advocate -- it's this self-preservation versus wanting people to have a better lot in life and nobody in small business says that necessarily raising the minimum wage is a bad thing, but we also don't want to put our businesses in jeopardy. because those are the very things that create those jobs. and if we are forced to go out of business, if we're forced to move, if we're forced to curtail hiring and if we are forced to down-size and if we are forced to eliminate a lot of optional benefits that people don't consider that happen at the small-business level, where they operate more like familis and benefits that are extend to employees that are not part of sort of the general conversation, but have real value. whether it's paid time-off. whether it be help when help is

needed when there is someone sick or someone needs a break? so we could force ourselves into a situation where all of those kinds of discretionary benefits just can't even be offered because they are not economically possible. it could eliminate profit-sharing. it could eliminate the hiring of entry-level employee because i'm already paying a wage for someone with experience, so why would i hire someone who doesn't have experience? so as an altruistic as you would like to be, altruism can be stymied by the bottom line and if there is no bottom line, a lot of these things could be in jeopardy. this issue is a very significant one for traditional, small, independently-owned business as we know them today. whether these changes are inevitable over time is debatable. but certainly we're looking a

scenario which would so dramatically accelerate them and outside of any kind of time-horizon for planning. that is one of the big issues there is no time to plan for this. going to $13 an hour on january 1 2015 is no business plan could have accommodated or thought about and going to $15 the year or year after that is again, a change that business planning, conventional business planning could not have anticipated and represents a shock to businesses. so this is a big challenge for these small businesses, and i think as advocates of small business, we have to be concerned about that. >> commissioner yee riley. >> yes, this minimum wage is mandated for employers in san

francisco? >> that is correct. >> now i know you all know there are a lot of people that commute from other cities in the bay area to work in san francisco? >> right. >> so one of the reasons why they wanted to raise the minimum wage because they can't afford to live in san francisco. would this really be benefit san franciscan residents or are we raising the minimum wage and they still live out of san francisco? >> ted egan has presented data on the percentage of minimum wage employees who are residents of the city as of today. and it ranges from 75% in certain sectors or in the 70% range in restaurants actually, down to lower numbers in various other sectors. i think that again the challenge of looking at the numbers as they exist today does not take into account the

acceleration of people being pushed out of the city. and i don't mean by evictions, but just by people realizing that i can't afford to live here any longer. the real estate situation is accelerating at such a rapid pace, that rents have been increasing so quickly recently, and people have started to look outside of the city as an alternative. i think that we run the risk of hitting a tipping point where we see this ratio flip-flop, where, in fact, most people do move out of city and commute back into the city for these now high-paying -- call them "low-wage positions, but relatively high-paying. my concern also is that we put ourselves at a regional disadvantage to the extent that local -- we are our own city and county. but alameda county, including oakland and seven other counties surrounding the east bay, they are presently at a much lower minimum wage. they are at the state wage and

they are talking about raising their minimum wage to $10 $12 maybe higher, but to the extent that we continue to have a self-inflicted higher minimum wage here in the city, we will encourage people to come in and it happens today. i mean you can go to the acre cafe and meet several of their employees who say i come across the bridge everyday because i get paid a few extra dollars and don't have to work weekends and to the extent that they make a little more that compensates for their increase in transportation costs, they will take advantage of that opportunity. so we could see a situation where we see increased flight of the very people that we are trying to help and, in fact, they commuting into the city and those wages exit the city because you will spend that money where you are raising your families and putting your kids through school outside of the city and county of san francisco. >> that is my concern. >> commissioner dooley. >> i have been talking to a

lot of business owners about this, too, and one of the interesting points they have been making is that the local businesses that promote from within are saying that this will prevent them -- it's a stair-step, because if someone is getting $15 an hour, who is slightly higher level than the minimum wage person, then they are going to have to pay the next flight up, the next flight up, and so that is going to be a much more expensive proposition than just the minimum wage workers. >> well, we call this the ripple effect and this idea that that minimum wage than ripples up through the ranks of the rest of the employees, up to they have determined some percentage, where it starts to taper off at some point. where the $45,000 a year employee may not be pushing for

a raise, but certainly everyone in the band that is within, 20-30% of that minimum wage will feel that they are also entitled to an increase. the other thing to be very sensitive to, there are fees and things that are indexed to minimum wage and workers' compensation insurance and other things that go with it. so it does increase your overall cost of doing businesss in some other ways as well. the other concern is wage compression and that is if you raise -- if you effectively raise the minimum wage to the highest affordable wage that can be paid for that class of work, then no one will ever see another raise and there is sort of an expectation, i work hard, i do a good job and i see some incremental improvement in my wage, not just the mandated wage, but not just the cpi.

