Declining Case Rates, Businesses’ Hiring Scramble Argue Against “Premium Pay” Ordinance

Thanks to a continued decline in its COVID-19 case rate, Orange County will lilely enter the least restrictive Yellow Tier next week. This will allow Orange County businesses their widest operating latitude to date.

Theme parks such as the Disneyland Resort will be able to increase their capacity to 35% from 25%. Guests must still be either Californians or fully vaccinated if from out of state.

Bars that don’t serve food will now be able to legally re-open for indoor service, to a maximum capacity of 25% or 100 people, whichever is fewer. If all customers have proof of vaccination or a negative COVID-19 test, that limit increases to 37.5%

Gyms can expand indoor capacity to 50% from 25%.

The 200 customer cap for restaurants will go away, although indoor capacity will remain at 50%.

Movie theaters can expand their capacity to 50% (the current limit is 25% or 100 people, whichever is fewer).

Bowling alleys also can increase their capacity to 50%.

Click here for a complete breakdown of Yellow Tier rules.

Chipotle Mexican Grill announced it is boosting its average hourly wage from $13 to $15 by the end of June – resulting in hourly wages ranging from $11 to $18 an hour. The chain will also begin paying a $200 employee referral bonus and a $750 referral bonus for managers.

Why to wage increases? Because Chipotle is desperate for workers. The chain plans to hire 20,000 new employees this year, and is willing to pay to get them. We’re in a tight labor market – exacerbated by overly-generous unemployment benefits, and state and federal stimulus payments, that discourage people from returning to work.

In one of many examples, Raging Waters in San Dimas has raised its minimum wage to $15 an hour, and is offering signing bonuses.

So employers like Chipotle are willing to pay higher wages, signing bonuses, imporved benefits, etc.

Both of these developments undermine arguments for the premium pay proposal being touted by Councilman Jose F. Moreno, which the Anaheim City Council will consider this evening.  Moreno and his union allies want to exploit the pandemic to hit grocers, retailers and drug stores with premium pay – another $3-5 dollars an hour tacked on to covered businesses existing wages. They claim is workers in these sectors have continued working through the pandemic – and that by going to work were at greater danger of contracting COVID-19 than the general population.

The reality is these businesses, like others struggling to find workers, are already willing to pay premiums and other benefits in order to staff up. They have also invested heavily in safety protocols in order to ensure a safe working environment for both staff and customers.

Furthermore, a recent study from the National Bureau for Economic Research has found that people who went to work instead of shltering at home were significantly less likely to contract COVID-19:

The available data from schools, hospitals, nursing homes, food processing plants, hair stylists, and airlines show employers adopting mitigation protocols in the spring of 2020. Coincident with the adoption, infection rates in workplaces typically dropped from well
above household rates to well below.

In one example citied in the study, “an hour worked in the Duke Health system went from being more dangerous than an hour outside work to being more than three times safer.”  Thanks to COVID prevention protocols ptu in place by employers early in the pandemic, the study states, workers have been 4 to 5 times safer inside their workplace than outside of them.

As was pointed out in yesterday’s article, there is no compelling rationale for the Anaheim City Council to impose premium pay on grocers, retailers and drug stores – unless their goal is higher food prices and store closures.

UPDATE: On April 20, the Tustin City Council rejected a $4 an hour premium pay ordinance on a 3-2 vote.

4 comments

  1. Larry Herschler

    Safer cuz no one was working and the rest of the population was sheltered. Unemployment benefits do not discourage working. They provided a necessary lifeline for folks whose business shut down. It is not a handout. We all pay into unemployment insurance or don’t you look a your paycheck.? Are businesses scrambling yep And they know how to get people to work. Pay them a fair wage. Should the hero pay be limited to just a few businesses NO. It should be put on all businesses that are low balling wages.

    • Matthew Cunningham

      With all due respect, Larry, the evidence says otherwise.

    • David Michael Klawe

      Larry, here in California, only the Employer pays the Unemployment Insurance contributions. The Employee pays nothing. Maybe you are confusing the Disability Insurance deduction.

      From the EDD website.

      >>Tax Provisions

      The UI program is financed by employers who pay
      unemployment taxes on up to $7,000 in wages paid to
      each worker. The actual tax rate varies for each employer,
      depending in part on the amount of UI benefits paid to
      former employees. Thus, the UI tax works much like any
      other insurance premium. An employer may earn a lower
      tax rate when fewer claims are made on the employer’s
      account by former employees.

      In all states, employers contribute to similar federal-state UI
      programs, and the tax rate and other provisions vary from
      state to state.

      Part of the employer’s tax goes directly to the federal
      government to pay for the administration of the system.
      The greater portion goes into a special UI Trust Fund
      from which benefit payments are made to the workers who
      are unemployed<>As Bloomberg wrote, “Anyone who previously made less than $32,000 per year is better off financially in the near term receiving unemployment benefits, according to economists at Bank of America.” Blog writers for the libertarian Cato Institute wrote: “Combined with state unemployment benefits, around 37 percent of workers can currently make more unemployed than in work. A low-income worker in Massachusetts previously earning $535 per week faced a pre-pandemic replacement rate of unemployment insurance benefits to earnings of 48 percent ($257). Now, the same worker would obtain benefits worth 104 percent of their pre-recession earnings ($557).”<<

      And the UCFW members are getting a fair, negotiated pay and benefits package that the Union approved. Then, as Matt Cunningham mentioned, added pay, bonuses and benefits were given during the Pandemic. Things the employers decided to do, and the Union had no involvement in.

  2. Larry Herschler

    Oops sorry. I accept my mistake. You are correct Matt. I stand by the rest of the comment. Thanks, it is nice to learn something new. Appreciate it

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