Businesses at city's border brace for wage hike

They have to pay more than neighboring businesses
Posted at 6:27 PM, Jun 15, 2016
and last updated 2016-06-15 22:09:25-04

San Diego's minimum wage increase is making for an odd situation for businesses along the city's borders, such as with La Mesa and Chula Vista. 

That's because voters in the city of San Diego passed Proposition I, raising the minimum wage in the city of San Diego to $10.50 an hour next month, and $11.50 an hour on Jan. 1, 2017. The increase only affects businesses in the city, so those along the border with places like La Mesa, Chula Vista, and Del Mar have to pay higher wages than their neighbors.

Jeff Rossman owns one of those businesses. He's the executive chef at Terra American Bistro, just a couple of blocks from the San Diego-La Mesa border.

"There is a competitive advantage in La Mesa versus right now in San Diego," he said. 

He moved there about five years ago after the rent in Hillcrest got too expensive. He said waiters and waitresses make up more than $20 an hour with tips, but that restaurants operate on a 3 to 5 percent margin that keeps getting squeezed.

"Raising prices when the person down the street has comparable pricing, then it kind of knocks us out of the market," he said. "If you shave half an ounce or you're giving a little bit less lettuce on a salad, there's a combination of things we can do."

California's minimum wage is set to ultimately increase to $15 an hour by 2022 for most businesses, but San Diego's will be higher until 2019. 

"We can buy more clothes, or more for bills, and go outside to eat," said Roselva Gomez, a San Diego fast food worker who is getting a raise due to the increase.

And while his costs are rising, Rossman said perhaps the higher minimum wage could help attract higher quality servers, coming from just a few blocks away.