The Half Moon Bay City Council will consider raising the city’s minimum hourly wage to $15 by this summer. That prospect — outpacing an increase mandated by the state — may be good news for employees, but one of the city’s largest employers says it could cause it to close its doors.
Advocates for low-income workers say the raise would benefit many who are struggling to pay for rent, food and family expenses. They say higher wages is a necessary component in solving the region’s notorious affordability problems.
Some employers, however, view the issue differently. Last week, Rocket Farms President and Chief Operating Officer Nick Bavaro sent a letter to all five City Council members outlining how the potential ordinance will impact his operations. He says city officials did not notify him in advance of their minimum wage plans and that he needs time for any such change.
Rocket Farms, which has been in Half Moon Bay since 2011 when it purchased Nursurymen’s Exchange and sells roses and potted plants, is one of the city’s largest employers. The company employees 129 full-time employees who all make more than minimum wage. During peak seasons, Rocket Farms relies on as many as 400 farm labor contractors. These workers are brought into Half Moon Bay from the Salinas Valley or other areas. To be competitive in recruiting, Bavaro says he pays the farm labor contractors slightly more than the current state minimum wage at $13.50 per hour, but not $15.
He said he is in favor of increasing the minimum wage, but would prefer to stick with the schedule set by Senate Bill 3 governing statewide wages.
The state’s legislation established an incremental schedule to raise the minimum wage to $15 by 2022 for employers with 25 employees or more and by 2023 for employers with 25 employees or fewer. Since the state’s minimum wage is higher than the federal minimum wage, which is $7.25 per hour, it prevails in California.
“We budgeted and planned for that based on that criteria,” he said.
Since the majority of employees for Rocket Farms come from outside the city, Bavaro noted that the proposed ordinance would not impact his local employees. Only 50 Rocket Farms employees live on the Coastside and they all make more than minimum wage, according to Bavaro.
“Making $15 an hour is not going to help someone afford a house in Half Moon Bay,” he said. “This is a Band-Aid on a big wound and the wound can be fixed in better ways. By offering affordable housing, technology training for people and English-speaking classes, these are the things that will have direct impacts.”
He said that Rocket Farms operates on a budget that looks 12 to 18 months in advance and that he’s already secured commitments from suppliers and customers into 2021.
“It’s already expensive to do business in Half Moon Bay. We operate on very thin margins,” Bavaro said. Rocket Farms has to compete against other businesses in states that are paying employees the federal minimum wage. “We do not have the population in the city and surrounding area to fill the need during peak periods.”
Bavaro predicts if this ordinance passes it will mean a 15 percent increase in planned labor costs.
Deputy City Manager Matthew Chidester said city staff plans to present a draft ordinance at the Tuesday City Council meeting.
“The staff report will provide additional information based on the comments we’ve received since the last meeting, and the council will have a chance to consider the ordinance and discuss the additional comments and research,” he said.
Bavaro intends to be in attendance at the next City Council meeting and will suggest that agriculture businesses be exempt from the ordinance.
Bavaro said if the City Council were to pass the minimum wage ordinance it would be the “nail in the coffin” for Rocket Farms.
“The financial implications to Rocket Farms could mean we close our doors,” he said. “The impact would be immediate and very detrimental to our business.”