FYI: The earliest living-wage ordinance was passed in Baltimore in 1994.

Since then such ordinances have been passed in more than 15 cities and counties in the U.S.; in all, more than 35 municipalities or counties are considering similar legislation.

BY TRACY IDELL HAMILTON

On a recent sunny Thursday afternoon, a pizza delivery guy dropped off more than a dozen pizzas at Ernie Ball, Inc. The pies were a small thank-you to the staff, a little bonus for a job well done.

Many companies offer such perks, small but important reminders that employees are appreciated. But Sterling Ball, president of Ernie Ball, has taken employee appreciation to a whole new level.

With an entry-level wage already higher than the state or federal minimum, Ball realized that $6.75 an hour–even with a 40 hour workweek and benefits–still wouldn't allow an employee to afford rent, childcare, or other costs of living in San Luis Obispo.

So he sent his operations director, Don McCaleb, on a mission: Calculate what a minimum livable wage would actually be for his full-time employees. After hours on the Internet, dozens of phone calls, and a little bit of management discretion, McCaleb calculated a figure: $10.10 an hour.

Unswayed by the increase, Ball called a meeting of his employees and told them he would be raising his minimum wage to a living wage for all full-time employees. Two weeks before Christmas, the increase went into effect for more than 70 of Ernie Ball's 226 employees.

Andy Heystee, 32, who's worked for the company since 1994, said the wage boost was an incredible bonus, and just in time–his wife just had their first baby in February. Heystee had already received a raise earlier in the year, but "the extra money really helps," he said. "I've lived on the Central Coast since the 1970s, and the cost of living has really gone up. This makes it much more realistic for us to stay."

Ball's commitment to a living wage extends to his production line. As part of the periodic review of the more than 100 products the guitar and string manufacturer makes, Ball declared that products that can't be produced with this new higher labor cost and still make a profit would be discontinued.

"It's contrary to a lot of traditional business theories, I know," Ball said. "But I did it because it's the right thing to do, fundamentally." Some choices aren't "Harvard business school choices," he said. "I mean, this is a dumb place to make guitars, really."

Ball, 46, is in a sunny mood on this sunny day, resplendent in one of his trademark Hawaiian shirts, chunky black-framed glasses above an almost perpetual grin. With the company doing well, and himself personally doing well, he said, doing the right thing was easy, obvious, and moral.

But Ball is no wild-eyed idealist. "Look, the company benefits, too. Turnover is now nonexistent. People who apply here really want to work here. It's raised the bar overall."

Living-wage campaigns gaining ground

Ball formulated his plan for a living wage after hearing about the city of Santa Cruz, which passed a living-wage ordinance back in December.

Like the other 15 cities in California that already have living-wage ordinances, including San Jose, Oakland, and Los Angeles, Santa Cruz' ordinance applies only to businesses that contract with the city to deliver goods or services. Services that a city may contract out run the gamut from street cleaning and pest control to clerical and health services.

The impetus behind the living-wage movement came when cities began to realize that contracting with the lowest bidder for city services often cost them more in the long run in social services. Despite a record-breaking economy and skyrocketing CEO pay, after adjusting for inflation today's minimum wage is 30 percent lower than it was in 1968, even as the economy is 50 percent more productive, according to Robert Pollin, an economics professor at the University of Massachusetts.

Pollin has been studying livable wage campaigns across the country. If the minimum wage had kept pace with inflation, it would be close to $11 an hour. "If that sounds outlandish," he writes, "it's only because the presumptions of greed have so dominated U.S. economy discussions for a generation."

As Ball realized, families just can't make ends meet on the minimum wage–especially with no benefits. So they end up making up the difference between the cost of living and their income with food stamps, public health care, and other welfare programs.

In Santa Cruz, for instance, those agitating for a living-wage ordinance noted that the developer of a shopping center in Watsonville received more than $400,000 in taxpayer subsidies to create 151 jobs at its two anchor retailers, Staples and Target, with an average wage of just $6.37 per hour. With almost 40 percent of minimum wage jobs going to sole supporters of families, taxpayers end up footing the bill for companies that don't pay a living wage.

The details of each city's ordinance and the wage it has set as "livable" are slightly different. In Santa Cruz, living wages must be paid when contracts with the city exceed $10,000, and when the company has more than five employees and has been in business for longer than one year. Santa Cruz so far has the highest wage, at $11 an hour, $12 for companies that don't provide health benefits. San Jose's wage is close to Ernie Ball's at $10.75 without benefits, $9.50 with. Los Angeles is on the lower end of the scale, at $8.76.

