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Restaurants in Emeryville say they can’t keep raising prices, but workers say $16.30 an hour is barely enough in Bay Area

by Jim Carlton | Photographs by Rachel Bujalski for The Wall Street Journal
July 24, 2019 5:30 am ET
EMERYVILLE, Calif.—The economy is booming in the Bay Area, but at Patatas Neighborhood Kitchen, located in this small city just north of Oakland, owner Marcos Quezada recently eliminated the dinner shift and laid off six of his 10 workers.

He struggled with the decision but felt he had no choice after Emeryville increased its hourly minimum wage on July 1 from $15 to $16.30, the highest in the U.S. “I just didn’t see how I was going to survive it,” said Mr. Quezada, who opened the eatery in 2017.

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This city of nearly 12,000 has become ground zero for a national debate over how to balance boosting wages for the lowest-paid workers and ensuring small businesses can afford to keep employing them.

Proponents say a minimum-wage increase was desperately needed in the hometown of Pixar Animation Studios, where the median rent for a one-bedroom apartment is $2,840, the median home price is more than $560,000, and a salad costs more than $15.

“The Bay Area is more expensive than any other part of the country,” said María Moreno, community organizer with the Restaurant Opportunities Center of the Bay, an advocacy group.

But local businesses say several increases in Emeryville’s minimum wage over the past few years have left them nervous about their financial viability.


Employees cooking in the kitchen of Rudy’s Can’t Fail Cafe in Emeryville, Calif.

“There is a tipping point,” said Erik Hansen, the owner of Moomie’s, who is deciding whether to raise sandwich prices by as much as $1.50 or lay off one of his three employees. “We may have the highest minimum wage, but I don’t think the people in Emeryville will feel like paying the highest prices in the country.”

The debate in Emeryville echoes similar ones across the U.S. In Washington, the Democratic-controlled House of Representatives recently voted to raise the federal minimum wage from $7.25, where it has been since 2009, to $15 an hour by 2025. It is unlikely to be considered in the Senate, where Republicans are in the majority.

Several cities and states controlled by Democrats have increased their minimum wage, including California, where it is currently $12 and will rise by $1 every year through 2022 for most workers.

An analysis released in early July by the Congressional Budget Office projected that a $15 federal minimum wage would boost the pay of 17 million workers who would otherwise earn less than $15 an hour and lift 1.3 million Americans out of poverty but also result in about 1.3 million lost jobs.

‘We may have the highest minimum wage, but I don’t think the people in Emeryville will feel like paying the highest prices in the country.’
—Erik Hansen, the owner of Moomie’s

Emeryville first raised its minimum wage above the statewide floor in 2015, to $12.25 an hour, setting it to automatically increase every year since. Mayor Ally Medina, a Democrat, said the ordinance was meant to help workers cope with the Bay Area’s high living costs.

Sheena Luu, a barista at Polaris Cafe, said Emeryville’s minimum wage makes it possible for her to afford $1,500 in rent for her studio apartment. She also works at coffee shops in two nearby cities, earning about $13 an hour. “If I didn’t have it, I would have to cut back,” she said of the higher pay in Emeryville.

Maria Anguiana said her city-mandated raise this month is allowing her to contribute to her family’s living expenses, with something left for her own future. “This will help me save more for college,” the 17-year-old said while waiting tables in Rudy’s Can’t Fail Cafe.

The flip side can be seen on the menus at Rudy’s. Co-owner Doug Smith said he has raised the price of the cafe’s signature Deuces Wild special—two pancakes or two pieces of french toast, two eggs and two bacon slices or sausages—to $14.50 from $11 in 2015, and the Crunchy Asian Salad to $15.50 from $10. But that still isn’t enough to cover increased labor costs, he added.


Marissa Saenz and Lisa Root working behind the counter of the Broken Rack in Emeryville, Calif. Its owner, Marilyn Boucher, cut hours for her workers this month as a result of the July 1 minimum-wage boost.

A 2018 survey commissioned by Emeryville found that most retailers had adapted to minimum-wage increases, but the restaurant industry was struggling.

Because restaurants have thin profit margins and rely on low-paid workers, they are particularly vulnerable to minimum-wage raises, experts say.

“We’re all up against a brick wall,” said Marilyn Boucher, owner of the Broken Rack, who this month cut hours for her workers. She said she had planned to add hours before the July 1 minimum-wage boost.

Ms. Boucher said that at the Broken Rack, payroll costs have risen to 40% of her revenue, from about one-third in 2014. Last year, the business broke even, she said, after previously having profit margins of about 5%.

Business owners in Emeryville recently pressured the city council to temporarily exempt about two dozen small restaurants from the wage increase.

But the council on Tuesday night voted 5-0 to keep the $16.30 floor in place. The city council also agreed to convene a working group to help small businesses better cope with the higher costs.

