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Closing the minimum wage gap

Posted on December 5, 2018 by Sonoma Valley Sun

The minimum wage in Sonoma, and Sonoma County, needs to rise faster and considerably higher than it is on track to do. The California minimum wage is currently $10.50; $11.00 for employers of 26 or more. This will rise to between $11.00, and $12.00 for employers of 26+, in January 2019. By state law it will go to $15 by 2023. This is too little, too slowly.

The disparity between area wages and cost of living is striking. According to the Economic Policy Institute (EPI), a family of two adults in the Santa Rosa metro has annual costs requiring them to make either $35/hour an hour for a single earner, and or $17.50/hour each for two earners.

The Area Median Income (AMI) for Sonoma County is $68,000 for a family of two adults. Given the EPI calculation, almost all of the money earned by the average earner will go for annual expenses, leaving nothing in savings or reserves.

For AMI-level earners, the more money they earn, the more taxes they pay, and the less help toward Affordable Care Act health care help they get. In reaching median and higher income levels, extra income is quickly siphoned off. This is why all county earners on the AMI spectrum need a break on costs as well as higher wages wherever possible. And this study pre-dates the post-fire rise in county rent.  

Post-fire county median rent is now between $1,954 and $2,600. This pushes annual market rate rental housing costs to between $23,500 and $31,000 per year, $10,000 more per year than the cost of the EPI wage calculations, taking county and city rental AMI housing costs to 50% of annual income.

Not only is housing more expensive; food, gasoline, and private health care all cost more in Sonoma County. In fact, according to Forbes and a 2018 RealtyTrac study, Sonoma County is among the top ten least affordable places to live in the country. The City of Sonoma is even less  affordable than the county. Lower than AMI earners do not shop or buy gas in Sonoma because of the savings to be had elsewhere.

This circles back to the need to raise the minimum wage in Sonoma and the Bay Area, which is the second most expensive urban area in the US, after Manhattan and NYC.

The City of Sonoma planned to conduct a minimum wage study over three years ago, but never followed through. Various efforts are underway to immediately raise the minimum wage to $15/hour at a minimum; others believe that’s too little, too late, and advocate closer to $18 or $20/hour, plus yearly cost of living increases.

Area median income is barely adequate to survive here, and in post-fire Sonoma County, what was once middle class is now closer to poverty level. We continue to support an immediate increase in the minimum wage, whether that’s $15/hour, $18/hour or $20; frankly, the higher the better. Sonoma’s General Plan states that people who work here should be able to live and shop here. It’s long past time to make that aspiration a reality.

 



4 thoughts on “Closing the minimum wage gap

  1. What you propose would substantially increase the unemployment rate as businesses no longer able to compete here would go out of business or move to lower wage areas. Those unemployed would be the people you want to help.

    We live in an incredibly desirable area. Nothing is going to stop housing from continuing to increase at a pace faster than the national average.

    What we really need to be discussing is how to increase the skills of people in this area if we want to keep them in this area. But, either way, skills/education levels will increase as those not competing well move out of the area and people that have the skills and education businesses need move in.

  2. Skills and Education has nothing to do with it??? I’m not quite sure who will work at grocery stores, wait tables, educate our children, among many other things when these people can’t afford to live and work here.

  3. Teachers make significantly more than the minimum wage proposed in this article. My ex-wife and my current partner are or were both teachers. Teachers make enough to buy a home in Sonoma County

    What do you think would happen if we waived our magic wand and made the minimum wage high enough so everyone could afford a house? The demand on materials and land would push the price of a house up significantly to the point where people in low skill jobs can no longer afford it, again. It would also create massive inflation and host of other significant problems.

    What is going to happen is housing density will go up and those with poor skills who want to buy a house will get pushed out into lower cost areas and they will need to commute to their jobs. The rest will live in apartments.

  4. Closing the minimum wage gap is not remotely part of the affordable housing solution without also building income-restricted affordable housing, aided by public or public/private funding assistance if needed to keep costs down and prices ‘affordable’ for those earning minimum wage. Yes, ‘subsidized housing’ in Sonoma.
    Some if not most of new affordable housing will need to be rent-restricted apts. Otherwise, it is a cannabis-filled pipe dream to think that an individual (or several of them) earning the minimum wage will become homeowners able to afford to buy a single family home or condo in Sonoma any time soon. Most lenders require 20% down, + a credible employment history and demonstrated ability to repay. The median home/condo price in the area is c. $700,000, and rising. A minimum wage worker would have to pony up $140,000 in savings before a local bank might be willing to talk. Before that happens, there will be unicorns on the Plaza.

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