While they are few, there are businesses across the country that have, like Ball, raised their minimum wage to a living wage. According to a March, 2000, report from Responsible Wealth, a coalition of business people, investors and affluent individuals concerned with America's continued economic inequality, paying a living wage doesn't lead to the job cuts or company relocations that those opposed to a higher minimum wage suggest.

Instead, many have discovered the same benefits as Ball: higher productivity, decreased turnover, lower training costs, high morale.

"The growth of my business is due to the high quality of my bread, which in turn is due to the skilled employees I attract and retain with good wages and benefits," attests Jim Amaral, CEO of the Maine bakery chain Borealis Breads, in the Responsible Wealth report.

Thinking outside the box

Ball is proud of the skill and quality of his workforce. "Come in here and see my favorite place to hang out," he said, heading into the art department.

With the stereo pumping out some funky tune, four employees sit at computers, working on the latest designs for T-shirts, logos, and the latest promotional items. "It all happens in house, baby," said Ball, strumming a guitar against a backdrop of hundreds of Ernie Ball stickers and logos.

It was in this room that the crazy, hip murals that grace the company's bus and traveling stage were created. That bus and traveling stage–part of the wildly successful Battle of the Bands promotion–is another example of Ball's creativity and nontraditional business savvy.

As guitar sales have slowed, industry insiders have blamed Nintendo, skateboarding, and the Internet with taking up potential new guitarists’ time, energy, and money.

Ball decided that instead of complaining, he'd meet that demographic–16- to 24-year-olds–on their own turf. That effort began with the Vans Warped Tour, a punk/skateboarding extravaganza that has brought fame to Eminem, 311, No Doubt, Sugar Ray, and Papa Roach. "You want to know who's going to be big? Check out the Warped Tour," Ball said.

Ball himself traveled to many cities on the tour, watching teenagers wait in hours-long lines to get a chance to play an Ernie Ball Music Man guitar. "It was amazing," he said.

From there, it was a short step to the Battle of the Bands. Ball decided to showcase some of the talent that wasn't already signed to a record label. Through the Internet and flyers sent to the more than 6,000 stores that sell Ernie Ball guitars, strings, or components, the word went out to local bands across the country: Ernie Ball wants to hear you.

Three successful years and hundreds of bands later, Ball took the promotion a step further. He had his engineers conceive, design, engineer, and build a self-contained mobile stage with a kick-ass sound system. Ball is like a proud papa when he shows off the stage and the engineers who built it.

In another savvy marketing move, Ball enlisted Best Buy and Sony to underwrite the promotion. Those companies are looking to target the same demographic, he said, and now "where Sony was the enemy, now they're a partner."

Ball said industry insiders usually poo-poo grass-roots promotions and marketing. But with sales "through the roof," not to mention an increased profile on the guitar scene, "It's been one of the most cost-effective promotions we've ever done."

Pride, loyalty, and a little backlash

Ball's creativity and commitment, said director of operations Don McCaleb, himself a 16-year veteran of the company, made Ernie Ball a great place to work even before the wage increase. The company employs other worker-friendly policies, too, such as the 4/10 workweek. More than half employees work four ten-hour workdays rather than five eight-hour days. "People really appreciate the flexibility," he said.

The company has been manufacturing in San Luis Obispo since 1979, when Sterling Ball's father, Ernie Ball, the company's founder and patriarch, moved some of his operations here from Southern California. He consolidated his business in 1985, and expanded operations with an additional 40,000-square-foot building in 1998.

Ernie Ball lived and played guitar in Southern California in the 1950s. He had a music store first, according to McCaleb, where he sold guitars and taught guitar just as rock'n'roll and the electric guitar began coming into their own. The new guitars needed lighter strings, and Ball was happy to supply them. (Another manufacturer, McCaleb said, saw rock’n’roll as a fad, and passed on lighter strings, helping Ball corner the market.) Ball was the first to offer strings specifically designed for rock'n'roll. Guitar strings are still the company's core product. "It's our bread and butter," McCaleb said.

Ball further revolutionized the market when he began manufacturing custom-gauge single strings. Years later, Ernie Ball, Inc. bought out Music Man, begun by guitarist legend Leo Fender. The guitars built at the Ernie Ball plant on Suburban Road carry the Ernie Ball Music Man name. Flip over the guitar, and it reads, "Made in San Luis Obispo, CA."

The buildings where the guitars and strings are manufactured are immaculate, humming. Workers build guitars in one building and create and package strings in another.

