By Sam Laird

Arsineh Vartanian is afraid to name her current employer, but for the past three years has worked in Santa Cruz as a table server at what she calls numerous “high volume restaurants and bars.”  On Nov. 7, she will vote yes on Measure G in an effort to raise the minimum wage in Santa Cruz from $6.75 to $9.25 an hour, a hike she says will go a long way toward providing a better life for her and fellow low-income workers.

“To have a decent wage that you can depend on would be a huge deal for us,” Vartanian said.

Vartanian said that while the peak tourism season typically provides full-time work and about $20 an hour after tips, the off-season can bring financial stress.

“After Labor Day, you might only get $10 in tips per shift, and be lucky to get 15 or 20 hours of work a week,” Vartanian said. “During winter, it can get really hectic trying to find hours and extra jobs.”

And, according to Vartanian, the stakes are even higher for un-tipped kitchen workers at her job, many of who have families to support.

“Where I work, every single kitchen person works two full time jobs, and most of them don’t have a single day off during the entire week,” Vartanian said.

Measure G, if passed, would make the city’s minimum wage one of the highest in the United States, an increase that would directly effect an estimated 4,000 workers.

Proponents of the measure call it a necessary step for economic justice.

Opponents point out flaws in the Minimum Wage Ordinance, such as the fact that it would only be effective within the city limits and require annual increases, and say that it would place a potentially fatal burden on local small businesses.

Tim Fitzmaurice, Santa Cruz City Councilmember and UCSC lecturer, believes the measure is a critical step toward giving the working poor a chance.
“This is the only way people can get a raise when they’re making minimum wage,” Fitzmaurice said.  “You can’t just walk up to your boss and say you want a raise when you’re making $6.75 an hour, because eventually you will get fired.  As a community, we need to set an example for justice and fair pay.”

While Ristorante Avanti owner Paul Geise agrees with the ideology behind Measure G, he feels it simply isn’t viable for small businesses trying to stay afloat.

“Everyone wants to pay people a good wage, but you can’t just pick a number out of a hat and say ‘okay,'” said Geise, a UCSC alumnus who opened the restaurant with his wife in 1987.  “Look how many places go out of business within the first year.  It’s not easy.”

Measure G would go into effect Jan. 1, 2007, and include annual percentage raises directly proportional to the prior year’s increase in the cost of living.  Non-profits and businesses employing 10 or fewer people would pay a minimum wage of $8 an hour for the first year, before being required to pay the same wage as other city employers beginning Jan. 1, 2008.

Federal minimum wage is currently $5.15 an hour. San Francisco and Santa Fe, New Mexico both increased their minimum wages to $8.18 and $9.50, respectively. The California minimum hourly wage is scheduled to be raised over the next two years, to $7.50 by Jan. 1, 2007 and up to $8 an hour the next year.

Washington State currently has the highest state minimum wage, and will increase by 30 cents to $7.93 by Jan. 1 2007.

Nora Hochman, campaign coordinator for the Campaign to Raise the Minimum Wage, believes Measure G will provide a desperately needed boost to workers who are typically left in the dust. Hochman points out that the federal minimum wage has not been raised in 10 years and, by the time recent legislation takes effect, it will have been six years since the state minimum wage went up.

“We have a four-part economy made up of business, consumers, workers, and a local government with regulatory oversight,” Hochman said. “When one part of an economy is really weak, that brings down everything else.  The Minimum Wage Ordinance will strengthen workers, and when you strengthen workers you strengthen the whole economy.”

Hochman is also vociferous in her support of the annual percentage increase, criticized as one of Measure G’s major flaws.

“Flat rate raises are like flat-lining a worker because you can end up dying on the vine waiting for a raise as the cost of living goes up,” Hochman said.

According to a study by Bay Area Economics (BAE), a firm specializing in urban economic and pre-development services, 62 percent of local businesses surveyed stated that the proposed wage increase would have “no impact” or “some negative, but manageable effect” on their business.  Six percent predicted a “positive effect,” and 29 percent reported a “very negative effect” on operations.  The study polled a random selection of 123 Santa Cruz businesses.

Despite the results of the BEA survey, opposition to Measure G amongst local businesspeople has been strong and visible.

The Locally Owned Business Alliance of Santa Cruz recently found what it deemed to be many “unintended but detrimental” consequences of Measure G.  According to its findings, as published in the Santa Cruz County voter information guide, Measure G would cost locally owned businesses and non-profits $12.5 million in the first year alone.  In addition, it would give a considerable advantage to national chains that can cover expenses at Santa Cruz stores with profits from other franchises, while also placing Santa Cruz businesses at a competitive disadvantage in relation to businesses in nearby cities that are not affected by Measure G.

The measure would cause the loss of over 70 local jobs at Goodwill Industries, a non-profit organization committed to preparing people for the workforce through training, employment at Goodwill, and placement in outside jobs.

Larry Pearson currently serves as Board Chair for Goodwill Industries of Santa Cruz.

