San Francisco minimum wage increase would bump 23 percent of workers’ salaries, researchers find

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UC Berkeley researchers said San Francisco’s proposed minimum wage increase would raise the salaries of almost one-quarter of the city’s population by the time it reaches $15 per hour in 2018.

Approximately 142,000 workers would receive a pay raise under the proposed wage increase, which researchers said would have a modest impact on business operating costs and consumer prices. Michael Reich, a campus economics professor; Ken Jacobs, chair of the campus Center for Labor Research and Education; Annette Bernhardt, a visiting professor in the campus sociology department; and labor center researcher Ian Perry worked on the study.

The study is part of an ongoing research program to understand the impacts of increasing minimum wage in general, Jacobs said.

“When workers have more money, it has a positive effect on the economy,” he said. “We have not found negative impacts of minimum wage laws on employment.”

The findings showed that businesses would fare well under a minimum wage increase, with decreases in turnover rates and increases in worker performance. Restaurant prices would also experience a 2.7-percent price increase.

Researchers approached the study by focusing on how the wage increases would impact workers and firms. Using data from the American Community Survey, researchers demonstrated how wage patterns would change under the minimum wage increase and found that more than half the affected workers were employed in the fields of social services, fast food, retail and other similar groups.

The study found that hourly wages would increase by $1.69 per hour on average with an average annual wage increase of $2,800.

In June, the city of Berkeley adopted a new minimum wage ordinance that would raise the local minimum wage to $12.53 by 2016. Berkeley City Councilmember Jesse Arreguin, an advocate of the minimum wage increase, said he was pleased to see San Francisco moving toward what he called a “livable wage.”

“Families are struggling in the current economic climate,” Arreguin said. “Berkeley is one of the most expensive cities to live in in the Bay Area, and many working individuals and families are being priced out of the city because of high housing costs.”

Despite the positivity surrounding minimum wage increases, some business associations have expressed concern about the negative effects of raising minimum wages. The Berkeley Small Business Alliance wrote an op-ed on its website saying the increase would have a negative effect on the city’s budget and did not give small businesses adequate time to adapt to the change.

Looking forward, researchers plan to release additional reports of the effects of minimum wage increases in other cities in California.

Lydia Tuan covers research and ideas. Contact her at [email protected] and follow her on Twitter @@tuanlydia.