The City Council barely passed an increase to minimum wages that city contractors pay their lowest wage earning employees despite uncertainty of the effect on future budgets.
The positions of the council were clearly divided, scoring a 5-4 vote, which many believe indicates a deeper labor-supportive tilt in the city and a loss of political weight by the business community.
"We've got some soul searching to do," said Mitch Mitchell, vice president of public policy for the San Diego Regional Chamber of Commerce.
Council members who supported the increase included Michael Zucchet, Ralph Inzuzna, Tony Young, Donna Frye and Toni Atkins, who led the living wage charge over the past months.
The rift between the business and labor communities could not have appeared more expansive with the culmination at Tuesday night's meeting.
The passing of the ordinance is indicative of two points that mark a clear power shift in city politics.
First, the emerging political power of labor was made perfectly clear to the public.
"This is definitely a sign that there is a new sheriff in town -- and he pays labor dues," said Fred Sainz, vice president of public affairs for the Convention Center Corp., which stands to face wage increases of $1.8 million annually.
Tom Shepard, a long-time political consultant and strategist in the city, said that such a clear defeat of a business-backed policy is unprecedented in recent memory.
"I can't remember another issue that's come before the city that the business community was as unified in its opposition and the council went ahead and did the opposite," Shepard said.
Labor's influence on sparking change in city affairs has been established for years, but there has never been a high-profile case like this to illustrate that power, he said.
"Most of the changes have occurred below the radar screen of voters, such as the city employee benefit increases," he said. "This one was very high profile."
Second, some believe the business community illustrated the depth and width of its disconnect with workers -- which hurt them Tuesday night and could again in the future.
"I was really surprised at the level of distrust and dislike of the business community as a whole shown by the council," said Lisa Briggs, executive director of the San Diego County Taxpayers Association. "Until the business community, as a group, accepts that there is a perception that they are disconnected and until they address that, they will continue to lose."
Representatives of the San Diego Regional Chamber of Commerce had about 10 members present at the meeting speaking in opposition of the wage increase.
While most speakers, such as Chamber CEO Jesse Knight, spoke about the city's financial problems and the need to be responsible, others took a less scripted approach.
Ernie Hahn, general manager for the San Diego Sports Center, said the facility may close if the living wage is approved, but gave one comment that drew a series of taunts from the nearly 600 living wage supporters present.
"People work $7-an-hour jobs because they are fun and exciting," Hahn said.
Mayor Dick Murphy was forced to step in and request quiet.
During council discussion following the public comment, Atkins chided the business community for receiving different subsidies from the city and supporting the implementation of charges to residents while consistently opposing higher fees and taxes that impact businesses, such as the recent proposed tax increase on hotel rooms.
"There are subsidies that we provide each and every day to support business activities," Atkins said. "I guess the disappointment for me is that there is a huge lack of understanding for what it is like to be part of a working class family, be part of the working class that has to work at minimum wage for more than one job."
The city is currently facing a $50 million hole in this year's budget, a $1.37 billion pension shortfall and a retiree health care deficit between $500 million and $900 million.
Mitchell said the chamber's position was always framed around fiscal responsibility.
"What's really unfortunate is that we really focus in on the fiscal health of the city," Mitchell said. "This was never about living wage being good or bad, this was about what's good for the city."
The City Council approved the ordinance, raising the minimum wage for employees working for companies contracted by the city to $10 per hour plus medical benefits, or $12 per hour for employees not provided benefits.
The ordinance applies to companies in certain industries -- such as landscaping, janitorial and security -- with contracts with the city exceeding $25,000 and will be phased in between fiscal year 2006 and 2008.
Living wage proposal meets swift opposition (Mar. 31, 2005)
City manager's report on the living wage ordinance (PDF format)
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