SAN DIEGO — The new year comes with a new minimum wage for Californians and the change presents an extra challenge for some employers amid the ongoing pandemic.
In the city of San Diego, all employees will be bumped up to $14 an hour. The same goes for businesses with 26 or more employees county-wide. Companies with 25 or fewer employees will now pay a $13 minimum wage.
“There is no getting past the fact an increase in the minimum wage does raise the cost of doing business, and therefore creates an additional burden on employers,” employment lawyer Dan Eaton said. “Particularly in certain industries that are finding things particularly challenging now, as we are still in this pandemic.”
While the incremental increases to the minimum wage since 2017 have been an effort to pay Californians more to keep up with the cost of living, the other side of the coin is an added cost for hard-hit businesses, including those in the food and beverage industry.
“In the restaurant industry, I think you’ll find that we will actually lose positions to automation, or limiting services that people once got that they won’t get anymore in a restaurant, to make up for this, because we just can’t absorb it. It’s impossible,” Mike Georgopoulos, partner at RMD Group, said.
RMD Group operates eight restaurants and businesses in Gaslamp Quarter. Georgopoulos said the extra dollar an hour adds up, especially for employees who are also earning tips. He explained the fiscal impact last year’s minimum wage increase had for one area inside one of his restaurants.
“Twenty-five thousand dollars just in the kitchen, annually. So, now you can add that to the front of house and into the administrative staff, it really does add up. With an already very slim margin, it’s hard to continue to absorb these,” Georgopoulos said.
He said he supports wage increases as the cost of living in San Diego continues to rise but he believes California should make adjustments for tipped employees, as many other states do.
The minimum wage is set to reach $15 an hour for all employees in California by 2023.