BY DAVE PRICE
Daily Post Editor
The state Legislature passed three lousy bills last week that are going to create a lot of problems for everyone.
1. Rent control, AB1482
First, they passed a rent control bill even though Californians voted against rent control last year. Of course, they called it something else — rent caps. But AB1482 says that landlords will only be able to raise the rent for an existing tenant by 5% plus inflation annually on apartments built before 2004.
The problem with rent control, uh rent caps, is that it discourages investment in new housing. Who wants to invest in a housing development if the government decides the rent? And while 5% plus inflation seems generous, there’s nothing to stop the Legislature next year from lowering it to 1% — or 0%. This bill is simply a way to get the foot in the door with something that seems reasonable to keep the critics at bay.
Who is to say this bill won’t encourage landlords to increase rents to the limit each year? Landlords might also convert apartment houses to condos, which will further the shortage of rental properties.
To solve the housing crisis, you need to build more homes. With this bill, landlords will raise rents to the maximum they’re allowed and investors won’t spend money on housing in California. AB1482 is not a solution.
2. A new tax agency, AB1487
The second bad bill they passed last week was AB1487, which will give two agencies with un-elected boards the ability to put $2.5 billion in taxes on the ballot to fund housing projects in the Bay Area. With this bill, the Legislature seems to be saying: If the private sector doesn’t want to invest in housing, the government will step in and make the residents pay for it.
The two agencies are the Metropolitan Transportation Commission, or MTC, and the Association of Bay Area Governments, or ABAG. Their boards consist of people appointed by city councils and county boards of supervisors from around the Bay Area. Both agencies have long records of ignoring the public and flagrantly misspending tax dollars.
And, given the history of ABAG and MTC, you can safely assume that the money generated from taxes here in the mid-Peninsula will go disproportionately to San Jose, San Francisco and Oakland. Even if you think a Bay Area-wide tax-collecting housing agency with an unelected board is a good idea, there are no assurances that the money you put into this agency will stay here.
3. Killing the gig economy, AB5
The third bad bill was AB5, the attack on the gig economy that was backed by the unions. The bill will turn independent contractors, such as Uber drivers, into paid employees so that unions can sign them up as dues-paying members.
But these gig economy companies only have so much money. Uber lost $5.24 billion in the second quarter. So the cost of an Uber ride or a Doordash meal will go up to pay for this, and many current drivers won’t be invited to become paid employees. The layoffs will start Jan. 1 when the bill goes into effect. But the unions don’t care. They want to unionize these businesses and collect the dues.
AB5 not only serves the big labor bosses but it’s also a boost for plaintiff lawyers who make a handsome living suing businesses for even minor labor infractions.
The Legislature exempted many industries that didn’t want to suffer from the ban on independent contractors, including lawyers, doctors, realtors, architects, veterinarians, engineers and cosmetologists.
The Sacramento Bee pointed out that industries receiving exemptions spent $2.9 million to influence legislators in the first half of the year. The California Medical Association, which represents doctors, dropped $1 million on the Legislature before getting its exemption.
AB5 will have a devastating impact on tech companies who employ many mid-Peninsula residents.
Gov. Gavin Newsom says he’ll sign all three bills.
How did our three local legislators vote on these bills? State Sen. Jerry Hill and Assemblymen Marc Berman and Kevin Mullin voted “yes” on all of them.
• • •
Minimum wage for some but not all
Politicians talk a good game when they say they support immigrant rights, but their actions often contradict their words.
Take the minimum wage ordinances that have been the fad of local governments for the past few years. Raising the minimum wage to $15 an hour isn’t really a big deal around here because most businesses pay far more than that due to the labor shortage.
But each of these ordinances contain a sneaky clause that nobody in city government wants to talk about. It’s called the union loophole.
I bring it up now, because the union loophole appears in the proposed minimum wage ordinance in Menlo Park. In the past couple of years, the same loophole has appeared in minimum wage ordinances passed by Palo Alto, Redwood City, Mountain View, Los Altos, Belmont and San Mateo.
It says that if a business has a union representing its workers, the minimum wage ordinance doesn’t apply.
The union loophole
That leaves the door open for union organizers to approach hotels and tell them that if they sign a union contract for their housekeepers or kitchen workers, they can pay them below the minimum wage and save some money.
You’d think the workers would object, but most are from places like El Salvador, Guatemala, Honduras and Mexico, and because of their immigration status, they’re not going to argue about it.
And the unions don’t care if these workers are underpaid. They just want the dues that will be automatically deducted from the workers’ paychecks.
This scam is never mentioned at City Council meetings when the officials are making speeches about how the minimum wage ordinance they’re about to pass will help the struggling working class in their community.
Who’s pushing this loophole?
We’ve had some fun at the Post asking city officials where they got the idea of adding the union loophole to their locally-written minimum wage ordinance.
Bill McClure, Menlo Park’s city attorney, told us last week it was just boiler plate language he picked up from other cities’ ordinances. In Redwood City, officials last year told us the San Mateo Labor Council, a group representing unions from throughout the county, asked the city to include the loophole. In 2016, Palo Alto officials said they added the loophole at the suggestion of federal labor officials.
San Mateo gave us a hilarious answer: The city’s interim economic development manager, Kathy Kleinbaum, who presented the minimum wage ordinance to council in 2016, said at that time she didn’t know why the union loophole was included in the ordinance. She said the employee who drafted the ordinance no longer worked for the city. Nonetheless, it remained in the ordinance even though, officially, nobody knew why it was there.
At council meetings, none of the elected officials ever brought up the union loophole or moved to strike it from their ordinances.
But you should keep this scam in mind the next time you hear a local official say how badly they want to help low-income workers.
Editor Dave Price’s column appears on Mondays. His email address is firstname.lastname@example.org.
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