apply to your own workforce?”
Councilmember Henry Foster III said he welcomes additional input from the business community but remains concerned that even at $25 an hour, which translates to $52,000 a year for a full-time employee, that is not enough to survive financially in high-cost San Diego.
“It was clearly indicated in the staff report that a living wage in the city of San Diego is approximately $30 an hour, and I believe that,” he said. “I think there’s data that supports that and I think this is the start of a much-needed conversation. As much as I like to say that small business is the heartbeat of our economy, if we do not have the workforce, that heartbeat stops. So we need to understand that.”