San Francisco Becomes First U.s. City to Top $10 Minimum Wage

What the average San Franciscan may not know, he said, is that business owners also must pay another $1.23 to $1.85 an hour per employee for health-care coverage if they don’t offer health insurance. San Francisco is also the only city in the state that charges a payroll tax of 1.5 percent; it also mandates nine paid sick days annually per employee.

“So that drives me nuts, that as a chef, I have to cut my kitchen allowance,” Scherotter said. “What I pay for a waiter is more than double what Manhattan pays, it’s more than double what Chicago pays, and it’s four times what Boston pays. And those are … other big, expensive, pro-labor cities. But I pay what they all pay added together for tipped employees.”

Scherotter said the double whammy of recession and wage hikes has led to eight layoffs in his kitchen in the last four years.

“We hear that all the time,” said Steve Falk, president and CEO of the San Francisco Chamber of Commerce.

He said that by the time you add up all the mandates and taxes that city employers must pay for their minimum-wage workers, the payroll burden is at least 25 to 40 percent higher than other Bay Area cities.

He gave the example of catering companies bidding for the contract at the city’s Treasure Island. In the end it went to a Napa firm over a San Francisco catering company because Napa was able to come in lower.

“You can’t on one hand as a city impose mandates and fees on a local business and then exclude them because their costs are too high when they go to bid on a city contract or a city service,” Falk said. The chamber of commerce is calling on the city to build in a 25 to 30 percent bid allowance for San Francisco companies.

“Fortunately, it’s a very attractive place to own a business and businesses thrive here because of the number of visitors,” Falk said. “But we always worry: where’s the tipping point?”

That tipping point needs to lean toward the worker, said David Madland, director of the American Worker Project at the Washington, D.C.-based Center for American Progress Action Fund. He said the best studies on minimum wage indicate that the benefits outweigh the burdens placed on employers.

“I think it’s a big deal when a city is making a commitment that says, `Our workers are going to get paid a livable wage for a day’s work,”‘ he said. “It’s also very important that in today’s economy when a core problem is lack of demand … that a city is actively taking steps to put more money into consumers’ pockets.”

For Frias, it’s not just about a bit more change in his pocket.

“Hey, it’s a little over $10 — it’s a little bit of respect.”