That's where Christine Phanvongkham works putting electronic components into the guitars. She's worked for Ernie Ball for two years, and was one of the recipients of the pay raise. "I was very surprised but very happy," she said. A single mother rearing two kids, Phanvongkham currently lives in taxpayer-subsidized housing on Madonna Road, but the raise, she said, will help her get out and afford her own place. Of Ball she said, "He's so thoughtful to think about us. It helps us as well as his company."

Most of Phanvongkham's family works for Ernie Ball, too–her mother, father, and brother. They also received raises. "It has definitely made me work harder," she said. "And I'm very loyal. I want to do the best for this company, because they have done the best for us." Apparently, she does. Phanvongkham's boss, Dennis Rotterman, said she's one of his best workers.

But not everyone was happy with the new policy. Because the raise effectively compressed the wage scale (rather than moving everyone up), some people who had been at the company for a while and were making just over $10.10 an hour didn't see a jump in their paychecks. A few were bitter, McCaleb said.

Ball admitted that he was a little surprised and hurt by the vehemence of the reaction from some employees. He said he tried to explain that none of them had lost ground, and that he hoped they would be proud of having an employer that took care of its people. "I felt like I was making a company-wide statement about where this company was going," he said. But change can be threatening, he admitted, even when that change is for the greater good.

Still, he emphasized that there are always opportunities within the company for those who want to advance. "We always promote from within," he said.

Some outside the company have had a sour response to the news as well. San Luis Obispo Chamber of Commerce President Dave Garth, while admitting that the California minimum wage is not enough to live on "anywhere in the state," expressed skepticism that Ball raised wages out of the goodness of his heart. "I suspect they're driven by the need to find good employees, not because of any altruistic reason," Garth said. "Otherwise, why would they be making a big hullabaloo?" Garth referred, apparently, to the press release the company sent out.

He also questioned whether the increased wage was really much higher than other local manufacturers' entry-level wages. A subsequent unscientific survey of local durable goods manufacturers who did reveal their entry-level wage (most chose not to) found it to be between $6.50 and $8 an hour.

Ball said he was astonished at Garth's response. Attracting qualified employees is absolutely one of the reasons he raised his wage, he said. "And why wouldn't I send out a press release announcing that I want to attract qualified employees and take care of the ones I have?" he asked. "Comment like that are one of the reasons we don't belong to the Chamber of Commerce."

Calculating a living wage

When trying to figure out just exactly what a living wage might be for San Luis Obispo, McCaleb said he was surprised to find that there was no set formula.

That meant doing a fair amount of research. McCaleb said he called many of the cities in California that already had living-wage ordinances to ask how they’d come up with their wage. The city of Santa Cruz turned him on to a few sources that would ultimately help him craft the company's own $10.10 wage.

First he had to get some specifics on the county's cost of living, something easier said than done. Many studies he came across focused on national figures, McCaleb said, with numbers that didn't apply to San Luis Obispo, one of the most expensive regions in the country to live in.

He found specific figures for average county wages and housing costs from the state Employment Development and Housing and Finance departments. The National Low-Income Housing Coalition provided figures for "fair market rent" for the county, and a group called Wider Opportunities for Women had a study from 1996 that included child care and other costs. McCaleb said that he used the Consumer Price Index to recalculate and adjust costs for 2000. "The whole thing was pretty painstaking," he said, "and in the end, we had to use some management discretion as well."

The average salary in San Luis Obispo County is $28,150, according to the UCSB Economic Forecast for 2001. The median household income is $47,500. That median has not kept pace with gains in the rest of the state, according to the forecast.

This year only 20 percent of families in SLO county would be able to afford the median home price of $220,000. That figure is expected to keep rising–the forecast predicts the median home price will hit $300,000 by 2002.

Rents also continue to rise. The figures McCaleb found from the Low-Income Housing Coalition estimated county-wide fair market rent for a three bedroom apartment at $1,045, a two-bedroom for $752. As anyone who rents in the city of San Luis knows, those numbers are low.

Meanwhile, local wages continue to stagnate.

The median income of SLO County residents is "significantly below that of residents of other counties in the state," states the forecast. It acknowledges other concerns as well. "While the median income of households throughout California is increasing, that of SLO County households is not. The gap is widening, with county residents falling further behind."

Even with all this evidence that a higher entry-level wage is crucial to help residents afford to live here, Ball said that one local organization dedicated to bringing in new businesses–an organization he declined to name–asked him, 'Are you sure you want to do this?'

"They told me, 'We like to tell people that this is an affordable place to live,'" Ball said. "But it's not." Æ

New Times staff writer Tracy Hamilton don't need no guitar to live the rock'n'roll lifestyle–she's still got sex and drugs.