Have you noticed prices going up for Muni, BART and your local businesses?
On July 1, a new wave of minimum wage increases went into effect in San Francisco –
and this mandated increase in the minimum wage is having a ripple effect you might
not have seen coming.
Like most people in the San Francisco area, I agree that a gradual increase to what is
called a “living wage” is needed, especially when trying to make a living in the most
expensive city in the USA! This increase is a good thing for minimum wage earners,
who include part-timers, students and service industry workers.
Even at $15/hour, it will be extremely difficult for most minimum wage earners to make
ends meet, but it’s a step in the right direction as rents and other costs rise.
Since around 50 percent of minimum wage workers are in the restaurant industry, the
mandated wage increases disproportionately impact restaurant owners, who must
increase prices or reduce expenses to help make ends meet.
As the owner of Kawika’s Ocean Beach Deli – a small deli and gathering place serving the
neighborhood, Ocean Beach visitors and the gluten-free community with made-to-order
sandwiches – I am caught in this quandary. I am an Outer Richmond District resident
who tries to hire local talent, use local products and services and keep the money within
the Richmond to support our local community.
A little more than a year ago, the San Francisco minimum wage was $12.25 an hour. By
this time next year, it will be $15 an hour. Over the past two years, I and other small
business owners have tried to cope with mandatory wage increases by reducing staff
without compromising quality or service – and yet in the last 12 months my labor costs
have increased another 14 percent. (It doesn’t help that our vendors have also raised
prices to support their own wage increases.)
The biggest challenge for San Francisco small business owners is the pace of the
The state of California also mandated an increase to $15 an hour, but by 2023 instead
of 2018. That gives business owners more time to adjust so prices can increase gradually
over an extended timeframe.
With the fast-tracked mandate in San Francisco, the necessary price increases will
likely result in less patronage, leading to fewer hours and harder work for the already
lean staff, and even then we still might not meet the burden.
Although well intentioned and well deserved, fast-tracked mandatory increases in the
minimum wage have a ripple effect that appears to benefit no one. Fewer hours open for
a business means fewer sales. Fewer sales mean even higher prices, higher prices mean
fewer customers – a vicious cycle that can signal a death spiral for small businesses.
Certainly, some small business owners will learn to adapt with creative pricing, selective
purchasing and a number of other approaches that will allow them to survive, but these
success stories might be the exception.
How can you help? It may seem counterintuitive, but as prices go up while the necessary
adjustments take place, small business owners and staff need your patronage to survive.
Additionally, tipping, a mainstay in the American restaurant business, also needs to
continue at a healthy rate. At Kawika’s, we currently see five to 10 percent of our patrons
leaving something for our staff. If more of our patrons would tip a dollar on food orders,
my employees could be making a better, livable San Francisco wage today.
Please support your local family-owned businesses, as we are a vital part of the
community looking to keep our earned money within San Francisco and
with local residents.
David G. Nottage, III