but for the good work that i do. if i am pushed up to the ceiling, by the minimum wage, then there is no head room for the owner to provide that. because it's not economically possible. and so wage compression is another significant issue and just sort of there are a number of unintended consequences. there are classes of workers that are particularly atrisk here. youth employment is a big one. of the course the mayor has a big summer youth employment call to action and i think there is a lot of fear that people will just say look, i can't even consider it anymore, because i am hiring what few people i am hiring i am hiring experienced workers. some accommodation for training people. we use minimum wage in some of our businesses to bring them in though bring them through a period of training and see if they are going to

work out. if you have to bring people in at full-wage, you will hire experience people that have already proven themselves. there are people in special classes whether they are young, whether they are old or have disabilities or special accommodations for their wages. so we're looking at creative ways to carve out some special circumstances, perhaps falling back on the current legislation or falling back on california minimum wage. the whole tipped employee issue is a huge issue here in san francisco and in state of california. we can't differentiate between the tipped and untipped employees in restaurants, for example. and tipped people make substantially more in many cases. so the back of the house, untipped wage-earners tend to suffer disparity in wages there. and the state of california, is one of only a handful of states that don't allow for tipped

credits. and so that is not something that we can solve here in san francisco until such time as california changes its legislation. so the restaurant industry, one of our largest industris is going to be affected by this has some very serious challenges ahead of them. >> commissioner tour-sarkissian. >> thank you. i have a question for commissioner dwight about the process. what should happen and what are the milestones? what should happen between today and june 15th? and what are those dates? and what are we working towards? and how? and what is the input of the different parties involved in the task force? >> that is a good question, because there are some people of course who feel that we actually addressed this problem ten years ago and that we

should declare victory and not somehow feel like all of a sudden this is a new call to action for san francisco to make itself even less friendly to small business. okay. we started to raise our minimum wage in 2004. and we did it in a step and then in sequential steps ever since then and we are above the federal and local minimum wages of every around us. we have the highest minimum wage in the country, with the sole exception of seatac, outside of seattle. that being said, there is a national movement to raise minimum wages even above where our current minimum wage is. and so i think we have to acknowledge that. and i think just saying in no change is not a viable position to have today

i think there is a general feeling that is the proposal from seiu will have a negative impact. and that the call to action is to find a position that most people can live with. i think that raising the minimum wage to $15 an hour, whether it's over the next two years, three years or five years is going to have some collateral damage in san francisco. but this happens all the time. so there is a certain amount of churn in business as it is. i think that we have to -- as people that are are -- as the leadership group needs to find a position that has the least deleterious effect on san

francisco, while providing an improvement in the situation for minimum wage employees. and that is a very delicate balance. so presently the process is that through this collaborative process, we're going to come up with a proposal and i am confident that the mayor will put forth a proposal to the board of supervisors, whether it's one that is liked by a lot of people or not a lot of people remains to be seen. and there will be winners and losers. there is no question about it. there are winners and losers as to how we define "small business." just like the debate we had with formula retail, what is "small business?" we have a variety of definitions in various areas whether it's health care, whether it's what state calls a "small business." and it varies by sector. a

restaurant requires far more employees than a merchant. or even a manufacturing business. i'm always fascinated how many workers that they have catty corner from me to run a restaurant, you know? compared to what i have in my manufacturing company. so you get to a hundred workers pretty quickly if you have a couple of restaurants in your portfolio and it's not a huge business. so drawing the line at 50, 100 -- where do you draw the line? there will be winners and loser on where that line is drawn. then what is the first-year step and horizon for raising it to $15? and what i -- what i think the kind of moderates in the room have been advocating for is moderation on the front-end and have it be a

