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KERN BACK IN BUSINESS: Impacts of new minimum wage on Kern County

Posted at 6:23 AM, Jan 07, 2019
and last updated 2019-01-07 09:23:55-05

BAKERSFIELD, Calif. — Once the clock hit 2019, California's lowest paid workers got a raise when the state minimum wage increased. The minimum wage for small businesses that have 25 or fewer employees went up from $10.50 an hour to $11 dollars and hour; while minimum wage for workers at companies with more than 25 employees went up from $11 dollars an hour to $12 dollars an hour.

"It's based on that minimum wage is minimum wage," said Bakersfield Chamber of Commerce's CEO/President, Nick Ortiz. "And the only differentiation that people get is the size of the employer. By 2023 all employers will be at $15 dollars per hour."

The minimum wage increase is part of a state law to move to $15 dollars an hour then to system based on a consumer price index or cost of living index. But Ortiz said, when it comes to Bakersfield and Kern County, California is not a one-wage size fits all.

"What is a living wage or what should be a minimum wage in the Southern California area, Los Angeles area and the San Francisco Bay area may not necessarily be right for the Central Valley," said Ortiz.

Locally businesses have begun to adjust their payrolls with the new minimum wage increase. For some like the Wonderful Company and Self-Help Credit Union, they moved their employees to $15 dollars an hour this year instead of waiting until 2023.

Self-Help Credit Union director of operations, Jose Gonzalez, said, "We actually felt like it was the right time to do that. And it's a great opportunity for us to invest in our employees."

While other local small businesses like Lamont Auto Repair are nervous about how the increased cost of wages will impact their bottom line and prices.

"I see it as something good for my workers," said Lamont Auto Repair owner Emanuel Espinoza, "but it does bring challenges to us, you know adjusting our prices you know based on the minimum wage."

In a statement to 23ABC, the Wonderful Company's director of communications wrote that about 2,000 of their roughly 4,500 employees here in Kern County got bumped up from minimum wage to $15 dollars an hour. And Ortiz said, when a lot of workers see a quick increase like that it impacts the rest of the economy.

"If you're going to $15 dollars an hour, what was a pretty substantial hourly amount over minimum wage now just becomes the bare minimum. And so you have to make changes in your payroll, not just for those minimum wage workers, but really throughout the system, throughout your entire payroll," said Ortiz.

For a second generation small business like Lamont Auto Repair owner Espinoza hopes the raise in minimum wage won't get in the way of him be as competitive as the bigger auto shops.

"We're a small business, we try to stay competitive," said Espinoza. "We have to stay competitive with the big guys. And you know I don't like raising my prices in an outrageous amount."

But for Self-Help Credit Union, they saw the chance at increasing their wages as a boost to the local economy.

"A higher wage for our employees, which gives them more purchase power for them and their families. And that actually helps the local economies as well, because they can spend a little bit more on the things that they need," said Gonzalez.

As for job availability moving forward there are mixed thoughts. Ortiz thinks small business might need to make cuts to keep costs and prices down.

Ortiz said, "The burden of increased cost will fall disproportionately on small businesses, which make up about 75-80% of our membership. So what you're going to see potentially is, you know, less ability to invest in your business. Less ability to hire more."

While Gonzalez hopes the increase in pay will increase the quality of employee at his business.

"I think it will. I think they will see that Self-Help is looking to provide a great environment for our employees as well as an investment in our employees by even being ahead of the curve," said Gonzalez.

In 2020 California will increase its minimum wage again until 2023 when the state's minimum wage will be $15 dollars an hour.