City Council Passes Living Wage Ordinance Amid Strenuous Budget Debate
Wednesday, April 13, 2005 | After nearly six hours of debate that pitted the city’s fiscal crisis against the budgetary woes of some of the region’s lowest-paid workers, the City Council voted to make the city of San Diego the last major city in California to set a minimum payment for at least some of its employees.
By a vote of 5-to-4, the City Council chose to force city contractors to pay such workers as janitors, landscapers and security guards a minimum of $10 an hour. The wage would rise to $12 an hour if health care benefits aren’t provided to the employee. The measure, which is estimated to impact approximately 2,000 workers, won’t go into effect until fiscal year 2007 in order to ease its financial impacts.
Mayor Dick Murphy and council members Scott Peters, Brian Maienschein and Jim Madaffer voted against the measure. Voting in favor were council members Toni Akins, Donna Frye, Ralph Inzunza, Tony Young and Michael Zucchet.
The decision marks the accomplishment of at least one of the goals of a two-and-a-half year campaign by labor and faith leaders to nudge taxpayer dollars toward paying wages that don’t leave workers below the poverty line.
Atkins led the drive to pass the ordinance on the council.
The discussion was highlighted by a lively debate over the appropriateness of adding costs to the city scrolls at a time when it is mired in perhaps its greatest fiscal crisis, though estimates of its annual costs varied considerably.
“An increase to our city budget that is less than 1 percent is worth increasing the quality of life of thousands of our city’s working poor,” said Young, who was figured to be the deciding vote at the beginning of the day.
In the coming months, the city must take the first steps towards taming a crippling $1.37 billion pension deficit while grappling with between $500 million and $800 million in future retiree health care costs that have to date gone unfunded. It also must close an estimated $50 million budget gap by June – potentially using layoffs and deep cuts in basic city services – and complete its fiscal year 2003 and 2004 audits, long-delayed by errors and omissions discovered in the city’s financial disclosures. Federal authorities are also investigating city finances and politics.
That laundry list of fiscal problems, as well as the looming threat of salary freezes and other cuts for city workers, was cited by a number of the measure’s opponents on the council and in the business community.
“I really think by adopting this today we are sending the wrong fiscal message in so many ways,” Madaffer said.
The City Manager’s Office has estimated that the measure could cost between $3.4 million and $5.3 million in fiscal year 2006, which begins July 1. However, the organized labor officials who crafted the proposal estimate it will cost nothing in 2006, $1.4 million in 2007 and $2.9 million in 2007.
But aside from the simple budget numbers, the crowd of supporters that totaled more than 100 said the living wage ordinance was the right thing to do in a region where affordable housing, gas prices and overall cost of living have outpaced wages.
“San Diego risks having an economy where the great majority of the people will be struggling to get by,” said Alan Gin, an associate professor of economics at the University of San Diego who supported the measure. He said that of the 21,000 jobs added in San Diego in 2004, an estimated 70 percent were low-income.
Many from the business community who came to speak against the measure said now is the wrong time to be considering such a measure.
Kevin Sullivan, owner of the ARCO gas station that sits on city property at the Sports Arena, said such a mandate would drive his costs up by $100,000 a year. Ernie Hahn, president of the group that operates the Sports Arena, predicted the measure would likely put the Sports Arena out of business.
“This change you are making to my business is absolutely devastating,” Sullivan said.
Under the ordinance, the following city contractors would be forced to pay the new wage:
– Any entity that receives more than $500,000 in financial assistance from the city, such as the San Diego Convention Center, the San Diego Regional Economic Development Corp. and the San Diego Convention and Visitors Bureau, beginning in fiscal year 2007.
– Service contractors with contracts of more than $25,000, such as businesses that provide the city with janitorial, landscaping or security services. Service contractors will be affected beginning 2007.
– The nonprofit organizations that do more than $25,000 in business with the city that have more than an 8-to-1 ratio between the salary of their highest-and lowest-paid employees. This stipulation takes effect in 2007.
– City facilities, such as the Sports Arena (now known as the iPayOne Center), Petco Park and Qualcomm Stadium. Contractors at such facilities will have to obey the ordinance beginning in 2008.
Despite the massive budget woes of the city, supporters argued that taxpayers end up paying for poverty wages one way or another through the social services that low-income workers are forced to utilize.
“A worker who serves a hot dog and a Coke at a ballgame can’t even afford to buy a hot dog and a Coke,” said Midge Costanza, president of the Midge Costanza Institute for the Study of Politics and Public Policy.
Please contact Andrew Donohue directly at