“We actually serve three counties-Santa Cruz, Monterey, and San Luis Obispo,” said Pearson, who estimated the added wages in Santa Cruz would cost Goodwill between $220,000 and $240,000 per year. “Under Measure G, we would have to move many of our operations somewhere else outside the city of Santa Cruz simply because the cost of operating here would become too high.”

The restaurant industry would be particularly affected by Measure G.

“Payroll is the biggest cost in the restaurant business,” Ristorante Avanti owner Paul Geise said. “We’d be looking at an increase of $200 per day.”
Servers at Ristorante Avanti are paid $7.50 an hour, but can make up to $30 an hour after tips.  Dishwashers and other kitchen workers, meanwhile, don’t earn tips but make at least $10 an hour, meaning they would remain unaffected by the passage of Measure G.  Geise considers the dishwashers, many with families, to be the real “working class people” at his restaurant.

“According to income taxes, tips are income, but according to Measure G, they aren’t,” Geise said.  “It’s totally wrong that I’d be giving this raise to my highest paid people already, instead of the people in the kitchen who have kids to support.”

At UC Santa Cruz, wage increases would only go to employees at the three private sector businesses on campus-Joe’s Pizza and Subs, Tacos Moreno, and the Hungry Slug.

However, the Campaign to Raise the Minimum Wage’s Nora Hochman believes that pay raises in town would give campus unions a stronger bargaining position with the university, and may force UCSC to pay student workers more to keep them from leaving for higher paid jobs off-campus.

Dining hall employee Julie Thatsaphone supports Hochman’s hypothesis, and feels that she is representative of most of her coworkers.

“It’d be more worth my time to look for jobs downtown,” said Thatsaphone, a third-year student who has made $7.50 an hour for the past year at the College Eight/Oakes dining hall.  “When you’ve got rent and other things to worry about, why not go for an extra couple dollars per hour?”

Scott Berlin, director of Dining and Hospitality Services at UCSC, said that on-campus employers would wait and see what the effects of a Minimum Wage Ordinance were on operations before planning any response.  He also speculated that, if passed, Measure G could end up making it harder for students to find jobs in town at all.

“If it passes, everyone with a job in town already won’t be going anywhere,” Berlin said. “Plus, students may end up competing with people from Los Gatos to Watsonville who will want to come work in Santa Cruz.”

Geise pointed out that for many businesses, the passage of Measure G would effect more than just hourly wages.

“If your payroll goes up 20 percent, your workman’s compensation, social security, and disability all go up 20 percent as well, because they’re all based on payroll,” Geise said.  “So for businesses, it isn’t just the $2.50 minimum wage increase, its all those other costs as well.”

Another negative effect of Measure G for some is wage compression.  As the lowest paid jobs go up in value, workers with more experience and added responsibility may suddenly find themselves making only fifty cents or a dollar more than a worker arriving for their first day.  This often causes veteran workers to pressure upper management for raises of their own, which then leads to much greater overall operating costs for businesses.

However, the biggest negative element of Measure G for local businesspeople seems to be the annual cost of living adjustment.

“Every year there’s an increase, so if inflation increases at five percent a year, in 20 years our minimum wage will be almost $25 an hour,” said Pearson, who has owned and operated Pacific Cookie Company since 1980.  “The difference between the minimum wages here and elsewhere will be so substantial and so burdensome that it will kill small businesses.  Also, the cost of running a business here will be so great that businesses located within the city of Santa Cruz will become unsellable.”

Geise echoes many of the same sentiments.

“The only way to offset increased payroll is to raise prices and reduce hours of operation,” Geise said. “You’d have to reduce shoulder operations, meaning you might close for one day of the week or stop serving lunch.

Pearson is among the business owners who may have to close up shop if Measure G passes.

“We’d move our manufacturing as soon as our lease is up, just because there’s no way we could sell enough cookies to cover our costs,” Pearson said.

Ernesto Quintero, co-owner of Saturn Caf?¬©, is strongly in favor of Measure G.  Quintero feels the economic realities faced by Arsineh Vartanian and others make the decision a matter of conscience.

“My business partner and I feel pretty aware of how hard it is to survive on the minimum wage, especially with a family to support,” said Quintero, who estimated a 10 to 12 percent increase in his restaurant’s payroll. “We feel it’s a fair way to pay people and that, ethically, it’s the right thing to do.”

Saturn Cafe, which has been locally owned for 27 years, is made up of roughly 50 percent students and 50 percent local residents. Quintero said that a busboy or server at Saturn Cafe currently makes the minimum wage of $6.75 plus tips, while non-tipped dishwashers start at $7 an hour.

“There’s a lot of fear here among local businesspeople that, if this measure passes, we’ll be left in a losing battle with large corporations that have buying power and ad money we just can’t match,” Quintero said.

“But, as a community, we can talk about that,” he added.  “If customers came in and said, ‘we’re not going to go to big chains if you have to raise your prices a little bit, we’re going to support you and local workers,’ then a lot of that fear could be alleviated.”