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CC - ACTION ITEM: (1) Authorization to Prepare and Issue a Request for Proposals (RFP) to Conduct an Economic Impact Study of a Potential Minimum Wage Ordinance on the City’s Economy; and (2) Direction to the City Manager as Deemed Appropriate.
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Meeting Date: July 10, 2023
Contact Person/Dept: Onyx Jones/City Manager’s Office
Phone Number: (310) 253-6023
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments: Yes [] No [X]
Commission Action Required: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (07/06/2023)
Department Approval: John M. Nachbar, City Manager (07/05/2023)
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RECOMMENDATION
Staff recommends the City Council (1) authorize the preparation and issuance of a Request for Proposals (RFP) to conduct an economic impact study of a potential Minimum Wage Ordinance on the City’s economy; and (2) provide direction to the City Manager as deemed appropriate.
BACKGROUND
A movement to increase minimum wage per hour has gained momentum in many places across the country. With the federal minimum wage at $7.25 an hour, many advocates of raising the minimum wage have focused on the enactment of state and local minimum wage laws. The State of California recently enacted legislation that has increased the minimum wage statewide to $15.50 per hour in 2023; however, individual cities, especially in areas of the state with relatively higher costs of living have adopted local ordinances that establish a minimum wage greater than what was established by the state legislature.
The federal minimum wage is $7.25 an hour; the State of California’s minimum wage is $15.50, and below are examples of minimum wage rates in a few metropolitan cities in California:
• Los Angeles (Approved in 2016) - Effective 07/01/23 - $16.78/hr. •
• Santa Monica (Approved in 2016) - Effective 07/01/23 - $16.90/hr. •
• Long Beach (Approved in 2017) - Effective 07/01/22 - Hotel Workers - $16.73/hr.
• West Hollywood (Approved in 2021) - Effective 07/01/2023 - $19.08/hr. •
• Malibu (Approved in 2016) - Effective 07/01/2023 - $16.90/hr. •
• San Francisco (Approved in 2003) - Effective 07/01/23 - $18.07/hr. •
• San Jose (Approved in 2012) - Effective 01/01/2023 - $17.00/hr.
During the May 9, 2022, City Council meeting, City Council discussed the potential development of a Culver City minimum wage ordinance (MWO) and voted to create an Ad Hoc Minimum Wage Subcommittee (Subcommittee), appointing Vice Mayor Vera and Council Member McMorrin thereto.
The Subcommittee met on August 18, 2022, to discuss increasing the City’s minimum wage and its possible implications for residents, local employees, businesses and the community as a whole. The Subcommittee reviewed the minimum wage rates for 38 different cities within California and the steps that neighboring cities such as the City of Los Angeles and the City of Santa Monica have taken to implement their ordinances. Staff shared copies of the economic impact studies that were conducted by those neighboring cities. After discussing various aspects of the minimum wage ordinance, the Subcommittee Members requested that staff present two options to City Council for further direction:
Option 1: Advance the discussion of creating a MWO to address the immediate needs of minimum wage workers in the City, conduct community stakeholder meetings to receive input on the development of the ordinance. Based on information gathered from the stakeholder meetings, direct the Subcommittee, staff and the City Attorney’s Office to bring a draft ordinance to the City Council for consideration within the next six months.
Option 2: Hire outside consultants to conduct an economic impact study on the local effects of increasing minimum wage in Culver City including its impacts on the residents, workers and local businesses. Conduct community stakeholder meetings to receive input on the development of the ordinance and bring a recommendation to City Council based on the information received from the economic impact study, the stakeholder meetings, the Subcommittee, staff and the City Attorney’s Office.
During the September 1, t 2022 City Council meeting, Council instructed staff to schedule a Special Meeting that would allow Council to discuss in detail the implementation of a MWO that would raise the minimum wage in the City to $16.04.
At the January 23, 2023 City Council meeting, the Council reestablished the Ad Hoc Minimum Wage Subcommittee to further study the decision points required to draft a comprehensive ordinance, and in doing so, appointed Council Member Puza and Council Member O’Brien thereto.
On March 3, 2023, the Subcommittee met and reviewed the decision points, including types of businesses, business size, education, enforcement, oversight of the ordinance, and other decision points. The Subcommittee instructed staff to conduct further research and bring their findings back to the full City Council for further direction.
On May 16, 2023, at the end of the City Council meeting, Council member Dan O’Brien received three nodding heads to add a budget adjustment of $150,000 to conduct an economic impact study, hire a project manager, and consult with outside legal counsel to the Proposed Budget for Fiscal Year 2023/2024. On June 12, 2023, the City Council adopted the Budget for Fiscal Year 2023/2024 including the adjustment of $150,000.
DISCUSSION
During the City Council meeting on June 12, 2023, the Council adopted the Budget for Fiscal Year 2023-2024 which included the adjustment funding an economic impact study; the report generated from the economic impact study will outline the local effects of increasing minimum wage in Culver City including its impacts on the residents, workers and local businesses. The study could also provide analysis/information that will facilitate discussions at community stakeholder meetings.
The selected firm will prepare one report and, as necessary, one supplemental report, addressing the following issues:
1. How to establish a required minimum wage in the City of Culver City, a factor for increasing the minimum wage annually, and provide timeline implementation options;
2. Provide a full analysis of the economic impact of the minimum wage proposal, including both the positive and negative effects on the City;
3. Provide an analysis of the minimum wage proposal's effects on the local economy, including the number of people who would benefit from an increased wage and the potential for additional tax revenues;
4. Provide an analysis of unintended consequences, including the reduction of workers benefits and hours;
5. Provide an analysis on job creation and job/business retention;
6. Identify specific industries that could experience negative impacts resulting from this proposal, and
a. Evaluate the pros and cons of categorical exemptions (such as learner’s wage, financial hardships, service industry including tipped employees etc.)
b. Other solutions to reduce potential negative impacts of the proposal on specific industries (including non-profits, small businesses, restaurants, hospitals/medical facilities, etc.)
c. Provide clear definitions of the industries identified, including definitions of non-profits and small businesses;
7. Provide an analysis for an option to establish a base and ceiling on automatic wage increases;
8. Provide a review of options for the enforcement of a minimum wage ordinance; and
9. Provide a comparison of cost of living, demographics, and median wage in the City of Culver City versus other similar Cities.
In addition, the Consultant will attend all stakeholder meetings, meetings of the Minimum Wage Ad Hoc Sub-Committee, and City Council meetings, to answer questions concerning their report and questions related to the subject matter of the report.
FISCAL ANALYSIS
The costs for an economic impact study could range between $70,000 and $100,000, depending on the scope of services, extent of legal issues, type of consulting firm, and level of community outreach involved. Sufficient funding for the study has been included in the Adopted Budget for Fiscal Year 2023-2024 in Account No. 10114100.619800 (Finance Administration - Other Contractual Services).
ATTACHMENTS
None.
MOTION
That the City Council:
1. Authorize staff to prepare and issue a Request for Proposal (RFP) to conduct an economic impact study of a potential Minimum Wage Ordinance on the City’s economy; and
2. Provide direction to the City Manager as deemed appropriate.