Study: Minimum wage increases could mean loss of jobs in SF 

Think $4 toast is bad? Try $6 toast, with no one to serve it to you.

A survey on one major Bay Area city's minimum-wage hike and its negative impact on businesses could be a warning sign for San Francisco leaders who are seeking to boost the nation's already-highest minimum wage.

In San Jose, a 25 percent minimum-wage hike last year led to higher prices for consumers and fewer hours for workers at restaurants, according to a survey conducted by the Employment Policy Institute, a conservative Washington, D.C.-based

think tank.

Meanwhile, leaders in San Francisco -- which has a $10.74 minimum wage -- are calling for The City's lowest-paid workers to take home even more, possibly $15 per hour. And House Minority Leader Nancy Pelosi, D-San Francisco, has repeatedly called for an increase to the federal minimum wage.

"It's just bad public policy," said Michael Saltsman, the EPI's research director. "It's a warning for San Francisco -- and it's a warning for Congress."

The survey results echo warnings made by some economists before San Jose bumped the wage floor from $8 to $10 last year that the well-intentioned move would hurt job creation.

Out of the 163 South Bay restaurants surveyed, 108 -- or two-thirds -- raised prices after the $10 minimum wage took effect. Another 73 reduced workers' hours, and 69 restaurants cut staff entirely.

The notion of increasing San Francisco's minimum wage to $15 an hour is getting more traction. The influential San Francisco Labor Council recently called for such a figure.

San Francisco Mayor Ed Lee -- who has repeatedly said that $10.74 an hour is inadequate pay in a city where lower- and middle-class earners are struggling to compete -- said Friday in his State of the City speech that he plans to put a minimum wage hike before voters on the November ballot.

Any significant increase is most likely to be phased in over several years, business owners and city officials say.

About 5 percent of city workers take home minimum wage, according to chief economist Ted Egan. They mostly work in the restaurant industry -- which is notable for having small profit margins, sometimes as low as 2 to 3 percent -- and in retail.

Donnalyn Murphy, a spokeswoman for the Golden Gate Restaurant Association, which lobbies on behalf of The City's dining industry, said the organization did not have enough information to comment.

Any double-digit wage increase, like San Jose's, would affect many more workers.

Mark Dwight, the Stanford MBA who founded messenger-bag maker Rickshaw Bagworks, still bases his production in The City and the workers who assemble the bags start at $13 an hour.

Any significant wage hike would have to be passed on to consumers, he said, and would make The City a less hospitable place for commerce.

"It puts us at a further competitive disadvantage," Dwight said. "What's the tagline, 'Welcome to San Francisco, the most expensive place in the country to do business'?"

About The Author

Chris Roberts

Chris Roberts

Chris Roberts has worked as a reporter in San Francisco since 2008, with an emphasis on city governance and politics, The City’s neighborhoods, race, poverty and the drug war.
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