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Berkeley Nixes $19 Minimum Wage in Favor of $15

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NEW YORK (CNNMoney) — After months of anticipation, the City Council of Berkeley, Calif., decided not to take the plunge on a proposed $19 minimum wage when it met Tuesday evening.

Had the council given the go-ahead, the $19 minimum would have been the highest in the United States by far.

Council members opted instead to have staff draft an ordinance based on an alternate proposal put forth by four council members. That proposal calls for a gradual increase to $15 by 2018 for big businesses and by 2020 for small businesses, defined as having 55 or fewer full-time employees.

That’s according to Polly Armstrong, the CEO of the Berkeley Chamber of Commerce, who was at the meeting.

Berkeley’s current minimum wage just reset to $11 an hour, up from $10 previously. And it’s set to rise again to $12.53 by October 2016.

Should the new proposal gain final approval, the minimum hourly wage would still rise to $12.53 by 2016, but then keep going to $13.70 by 2017 and to $15 in 2018 for big businesses, adjusting for inflation thereafter.

The wage hike would be slower for smaller employers: From $12.53 to $13 to $13.60 to $14.25 and finally to $15 by 2020.

A $15 minimum would put Berkeley’s low-wage worker pay more on par with that in neighboring San Francisco and Emeryville.

But Armstrong said once the ordinance is drafted, the council will still have an opportunity to make changes. Her expectation is that they will stick with the $15 an hour, but may opt to change how quickly it takes effect.

In any case, it would be $4 less than a proposal put forth by the city’s Labor Commission. That proposal would have raised the minimum wage to $13 an hour by October 2016 and then increase it by $1.50 a year until it reached $19 in 2020. Thereafter it would be adjusted for inflation.

The rationale: Workers need to earn a living wage and the cost of living in Berkeley has become very high, even for those with middle incomes.

The minimum wage at its current level “puts people in untenable positions of having to have two jobs,” said Wendy Bloom, a resident and registered nurse, who also chairs the Labor Commission.

Even then, Bloom said, it’s tough to get by, especially as people working in Berkeley have to move farther and farther from their jobs because housing is so expensive.

The median home value is now $971,100 in Berkeley, and the median rent is north of $3,600, according to Zillow.

“You really can’t live on $19 even,” Bloom said.

Advocates for a higher minimum wage say it isn’t just an added expense for business. It actually can help businesses because workers will spend the extra money in their local economy.

Business owners, however, were concerned that raising the minimum wage by more than 50% could mean higher prices, fewer jobs for entry-level workers and some small businesses going belly up.

“You’ll end up with a city of chain stores and restaurants instead of the mom-and-pop stores we all love,” Armstrong said.

Even though the council backed away from the $19 idea for now, Armstrong said there’s nothing preventing the council from coming back in a couple of years to raise the wage again.