“I just did not feel comfortable telling workers they were not getting a pay increase they expected,” said Ms. Medina.

Write to Jim Carlton at [email protected]

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Amazing, truly their heads in the sand.

"where the median rent for a one-bedroom apartment is $2,840, the median home price is more than $560,000"

I want the "Mean" not the "Median"

No money to pay the rent, but covered in tattoos and piercings.

I don't see where the Federal govt has any role in establishing a "minimum wage" in the first place.  State and local? Whatever, you will reap what you sow.

It’s also a town of 12,000 people.  The stats about costs within the city boundary is only part of the answer.

Listen, a 1400 sqft house on a postage stamp outside SF is no doubt $650K

Its almost like we should have some system where people can use numbers to figure out problems.... Oh yeah its taught in the first grade

And well over the age of 30....

It used to be that a typical fast food restaurant would have  some kids between the ages of 15 and 18 making minimum wage, plus a 19 or 20-year old manager who was making a little more.

And occasionally you'd get that unmotivated 22-year-old college dropout who wasn't really going anywhere in life.

Minimum wage was fine for them... they were all living with parents. Or a few college-age kids splitting rent somewhere.

But grown adults (probably with kids), trying to make a "career" out of it?   GTFO, loser.

It sounds like one of those restaurants needs to change it's name to Rudy's Is Gonna Fail Cafe.

When the political winds blow and you can no longer make a profit with your business, it's time to close and either do something different or relocate.

That IS the crummy apartments for low income people. The Bay Area is hugely expensive to live. Anything that would have come under HUD or would be eligible for subsidized housing has been torn down to build pricey condos for people commuting in to the City by now.

That is the crappy apartments

Cracks me up every time someone posts that .gif

It's gold.

Even that means shit.  If you have super expensive houses that biases the mean upward.
The median is a better measure, but even so, what is the lowest housing, that is the important variable.

And soon, they'll be complaining about their 'small business desert'.

Wow, times have changed a lot in that poor little burg.  It was gentrified in the last 15 years or so.  The hardest workers used to be the street prostitutes.  Lately they've been making a big deal about the return of Flint's BBQ.  Looks like they won't be using the original address.

Perhaps some bartering of the ??

The poors live in Oakland.

The other issue I bet this is causing is that it has pushed minimum wage to the level of the cash wage that employers are paying their illegals.

Intended consequences

Honk...honk

I am a little confused by the math. Those employees should be getting tips

You don't need all those restaurants anyway.

I'd move my business just outside the city limits, and send the city council members an invitation to my grand opening.  

People don’t think economics be like it is, but it do

Was the woman in the picture @ The Broken Rack the woman quoted about rent?

"They didn't build those businesses"

He opened his store in 2017, and he didn't see this coming?

Remember the 'Company Towns' that mining companies setup back in the day? Complete with their own currency?

Yeah, that's gonna be a thing again, but this time it will be tech companies.

It was called The Ghost Ship...............

Even shitty parts of the Bay Area are expensive.

I had my 5th wheel trailer down in LA for a bit - space rent at a mobile home park in a barely acceptable part of town was $800/month.  Nice "resort" level trailer parks were $1500 and up.

Just double prices, the rich can afford it

Here is what is happening in the areas around the Bay Area.
https://www.stanforddaily.com/2017/11/14/behind-the-rvs-lining-el-camino-palo-altos-affordable-housing-crisis/

I work a contract in the Bay Area, that has guys commuting 2-3 hours everyday to work. they have to live that far out to have a decent house and not be in a shit hole. We aren't minimum wage guys, and they have deemed the travel fine with what we get paid per day. The job itself can't find local (less than 30min commutes) guys to save their life. and this is for a job paying over 100k plus health insurance. The areas surrounding the bay are expensive, because the tech jobs are paying high for the upper level jobs. Like someone posted earlier, the minimum wage positions are not being filled by kids or college students anymore, your seeing grown adults doing it because they can't get other work, or to supplement their normal day job.

New York City:  "We have the most expensive real estate and highest cost of living of any major city in America!"

San Francisco:  "Hold my beer..."

I'm guessing any savings in labor costs would be consumed by the increase in rent at the "new" location.

The last two paragraphs in the article tell me everything I need to know.

Lol. Coming soon to a city near you!

Tough sh*t for the employees.  There should be no minimum wage.

I’m not going to begrudge someone if they are truly passionate about that particular line of work.

But your budget better be in order for you to live within your means. The cost of living out there is the real kick in the nuts, not their salary. CA economy is about to take a nosedive.

guys, guys ..... relax

"The city council also agreed to convene a working group to help small businesses better cope with the higher costs."

see the city council will have all this figured out in no time ... as soon as they get their magic money tree to grow LOLOLOLOLOL