Close to Home: How to fund a living wage ordinance

A coalition of labor, faith, environmental, and community-based organizations has unveiled a proposed living wage ordinance for Sonoma County. The ordinance would require that both the county and large county contractors pay their employees a minimum wage of $15 per hour.

This would cover approximately 5,500 workers including park aids, security guards, janitors, landscapers, county fair temps, home care, recycling and other low-wage workers.

Jeannette Wicks-Lim, an economist at University of Massachusetts, has estimated that implementing the law would cost the county approximately $11 million to $12 million a year, or less than 1 percent of the $1.4 billion annual county budget.

One hundred and forty cities and counties nationwide, including the counties of Marin, San Francisco, Santa Clara, Santa Cruz, Ventura and Los Angeles, have approved living wage laws. Why? Because the state minimum wage of $9 per hour is less than half of an actual self-sufficiency or living wage.

According to the California Budget Project, in 2013 for two parents working full time to support two children and to pay for food, housing, health care, child care and transportation in Sonoma County (without relying on any public assistance programs), each parent must earn $20.51 an hour to achieve an annual income of $85,336.

Between 2010 and 2020, two out of five new jobs created in the county would pay less than $15 an hour, according to the California Employment Development Department. The expansion of low-wage service sector employment is one of the main reasons why one in three Sonoma County families in 2013 were working poor, with at least one member reporting income from work but earning less than $47,100 annually for a family of four.

How can the county pay for the wage hike and ensure that taxpayer dollars do not create poverty-wage jobs?

First, property, sales and hotel bed tax revenue increases have ranged from 3 percent to 12 percent since June 2014, and the economic outlook is promising. The Board of Supervisors recently set a county general fund reserve policy of 15 percent, and in 2014-15 the reserve balance was 8 percent. The board transferred $5 million to reserves last year and tentatively agreed to add $5 million to $8 million annually over the next five years to reach the 15 percent reserve-level goal.

However, in 2014, the Santa Cruz County auditor-controller surveyed general reserve fund policies for Bay Area counties and reported an average reserve level target of 10 percent. A number of Bay Area counties, such as Marin, have set a reserve policy of 5 percent. The report concluded that a reserve-level goal of between 5 and 10 percent was prudent and earned the highest Double-A credit rating from Moody’s Analytics. To fund the living wage law, the board could reconsider its 15 percent reserve policy or stretch out the time frame from five to 10 years.

Second, the county should freeze the hiring of managers. During and after the Great Recession- -from 2007 to 2011 - 580 line staff positions were eliminated, along with 45 management positions, according to county data. Since 2011, 380 line staff positions have been restored, as well as 75 management positions. There are currently 250 fewer line staff positions than there were in 2007 but 30 more managers.

In 2001, the ratio of line staff employees to managers at the county was slightly more than 7-to-1. By 2007, it had been reduced to 6.4-to-1 and has declined further to the current 5.6-to-1. The board should consider increasing the ratio back to historic levels.

Third, the Board of Supervisors will likely place a measure on the 2016 ballot to increase the hotel bed tax (or transient occupancy tax, TOT) from 9 percent to 12 percent, equivalent to the TOT rate in neighboring counties such as Napa. Twenty-five percent of annual TOT revenue is discretionary general fund revenue that could help offset the cost of a living wage law.

Santa Clara County recently implemented a $19 per hour living wage law, and San Francisco raised its citywide minimum wage to $15 an hour last November. It’s time for Sonoma County to join the nationwide and Bay Area economic justice movement to raise the wage floor to $15 an hour.

Martin Bennett is instructor emeritus of history at Santa Rosa Junior College and co-chair of North Bay Jobs with Justice.