gradual progression, whether it's over 5 years, seven years, whenever so we can adjust our businesses accordingly. because changes will have to be made. where expenses increase, you either pass it on to your customer or absorb it and you absorb it by pushing it off on your suppliers or employees. so there is give and take. there has to be give and take and not everyone can simply say i will pass it on to my customers, because we'll find that our customers will go elsewhere and there is not much far from elsewhere when you are in geographical-limited business area. >> commissioner ortiz-cartagena. >> we're tired of small business always being the collateral damage and i want the powers to be there is a face, for all the small business people that are watching that can't be here

because they are attending their small businesses, we are the ones that pay our mortgages and payroll. we're not googles and twitters, but we're the ones that made this city attractive. we are the ones that are history. my colleague, commissioner dwight said we're going to be a blip. i am not a blip. there is history behind here that made you want to stay here and that is small business. we are the roots of the city and nobody is looking out after us. i'm just tired. i'm fedup. i know there is change, but how does any small business calculate a 22% increase in payroll in less than eight months from now? how do you do that? so i want the powers to-be to know there is a face. i am a face. i am small business. my kids go to public school. you know, i pay my mortgage late sometimes, out there working 18 hours a day. c'mon, guys, think about us. i'm tired. >> commissioners, there is an opportunity for the commission

today or next week after you have heard this. but to provide some suggested recommendations that you may think commissioner dwight has kind of commented on many of them in term of what has been in the discussion. but the commission can sort of take the opportunity to make some form recommendation as a body, as it affects small business for any future developed legislation, such as the moderation or how it is phased in? maybe not with specific numbers, but the approach considerations for a wage for youth, for trainees and tipped employees, that type of thing?

also you might want to make a recommendation that in any newly developed legislation that an economic -- a continued sort of economic analysis is done on an ongoing basis to track the results? so that what is the effect on business? what is the effect on employment? especially as it pertains to hourly wages? so there are some options of things that the commission can put together and put forward some direction. >> okay. before we do that, i'm going to call public comment. do we have anybody who would like to make public comment on item no. 6? >> commissioners, jim lazarus san francisco chamber of commerce, i appreciate your comments on this very

complicated issue and the involvement of many of you on the commission and efforts that we have to bring a broad cross-section of the business community together. obviously this has impacts on small businesses, but impacts larger businesses in the city as well. i thought it was kind of ironic talking about protecting small business in formula retail, which of course is supported by so many supervisors and yet, they had no real constraints perhaps politically on higher minimum wage mandating health care spending and things that really jeopardize the future of small business on a daily basis in san francisco. and to argue that minimum wage can be set in a vacuum without having an economic impact is just not believable. san francisco had 600,000 jobs in 2000. there was a run-up during the dot com boom and lose almost

80,000 jobs in a couple of years by 2004. down to 520,000 with the run-up to 2007, we never got back to 600,000 jobs and it wasn't until last year that we got this city back to 600,000 jobs and in last few years, 20,000 tech and 50,000 spread out through rest of the economy in new jobs over the last three years of we know our economy can sustain the current costs in most cases of doing business here. as was mentioned how high can that without layoffs of people who want the minimum-wage jobs?

and looking at total compensation. we have to look at the spending requirements, if you have 20 or more employees under the health care security ordinance? compounded by what happens if you have 50 or more employees under the affordable care act in another year or so? so we look forward to working with this commission and you individually and business organizations throughout the city to try to come up with a liveable wage proposal for workers and employers alike. thank you. >> thank you very much. any other members of the public? >> my name is tracy turk. i am just here out of personal curiosity. commissioner dwight, do you have any idea or any of you

have any idea where the seiu come from with this? where did this come from? >>well, i think that is a complicated question and probably one that has some nuanced answer. i think it is intimately related to some other negotiations going on presently with the city. so this is really, i think, a wake-up call. i know it doesn't have universal support from other unions in the city and it's not to be construed as the consolidated and sort of general view of all union organizers here in the city.

