Minimum Wage Battlefield : Proposed Pay Increase for Low-Wage Workers Is a Sore Point for Employees and Businesses

Ever since the Clinton Administration proposed raising the federal minimum wage from $4.25 to $5.15 an hour, the issue has produced a rhetorical feast in Washington. But for a true taste of how the President’s embattled plan plays with the people it would actually affect, belly up to the gleaming glass takeout counter at Solley’s Delicatessen.

See that $8.10 corned beef sandwich on the menu? Well, expect to pay $8.5O for it if the minimum-wage hike goes through, said Sol Zide, owner of the popular Woodland Hills eatery and its sister restaurant in Sherman Oaks. Zide, 52, estimates that with a staff of nearly 200, the hourly increase and its accompanying taxes would add about $7,000 to his weekly payroll. “That’s a lot of bagels,” in his words, making higher prices at the two Solley’s inevitable.

From her regular station across the restaurant, however, waitress Jacquolyn O’Neill, has done some math of her own.

On a good day, O’Neill, 47, a veteran hash slinger with a gritty, no-nonsense attitude, can make as much as $125 in tips. During her five years at Solley’s, that income has helped her maintain many of the accouterments of a middle-class life--a VCR, car payments and a $900-a-month condominium in Canoga Park she shares with her 25-year-old twin daughters.

Yet based on her meager hourly wages, her woefully thin W-2 statements present serious obstacles. Excluding tips, her gross earnings for a workweek of slightly less than 30 hours are $115.66, which means she can not qualify for a home mortgage. If illness or injury forced her to stop working for an extended time, her disability payments would be based on her minimum wage, barely enough to cover the cost of a Band-Aid after the regular bills are paid. And health insurance? Zide says he can’t provide it and O’Neill says she can’t afford to buy it.

Of the haggling that has left Clinton’s proposal languishing in Congress, O’Neill said: “It’s like saying Jackie, you don’t deserve a raise. . . . I’m on my feet eight hours a day. I’m a working woman. I need all the money I can get.”

Welcome to the world of Southern California’s low-wage workers and their employers, a world where performance raises are dished out in 25-cent increments, where paid sick days, job satisfaction and security are in short supply and where the faces are in constant flux. It is a world far removed from free-spending Hollywood and the high-tech economy that experts say will drive America’s future.

From this lowly rung on the labor ladder, the competing claims of politicians and pundits that a wage hike would either help lift people out of poverty or fuel unemployment appear equally inflated. While employers here say they would have to charge their customers more but not lay people off, workers know that a 90-cent hourly increase, translating into only $36 more a week, won’t do much to fix their financial worries.

“If they raise the minimum wage, it won’t matter, because we will be paying more for everything anyway,” Michele Geotes said with a laugh. Geotes, 40, earns $5 an hour as a gas station cashier in Oxnard.

“Either my car will break down or I will have to renew my (car) tags. I’ll have to go to the dentist. The money will be gone before I can count it.”

The popular image of those earning near the minimum wage is one of teen-agers serving up hamburgers. The reality is much more complicated in California, where 1.3 million, or 11% of the state’s labor force, earned no more than $5.15 an hour in 1993, the last year for which statistics were available, according to the Economic Policy Institute, a Washington think tank. They are single mothers struggling to make ends meet, twenty-somethings just starting out and grown men whose bad fortune has required them to start over. They sell CDs at Tower Records, shoes at Payless and $60 flower arrangements at Conroy’s. They clean office buildings after hours and are already on-duty dishing out doughnuts when rush hour begins at dawn.

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Finding one of these jobs may not require much ingenuity, but living on a minimum-wage salary certainly does. Just ask James Nunez, 26, a Sun Valley resident who from the time he left high school drove a van for Lockheed Corp., eventually earning $9 an hour. Nunez became a casualty of the defense company’s downsizing in August, 1993.

After brief stints as a security guard and a truck driver, he started delivering flowers for a Conroy’s franchise in Burbank a year ago. Although he earned just $5 an hour until his pay was raised to $5.25 last month and receives no medical benefits, Nunez said he took the flower delivery job because it offered full-time day hours and a congenial atmosphere.

On a monthly income of $674 a month, after taxes, he attempts to support both himself and his mother, who cares for his baby nephew. The first thing he does when he gets his paycheck every two weeks is put $300 aside so he can make the rent on their two-bedroom duplex. A second part-time job he landed doing maintenance work at Johnny Carson Park in Burbank for nine hours each Saturday and Sunday is their salvation, just covering the cost of food and utilities, because it pays twice as much as Conroy’s, he said.

“It’s called managing your money perfectly,” Nunez said of his high-wire financial balancing act. “I got no credit cards. I don’t have a car. I haven’t been to a movie in two years. I bring my lunch from home instead of eating out.”

His buddies sometimes tease him because he never has the cash to go out on the town. “They say you work seven days, how come you never have any money?” he said. Nunez has applied for other jobs, but expresses no bitterness about his lot while he waits for something else to come through.

“I would like to have a better job but at least this is steady,” he said. “If I didn’t do it, I wouldn’t have what I got, which is not that much.”

In recognition of the state’s comparatively high cost of living, California historically has had a minimum wage that exceeds the federal one. The state Industrial Welfare Commission adopted a minimum wage of $4.25 in 1988, three years before the federal minimum wage reached that level.

