An ever tighter squeeze

Employers struggle to meet growing labor costs; Employees struggle to earn a living wage.

According to a report by Investor’s Business Daily (IBD), an increase in minimum wage, rising healthcare coverage requirements and the new mandatory paid sick leave passed by Governor Brown on September 8, will increase the cost to employ full-time minimum wage workers in California by 56 percent, or $4.82, over the next two years.

“Everything costs more these days,” said Mahn Che, operator of several Carl’s Jr. restaurants along Highway 395, including the Mammoth Lakes location. He explained that the increased minimum wage seemed to benefit his employees for about two weeks, “and then they see everything rise in the commodity market,” he said. “It’s still not worth it to have the minimum wage [increase because] the cost of living starts to cost more—that’s how they feel.”

Colleen Gaunt, HR Operations Manager for Mammoth Mountain Ski Area (MMSA) said that the base wage for hourly employees has remained at $9.80/hour the last four years and will continue at that rate until the minimum wage increase in January 2016.

The base wage is different than minimum wage, which California just raised to $9 an hour on July 1, 2014. Mammoth Hosts, Servers, and Bell Hops are among the minimum wage jobs at MMSA.

“Personally I think it’s a good idea,” Gaunt said about the wage increase. “When’s the last time minimum wage gone up? It seems like we’re due.”

“As small business owners in the Eastern Sierra, we work hard to provide good jobs with career opportunities, competitive wages and benefits,” Kevin Mazzu, owner and operator of McDonald’s Restaurants in Lone Pine, Bishop and Mammoth Lakes. “We value the dedicated employees that work in our restaurants and remain committed to providing them with opportunities to succeed.”

“Focus on people and the business will take care of itself,” Mazzu told the Inyo Register in 2011, when his businesses were  recognized by the Central California Better Business Bureau with an Ethics Award Marketplace Excellence. Mazzu held up the award,  “in large part for how we respect, value and compensate our employees,” to answer the Sheet’s questions about current employment standards.

He also deferred answering any specific questions to the McDonald’s Corporate Press Agency, which failed to respond. However, in a Press Release dated September 5, the corporation said: “It’s important to know approximately 90% of our U.S. restaurants are independently owned and operated by franchisees who set wages according to job level and local and federal laws.”

The press release also stated: “McDonald’s and our independent franchisees support paying our valued employees fair wages aligned with a competitive marketplace. Additionally, we believe that any increase needs to be considered in a broad context, one that considers, for example, the impact of the Affordable Care Act and its definition of “full time” employment, as well as the treatment, from a tax perspective, of investments made by businesses owners.”

Mazzu confirmed this position by saying “Like all small businesses in this area, we struggle to balance rising costs, increasing regulation, reinvestment needs and the seasonal fluctuations of the tourist market.”

The article in IBD said the effects of these employment changes could result in decreased hiring rates throughout the low-wage industries and 29-hour workweeks for minimum-wage employees so the employers can avoid providing health-care benefits to employees working 30 hours or more a week.

Che said, as a small company, he is keeping his employees around 29 hours a week to avoid the healthcare costs. “We have managed it down,” he said. “We have more part time employees. The majority of our employees have 2 jobs and they see their hours down at both jobs.”

Che emphasized that he operates the franchise but does not personally own the restaurants, laying the responsibility for these hourly changes on the corporation. He also said most of his employees are seasonal and don’t qualify for full-time benefits.

“We’re not watching hours,” Gaunt said about weekly employment, although they are creating a 1,700 hour limit for “qualified seasonal employees” which means they will be eligible for healthcare through MMSA.

MMSA CEO Rusty Gregory said the plan for an aggregate 1,700-hour limit was conceived so as not to penalize workers who have year-round jobs but jobs that may lack shoulder season demand.

Previously, he said, a worker who had the hours but had breaks in service (based upon a short shoulder season layoff) would not have been eligible for the plan.

Now they just have to make the hours, regardless of when the hours come.

As far as the paid sick leave, Gaunt said “We’ve got a little bit of time to adjust to that. We all think it’s a good idea.” The law takes effect in July 2015 and will require 24 hours, or 3 days, of annual paid sick leave for all employees. Or one hour of paid sick leave for every 30 hours an employee works under an accrual method.

Gaunt said the new law is “not overwhelming. Somebody that works 5 months out of the year, they are only going to end up with 20 hours” of paid leave, Gaunt said. “I don’t think the effect will be that major.”

Che, wasn’t aware of the new sick leave law. Currently his salaried employees receive sick leave, but not his hourly employees.

Another corporate employer in Mammoth, VONS, starts all employees above minimum wage and offers full benefits after six months and paid sick leave after a year of employment, according to assistant store manager Ian Snyder. And the local 8 grocer’s union regulates weekly hours and healthcare benefits, which have not changed as a result of Obamacare.

There has been a recent campaign to organize a national fast-food workers union.

William Finnegan published an article in the September 15 edition of The New Yorker outlying the fast food workers union movement, Fast Forward. The group has organized multiple public protests asking for $15 an hour and a union for the 4 million fast-food workers in the nation. And the fast-food workforce has been increasing since the global recession hit in 2009 given that “McJobs are often the only jobs available,” Finnegan wrote.

As far as union organizing, Che hasn’t heard anything about it in Mammoth or along the 395. “It’s a small group of fast food restaurants,” he said. “And most of our workers are seasonal.”

Finnegan’s article also cited a recent study conducted by UC Berkley and the University of Illinois at Urbana-Champaign that found that 52 percent of fast-food employees are on some form of public assistance, which equals almost $7 billion a year. This only exacerbates the issue. While employers are being hit with increasing employment costs, employees struggle to survive.