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San Luis Obispo business owners brace for minimum wage increase in 2020

Posted at 7:08 AM, Dec 17, 2019
and last updated 2019-12-17 10:17:54-05

With the start of the New Year comes a new minimum wage for California's lowest income earners and Central Coast businesses are bracing for the change.

"It kind of has a trickle effect throughout the entire organization," Madonna Inn Operations Manager Mat Tornquist said. "In order to still have a business and operate a profitable business, prices will have to increase at some point."

By Jan. 1, minimum wage for businesses with 25 or more employees will increase from $12 per hour to $13 per hour as part of the state's long term minimum wage goal of reaching $15 per hour by 2022.

To balance the scales Tornquist said he devised a plan about four years ago to gradually increase the cost of a night's stay and meal.

Only tipped employees earn minimum wage at the Madonna Inn. Tornquist said with each increase to that base wage, though. all employees receive a pay bump in an effort to remain a competitive employer.

"I want people to come work for me as opposed to someone else," Tornquist said.

Though much of San Luis Obispo's workforce struggles to make ends meet, unemployment is low, which means hiring is competitive.

"It used to be back in the day you could put an add out and get a lot of responses, but now most people are working," USA Staffing San Luis Obispo Marketing Dir. Wendi Patterson said.

Patterson helps local businesses find employees. She said about 15 percent of her clients offer minimum wage positions but those jobs are hard to fill.

"There are not that many people out there who can survive on $13 with the rent and just living here," Patterson said.

That pressure means many places, like the Madonna Inn, can no longer pay minimum wage.

"If I'm interviewing 20 people and can't fill a housekeeping position or dishwasher position, that's my indicator that I need to pay more to keep employees," Tornquist said.