Every month, UC Santa Cruz alumna Taylor Lara spends about $800 for living expenses. She works as a server at Pono Hawaiian Grill, where she earns minimum wage plus tips. She gets by each month but avoids adding new expenses to her budget, let alone building her savings account.
Lara graduated last spring and said things were much easier when she was a full-time student with financial aid to help pay the bills.
“Now I’m fully supporting myself,” Lara said. “But without that extra help, it’s hard.”
She hopes paying the bills will be less of a strain on her finances this upcoming year. On Jan. 1 Lara and thousands of California residents saw their hourly wage rise to $10 because of Assembly Bill 10 (AB 10), authored by Watsonville resident and assembly member Luis Alejo.
California legislators passed the bill in 2013, agreeing to increase minimum wage from $8 to $9 in 2014, and from $9 to $10 in 2016. Prior to AB 10, the minimum wage had been stagnant at $8 for six and a half years.
“[This] $2 increase from $8 to $10 means that by the end of the year, [minimum wage] workers will have a little over $4,000 more to make ends meet,” Alejo said.
Alejo worked with Rob Fairlie, chair of the UCSC economics department, to pass the bill. In September 2013 Fairlie testified in Sacramento in favor of AB 10. He could not be reached for a comment in time for press.
“[The increase] simply gives hard-working Californians dignity and respect, and more ability to provide for their families,” Alejo said in a press release. Inspired by his mother-in-law who is a mother of three, a grandmother of five and works two minimum wage jobs, Alejo is no stranger to the obstacles of supporting a family on low wages.
Alejo said over 90 percent of minimum wage workers are over 20 years old and two-thirds are over 26 years old. The $10 minimum wage will benefit people who work in low-wage industries, such as restaurants, construction and agriculture, as well as adult workers who are trying to support a family.
Alejo said families’ extra income will be spent on buying groceries, paying bills and going out to local restaurants, so the additional income will be reinvested back into California’s economy.
However, not everyone is so confident the bill will benefit even Santa Cruz’s local economy. Bill Tysseling, executive director of the Santa Cruz Area Chamber of Commerce, said that while the increase is too small to boost the economy, it won’t hurt either.
Critics of the minimum wage increase argue that raising employees’ pay results in higher business costs, which hurts business owners. In response to that argument, Tysseling said that “the businesses that [the increase] would affect have had 18 months to prepare, so whatever impacts that might have occurred will have already taken place.”
John Bilanko is the owner of Cafe Ivéta, a small business on Delaware Avenue. He said all of his employees’ wages were above $10 before the start of the new year, so the wage increase has not affected his business.
Bilanko said he values his employees and believes “people should earn what they’re worth.” His employees receive a $10 minimum wage and $8 to $10 an hour in tips.
When asked about businesses that don’t need to change their business models to comply with the higher wage, Alejo said, “It’s a good sign. It’s great that employers can realize how expensive it is to live in the Monterey Bay Area. But there are many other parts of the state where that doesn’t happen.”
Bilanko is opening a second Cafe Ivéta location at UCSC’s Quarry Plaza in February, at which point he will be expected to follow not only the state’s $10 minimum wage law, but the University of California’s new minimum wage law as well.
The University of California created the Fair Wage/Fair Work Plan, which went into effect Oct. 1, 2015 and raised the minimum wage to $13. It will continue to increase by $1 annually until reaching $15 in 2017. The increased wage only applies to employees who work over 20 hours a week, ruling out many students. Most managerial staff, cooking staff and contract workers will benefit from the increase.
At $10 an hour, California now has the highest minimum wage in the country, along with Massachusetts.
“[It’s] estimated about 2.5 to 3 million people will benefit from this increase,” Alejo said. “It is the least we can do for workers who are paid the least in one of the wealthiest states in one of the wealthiest nations on the planet.”
Although the wage may seem high, it’s by no means sufficient. Researchers at the Massachusetts Institute for Technology created the Living Wage Calculator, which calculates that a living wage in Santa Cruz County would be $12.97. That figure is indexed to the former $9 minimum wage, so even the higher 2016 wage doesn’t meet MIT’s standards.
“It’s definitely hard to live in Santa Cruz,” Taylor Lara said. “The only reason I can stay here is because my [rent] right now is cheap.”
Like so many students in the city of Santa Cruz, Lara is able to afford the high cost of living because she splits her rent with other working individuals. But she said she is concerned about other city residents who have children or families to take care of.
When asked if she thought she could support another individual on her new $10 wage, she said, “No. Not at all. It would be nice to make more,” Lara said. “But for people that don’t make tips and are supporting families, [the wage] should really be higher.”