The last time the Industrial Welfare Commission considered raising the state minimum was three years ago, when it rejected a proposed 25-cent increase on the grounds that California’s depressed economy could not absorb the shock. If Clinton’s proposal meets defeat in the Republican-controlled Congress, which appears likely, the state commission has promised to revisit the issue again, but a decision would not take place until next year.

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In the meantime, consumer price hikes have reduced the value of 1988’s $4.25 minimum wage to $3.12, according to Jack Kyser, chief economist with the Los Angeles Economic Development Corp.

The difficulty of maintaining a decent standard of living on declining wages is reflected in the tired, resigned face of gas station cashier Geotes. During a 25-year career that has included stints as a short-order cook, a maid, a bartender, a pizza delivery person, a school bus driver and a home health aide, Geotes has grown accustomed to unpredictable hours. None of those jobs offered fixed, full-time schedules, and at her peak Geotes worked for five different employers simultaneously, she said.

“I will do it for two or three years and then I burn out and quit everything and go on welfare. I wait a while and go back and do it over again,” said Geotes, a tall, robust woman with a daughter and son, ages 21 and 19, as well as a bachelor’s degree in home economics.

Her tolerance for uncertainty has served Geotes well during the year and a half since she started working as a $5-an-hour cashier at a string of Ventura County gas stations. Her current job at an Oxnard Shell requires her to work one 6 a.m.-to-noon shift, one noon-to-6 p.m. shift and two midnight-to-6 a.m. shifts. “Luckily, I can sleep in pieces,” she said.

In truth, Geotes is grateful for the work. In 1992, she was arrested for cocaine possession, a mistake that cost her a steady job as a Greyhound bus driver. With a six-month prison term on her record, she has had a difficult time finding anyone willing to hire her. She lives with her parents in their Ventura trailer home, feels miserable that she can’t help her own children financially, and vainly attempts to save enough to rent an apartment.

“I’ve given up thinking a job is going to lead anywhere. I’m just trying to survive,” she said.

Many low-wage jobs pay so little because they can be filled by people with no experience, poor English skills, little education or troubled job histories. But that is not always the case.

A visit to the North Hollywood office of the California Employment Development Department reveals plenty of positions demanding responsibility among the job listings: A Burbank preschool wants to hire a teacher’s aide for $5 an hour. A security company seeks unarmed guards to protect earthquake-damaged buildings for $5.50 an hour. And a Los Angeles medical firm has a receptionist’s position open at $5 an hour.

With the loss of high-paying aerospace and manufacturing jobs, “the percentage of low-wage earners is probably higher today than it was two to three years ago,” said Marvin R. Selter, chairman of the National Staff Network, an employee-leasing company based in Van Nuys. A higher minimum wage would affect more people, because employers would feel pressure to raise the salaries of those who were making slightly more than $5.15 an hour, Selter said.

Whether the state’s economy has rebounded sufficiently to handle such pressure remains subject to debate. Economists offer conflicting evidence on whether minimum-wage hikes improve employment by enticing unemployed workers to return to work or sacrifice jobs by increasing salary costs to employers.

Local employers agree that if the minimum wage is raised, they will simply pass the salary costs on to customers in the form of higher prices. They disagree, however, about how much of a problem that poses for them.

Andrew Kim, 31, owner of Bell Building Maintenance, an office cleaning company in North Hills, has about 120 workers who earn between $5 and $6 an hour. If his $5 workers make $5.15 under the proposed minimum, Kim would have to raise the salaries of his other employees by the same amount. In turn, he would raise prices he charges his customers by 5% to 10%, so a $300 job could end up costing $330. His clients undoubtedly won’t like the higher prices, Kim said, but will probably pay them if his competitors raise their rates as well.

“Personally, I think (the minimum wage) should go up,” Kim said. “I don’t think it is enough for anyone to live off of.”

But Solley’s owner, Zide, who opened his first restaurant 21 years ago, can tick off half a dozen reasons why small businesses like his remain too fragile to sustain an increase in the minimum wage. Although his sales have jumped 35% since his Woodland Hills restaurant was remodeled and began producing its own baked goods 2 1/2 years ago, higher coffee, produce and paper goods prices have cut into profits, as have the skyrocketing costs of business licenses and utilities, he said.

What bothers Zide, though, is not the extra 90 cents an hour his servers and dishwashers would get, but the additional 18 cents an hour he would pay to Sacramento and Washington in higher Social Security and workers’ compensation taxes. “Government does this for one reason, and it’s not to put more money into the pockets of the workers,” Zide said. “They are so desperate for money, they sit around thinking of ways to raise it without having to do anything.”

After the last minimum-wage increase in 1988, Zide passed part of the cost on to his customers and stopped allowing his employees to work overtime. At the same time, he began paying his cashiers and counter staff more than the minimum wage, to compensate for the fact they did not earn tips.

“Times were good in ‘88, that is the big difference. Times are tight now, and we don’t have the margins to absorb this kind of thing,” Zide said. “We’ll have to figure out how we can charge people more for the same product.”

As if on cue, a middle-age woman carrying a white paper takeout bag storms up to Zide and asks if he is in charge. “I feel it’s outrageous to pay $21 for two tuna sandwiches,” the customer grouses loudly. Zide starts to explain that fishing regulations designed to protect dolphins mean he is paying twice as much for top-grade tuna. But before he can finish, she is out the door.

“That is a perfect example of how the minimum wage is going to cost us customers,” he said.