Bakersfield restaurateur Rick Mossman hadn't even finished drinking his daily cup of orange juice when he noticed a pair of customers sitting at the counter reading the newspaper and snickering behind his back.
When he asked them what was so amusing they pointed out that the minimum wage had just gone up, and with it, his labor costs. But on that day, Mossman got the last laugh.
"I said, 'Well, now, actually you're spending more money because the price of your coffee just went up,'" said the owner of Mossman's Coffee Shops and Catering Co. "They were incredulous."
This happened several years ago, but it could just as easily happen today. As of Jan. 1, the state's minimum wage is up another dollar per hour as California moves closer to its goal of a $15 per hour minimum in 2023.
A LIVING WAGE
Across the state, employees in a variety of entry-level jobs will earn more money per hour than they did last week, ostensibly increasing their buying power and expanding economic opportunity for the state's lowest-paid workers.
Workers' rights advocates say it's a matter of equity and necessity: As the cost of living continues to increase, so should the state's minimum pay.
Local small-business owners tend to see it differently. For them the wage change — from $12 per hour to $13 for companies with 25 or more employees or from $11 to $12 for those with fewer than 25 — will require making some sort of adjustment. What kind of adjustment that is and how successful it will be may depend on the business.
"It’s going to cripple a lot of small businesses," said Nick Hill III, president of the Kern County Black Chamber of Commerce. "Maybe they’ll be able to adjust. It depends on the volume of the business and the nature of the business.”
Mossman said he'll have to raise his menu prices but that he also plans to cut hours across the organization, meaning his managers will have to seat customers more often instead of relying on hostesses every time.
He also expects to raise his cooks' pay, even though they earn more than minimum wage. They're generally longtime employees, he said, and he thinks it's the right thing to do.
Retail store owner Kerry Ryan asserted he doesn't have the option of raising prices. Go above the price posted on the internet and you risk losing business, he said.
But the owner of Action Sports doesn't keep people working at minimum wage much beyond their training period, so he said the wage increase won't affect his business much. If anything, he said he'll simply absorb the wage increase.
Even so, everyone wants a raise when the minimum wage goes up and he said that creates unrealistic expectations. He said his focus becomes ensuring employees arrive to a positive work environment every day.
"I think when you have happy employees and the environment you create for them is positive, that the wage is more negotiable, if you will," Ryan said. "It's a lot more fun to work for less money when you're in a great environment."
Bakersfield training and development specialist Robin Paggi said by email many businesses will have no choice but to take a harder line on overtime. Some will have to trim their payrolls as well, she said, and for them there may be no option but to pay out additional overtime.
She advised business owners in that situation to look for creative ways to save money, such as doing away with employee perks such as free food and beverages. New vending machines might be an option in that case, she said.
Hill recommended business owners consider cross-training employees to make them more efficient in case layoffs become inevitable. Another way to tighten up on controllable costs might be to switch to making deliveries in a van instead of a truck, he said.
"Some people are going to be laid off and some people are going to find a way to weather the storm,” he said.
For local farmers, the wage increase is just the latest in a series of regulatory changes impacting agriculture.
The Kern County Farm Bureau's executive director, Ariana Joven, pointed to the new requirement that ag employers with more than 25 workers pay farmworkers overtime after nine hours in a single day or more than 50 hours in one workweek. That standard is scheduled to change in coming years, raising growers' costs each time.
"Our members are often price-takers, not price-makers, and increased costs such as minimum wage and ag overtime will have a negative impact on businesses and their ability to retain quality employees," she said by email.
John Moore III, a nut, citrus, carrot and potato grower in Arvin, said he can't afford to bring on more people and will have to cut his workers' hours. The more labor costs rise, he said, the stronger the pressure on him becomes to switch to crops that can be planted and harvested by machine.
"You look to commodities that take less labor," he said. "Really, it’s an increase in mechanization — anything you can do to limit the amount of labor you have, you’re going to try to do.”