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Local Wage Proposals Perform Badly for Gig, Health Workers (1)

Nov. 9, 2022, 3:45 PMUpdated: Nov. 9, 2022, 10:30 PM

A set of local minimum wage proposals appeared to fare poorly in initial ballot-box results Tuesday, as voters considered industry-specific pay increases for health-care, hotel, gig, and service workers in California and Maine cities.

The California measures proposed to raise minimum wages in unusually industry-specific ways. A Portland, Maine, ballot measure would have raised the wage floor for all workers, while also extending the minimum wage to cover tipped workers and independent contractors.

The proposals faced vocal opposition from the industries that would be affected, including hospitals fighting the California measures and the restaurant industry— along with rideshare and delivery app companies—fighting the Maine proposal. Voters rejected the Portland measure, and two of three California proposals were on track to fail as of Wednesday morning.

The California results weren’t final, however, as a large number of mail-in ballots still need to be counted, spokespeople in the Los Angeles County and Orange County elections offices said on Wednesday afternoon.

Statewide minimum wage proposals fared better than local initiatives on election night. Nebraska voters approved a plan to phase in a $15 minimum by 2026, and voters in the District of Columbia approved a proposal to phase out the subminimum wage for tipped workers, meaning they’ll qualify for the full minimum wage by 2027.

California Wages

Efforts to pass higher minimum wages for specific industries are part of labor unions’ playbook, said Michael Saltsman, managing director for the conservative-leaning Employment Policies Institute. He pointed as an example to Fight for $15 organizers’ initial focus on the fast-food industry, after which they shifted to pushing for universal $15 minimum wages in cities and states.

“Their trend tends to be targeting one industry for a specific minimum wage target and then trying to apply it broadly from there,” he said.

Inglewood City, Calif., appears an exception to the election-night trend of local wage measures struggling to get traction. Voters there supported a proposal requiring private-sector hospitals and clinics to pay workers at least $25 an hour by a margin of 53.5% to 46.5% as of Wednesday morning’s incomplete vote count. A similar measure was failing in nearby Duarte, Calif., with 64% voting ‘no’ in those Wednesday morning results.

The measures are part of a broader push to raise health-care worker wages in California, said Renée Saldaña, a spokeswoman for the SEIU’s United Healthcare Workers West, which is backing the measures. Voters could consider similar ballot measures in future years in Downey, Long Beach, Monterey Park, and Los Angeles, after some of their city councils approved health-care worker ordinances but opponents blocked them by filing petitions for a voter referendum, she said.

Hospitals and other facilities were already struggling with staffing shortages before Covid-19, and the pandemic only made it worse, Saldaña said. Now lower-paid workers such as nursing assistants can make more money in other industries without any specialized training.

“They’re leaving. We are competing with fast food and Target and retail for these low-paid workers,” she said. “The $25 minimum wage would really help to keep these workers in these hospitals.”

In Laguna Beach, Calif., it was hotel workers whose minimum wage proposal faced grim prospects, with voters rejecting it by a margin of 68.8% to 31.2% in initial results released Wednesday morning. The measure would require hotels to pay their workers at least $18 an hour, with the rate scheduled to increase annually until it reached $22 in 2026.

Portland Gig Workers

Voters in Portland, Maine, rejected the minimum wage proposal on their ballots by a margin of 61% to 39%.

That measure would have increased the local minimum wage to $18 per hour, up from $13 currently. The measure proposed applying Portland’s wage law to gig workers as well as tipped workers, phasing out the tip credit that restaurants and other service businesses use to reduce the wage they’re required to pay servers and other service workers.

Beyond raising the wage floor, the Portland law would have required that rideshare and delivery app companies such as DoorDash, Grubhub, Lyft Inc., Uber Technologies Inc., be classified as employers and their drivers classified as employees for the purposes of the city’s labor laws.

It also would have created a local Department of Fair Labor Practices to enforce the minimum wage and to develop rules dictating how that wage would apply to rideshare and delivery drivers.

Rideshare and delivery app companies classify their drivers as independent contractors, so they aren’t subject to minimum wage and other labor laws in most cities and states.

One exception is Washington state, where lawmakers enacted legislation this year to grant rideshare drivers certain legal protections including minimum pay per trip, while also clarifying they remain independent contractors, not employees of the rideshare companies. Other states have considered but stopped short of passing similar proposals that strike a compromise between drivers and app companies.

(Updated with comments from Saldaña and Saltsman, and to clarify the status of California election results )

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloombergindustry.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Genevieve Douglas at gdouglas@bloomberglaw.com