- Associated Press - Monday, December 12, 2011

SAN FRANCISCO — David Frias works two minimum-wage jobs to squeak by in one of the most expensive cities in America.

Come New Year’s Day, he’ll have a few more coins in his pocket as San Francisco makes history by becoming the first city in the nation with a $10 minimum wage. The city’s hourly wage for its lowest-paid workers will hit $10.24, more than $2 above the California minimum wage and nearly $3 more than the national amount.

It won’t put much more in Mr. Frias‘ wallet, but it gives him a sense of moving on up.

“It’s a psychological boost,” said Mr. Frias, 34, an usher at a movie theater and a security guard for a crowd-control firm. “It means that I’ll have more money in my wallet to pay my bills and money to spend in the city to help the economy.”

San Franciscans passed a proposition in 2003 that requires the city to increase the minimum wage each year, using a formula tied to inflation and the cost of living.

“It helps workers’ morale in a time of economic crisis; they feel that they’re able to tread water and get some relief from the recession,” said Karl Kramer of the San Francisco Living Wage Coalition.

While the city is at the forefront of attempting to provide a decent living wage, most employees say it’s still not a wage to live on. And some employers say it could lead to layoffs by small businesses already forced to pay federal, state and city payroll taxes as well as a slew of other city-mandated taxes.

Daniel Scherotter, chef and owner of Palio D’Asti, an upscale Italian restaurant in the Financial District, said the city’s minimum wage hike from $9.92 to $10.24 means that his highest-paid employees — the waiters who make most of their income from tips — will see more money in their pockets while his salaried kitchen staff will have to take the hit.

What the average San Franciscan may not know, he said, is that business owners also must pay another $1.23 to $1.85 an hour per employee for health-care coverage if they don’t offer health insurance. San Francisco is also the only city in the state that charges a payroll tax of 1.5 percent; it also mandates nine paid sick days annually per employee.

“What I pay for a waiter is more than double what Manhattan pays, it’s more than double what Chicago pays, and it’s four times what Boston pays. And those are … other big, expensive, pro-labor cities. But I pay what they all pay added together for tipped employees,” Mr. Scherotter said.

Mr. Scherotter said the double whammy of recession and wage increases has led to eight layoffs in his kitchen in the past four years.

Steve Falk, president and CEO of the San Francisco Chamber of Commerce, said that by the time all the mandates and taxes that city employers must pay for minimum-wage workers are added up, the payroll burden is at least 25 percent to 40 percent higher than other Bay Area cities.

“Fortunately, it’s a very attractive place to own a business, and businesses thrive here because of the number of visitors,” Mr. Falk said. “But we always worry: Where’s the tipping point?”

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