Study finds increasing minimum wage does not cause loss of jobs

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Elina Blazhiyevska/Staff

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A new study conducted by UC Berkeley researchers found that significant increases to the minimum wage in a city do not result in market job loss.

The study was conducted by economists Sylvia Allegretto, Anna Godoey, Michael Reich and Carl Nadler through the campus’s Institute for Research on Labor and Employment. It is one of the first studies to look at employment effects of minimum wages above $10, according to Nadler.

“We find that (minimum wage increases) are working just as intended,” Nadler said in an email. “So far they are raising the earnings of low-wage workers without causing significant employment losses.”

The researchers analyzed minimum wage increases of food service workers in six cities — Chicago, Oakland, San Francisco, San Jose, Seattle and Washington, D.C. — from 2009 and 2016. They then compared U.S. Bureau of Labor Statistics data on the six chosen cities with highly populated counties that did not raise their minimum wage.

Berkeley City Councilmember Kriss Worthington voiced his approval of the minimum wage study. Reports like this, he said, help encourage the federal government to raise the current federal minimum wage of $7.25 by showing successful city case studies.

Worthington said he thinks the study’s conclusion can likely be generalized to cities such as Berkeley as well.

Berkeley has taken a gradual approach to minimum wage increases, according to Worthington, who introduced a bill to increase minimum wage in 2004. Over the years, several council members either did not vote or abstained from voting on proposals that would increase the city minimum wage.

City Council, however, approved an item that would incrementally increase the city’s minimum wage in 2016. It is set to increase the current wage of $13.25 to $14.05 in October and again to $15 in October 2019.

John de los Angeles, spokesperson for American Federation of State, County and Municipal Employees Local 3299 — the UC’s largest employee union — said that although the outsourcing of university jobs is the union’s No. 1 priority, it continues to demand “fair and adequate” wages for its workers as well.

“These workers turn around and they put back into the economy what they make,” de los Angeles said. “They turn right around and pay for clothes for their kids, … their rent — pumping their income right back into the economy.”

Increasing minimum wage does not benefit just low-wage workers, Nadler said in his email. He added that employers, too, would benefit from paying workers more because increased wages encourage employee retention, which in turn reduces the cost of employee recruitment and training.

While Berkeley seeks to help employees, Worthington said, the city is also simultaneously working to support small businesses so they can “survive and thrive.” Council members will vote Thursday on an item that would provide small business support.

“This study shows in multiple cities that having a local minimum wage is primarily a great thing, especially for the low-wage workers,” Worthington said. “I would argue it’s a good thing for the cities and the broader community.”

Contact Alyssa Bernardino at [email protected] and follow her on Twitter at @alybernardino.