Ray Vega, owner of the Sherman Oaks Mexican eatery Casa Vega, said he supports the recent move to boost the state’s minimum wage to $8 an hour by 2008. “It’s important for our people to make a decent wage,” he said, adding that workers such as chefs, managers and other staff deserve far more than the current minimum wage of $6.75 an hour. But Vega, who has been in business for 50 years, stopped short of a full endorsement. “I think it’s good, except for the tipped employees” such as waiters, bus boys and bartenders, he said. “Tips should be considered minimum wage.” Vega’s comments reflect a range of emotions among Valley business owners concerning the minimum wage increase signed into law last month by Gov. Arnold Schwarzenegger. The move incrementally increases the current minimum wage of $6.75 by $0.75 on Jan. 1, 2007 and $0.50 on Jan. 1, 2008. The additional $1.25 per hour works about to an additional $2,400 each year for full-time, minimum wage employees; or a $16,640 annual income before taxes starting in 2008. Vega said the new wage is unfair to restaurants owners because tipped employees are typically already making minimum wage in tips. Coming up with the additional cash will be difficult, especially for businesses just getting off the ground, Vega said. “I feel sorry for the new businesses,” he said. “We’re very fortunate we’ve been in business so long.” Vega’s comments are mirrored by James O. Abrams, president and CEO of the California Hotel & Lodging Association, which opposed the legislation. “Virtually every minimum wage employee in our industry is a tipped employee,” Abrams said. “You can’t get people to work at the minimum wage.” For hotel companies, which employ mostly minimum wage employees, the increases cement the notion that the state is unfriendly to business, he said. “We are the most expensive place to do business,” said Abrams, who added that California will have one of the highest minimum wages in the nation come 2008. For small companies with large numbers of minimum wage workers, the additional funds add up. “Any mandated cost increase is potentially a big deal,” said Ernie Doud, a principal at Doud Hausner & Associates, a Glendale family business consulting firm. “People panic about stuff like this.” But the increases also have some benefits, he said. “It really gives businesses an opportunity to recheck the efficiency of their organization,” he said. “It’s all about productivity.” While some business owners say the increase is unfair, Chris Angelo, chief financial officer of the Valencia landscaping company Stay Green Inc, said his company long ago abandoned minimum wage. Offering $6.75 an hour didn’t bring in applicants, he said. “Wages in the past two years have been driven up by the competition for employees,” he said. No one at his 200-employee company earns less than $8 an hour. “That’s typically what the market is bearing,” Angelo said. Andy Gump Temporary Site Services, a Santa Clarita provider of portable toilets, fences and power generators, also starts its entry-level employees far above the minimum wage. “Our lowest is $9,” said President and CEO Barry Gump. “We have to offer more to get more.” Some business owners think the minimum wage is still not enough. “Minimum wage should be $9,” said Diane Knight, who opened Lady Di’s Cookies in Valencia three years ago and has about 15 bakers, assistants, managers and other employees on staff. Most start around $8 an hour, $2.25 above the minimum wage. Knight said she pays more to ensure that staff will stay. It’s worked so far. “I have good luck keeping people,” she said. “But it’s harder because we pay out more.”