so it's something that frankly, unfortunately it kind of circumvented a process that the mayor had announced that he was going to set forth and has now convened in this minimum-wage task force, where labor is at the time. it's unfortunately caused a lot of chaos in the process, but it's a call to action. >> okay. i was just curious. thank you. >> thank you. >> any other members of the public? seeing none, public comment is closed. commissioner dwight. >> so if i may, i think that i am very intimately involved in this process. i sit on the to task force and also on the chambers task to convene different business leaders to see if we can come up with something to try to

navigate this situation. the items that are on the list here, you know, for consideration, are all things that are being considered presently. if you have other ideas, i welcome them. you can let me know directly or let jim lazarus know at the chamber of commerce or come to the minimum-wage task force meeting and let them know there. the mayor's office does have an email address where anyone can send suggestions. it's minimumwage@sfgov.org. and i know that it's responsive, because i have sent some things there and received responses. that is jason elliot, the mayor's policy advisor is spearheading getting all of

these -- processing all of those inputs that come in through that venue. so there are multiple ways to get involved and be heard and i'm spending a great deal of time on this meeting with the supervisors individually as well. to try to just alert them to really the magnitude of this issue; that this is something that they need to be informed about. and i think at the last task force -- the first task force meeting i would say not all of the supervisors' offices were represented, but at this last one, i think as i listened arounded room, not all supervisors can be in the room at the same time, but there were legislative assistants from all supervisors offices. >> commissioner yee riley. >> i just wanted to ask commissioner dwight what is the next step? >> this is a third meeting

coming up and as i say, no hard numbers have been put on the table yet for consideration. and i think there is a sense of urgency that the next meeting probably have a strawman proposal of what the numbers look like and what any special provisions might be, so we can start to deal with something other than a blank sheet of paper. there is a fair amount of dancing around that issue right now, because there is a general feeling to commit sets us on a path. there are a lot of people who do not want to see any change, frankly, at this point. and i think there is actually a pretty good argument for letting california and letting the federal government address the issue first. and that we feel like we already got out ahead of this problem ten years ago and we really shouldn't burden ourselves with getting in front

of it again, when there is so much activity at both the state and federal levels. because it's possible that state and federal developments could affect why we end up. for example, if we have a special schedule for some of the groups that we talked about, that could be trumped by, obviously by california state minimum wage. because we have to be at minimum we have to be at the california minimum wage, which has to be at the minimum of federal minimum wage and until this issue of tip credits is dealt with at the california state level, i think there is a big push to deal with this at the california state level. so i think that there is a lot of talk and ultimately something is going to have to be put on paper and that is going to happen very quickly. >> and commissioners, just so that you are aware, that any sort of final, official draft

ordinance that is introduced will likely come before the commission. but the commission does have the opportunity whether today or you want to think about it and do it next week, to provide some generalized direction of what should be considered? again as many of the points that commissioner dwight brought up and if to do that, then there does need to be -- i or staff can't do that just around a general discussion, there does need to be some action taken in terms of -- not to say that these have to be, but these are general directions to be applied to the legislation. >> i think what commissioner dwight has to say and i am fully comfortable with his plan of action. >> i forget -- i am not sure. jim do you know if they set the next meeting? the next task

force meeting does not have an official date yet. but i will let you know what -- when i know, but it has to be in a couple of weeks >> i would like to perhaps make some recommendations based on today, from this sheet from commissioner dwight. >> we're running out of time at this meeting. go ahead. if you have recommendations, go ahead. >> that we recommend an appropriate phase-in period. include a separate wage for youth employment, trainees, hard-to-place workers, tipped employees, social enterprises, persons with disabilities. include in the legislation to track the effect of the minimum wage increase and create a trigger clause so that the mayor and board of supervisors have the ability to decrease or

not increase the minimum wage for a period of time, should unemployment and hourly wages be at a certain percentage, offsets to small businesses such as payroll tax credit during gross receipt phase-in. >> is that what the task force is working on also? >> that recommendation that commissioner dooley has just proposed is completely consistent with the actions that we're presently taking and i think it would be fine for small business commission to go on record as making those recommendations and i will of course carry those to the various forums, including the minimum wage task force. >> perfect. so do you want a motion? >> i would like to move that. >> commissioners, this is agendized as a discussion item only. so no action necessary. >> we'll formale