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

Bio:
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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