A Reader’s Guide to the Minimum Wage Push

A Reader’s Guide to the Minimum Wage Push

Photo by Sam Hodgson

Todd Gloria

The minimum wage, which sets the bar for the lowest hourly wages, is suddenly in the spotlight. From the president to the governor and the guy temporarily in charge of City Hall, top Democratic politicians are calling for boosting the minimum, in some cases to the max.

President Obama wants to boost the national minimum wage from $7.25 to $10.10 per hour. California’s on track to raise its bar to $9 and then $10. And here in the nation’s eighth-largest city, interim Mayor Todd Gloria has hinted that $14.50 per hour is a nice number.

Critics of boosting the minimum wage say an increase is a ticket to higher costs and more unemployment.

Kevin Faulconer, the GOP’s candidate in the mayoral race, opposes Gloria’s proposal and “sat quietly, with no hint of a smile or even a polite clap,” when Gloria brought it up during last week’s State of the City address. And former Mayor Jerry Sanders is warning of the potential for stunted growth.

Here’s a guide to what all those numbers mean, and what factors will come in to play as the debate continues.

What’s the minimum wage now?

California’s minimum wage is $8 now and will increase to $9 on July 1 and then $10 in 2016. Unlike a small number of other cities, San Diego does not have its own minimum wage. It’s $8 here, just like in most of the rest of the state.

Nationally, the minimum wage is $7.25 per hour — enough, as The Atlantic notes, for a Chipotle burrito (but no guacamole) if no taxes are withheld. Employers nationwide can’t pay less than that.

According to the National Conference of State Legislatures, 21 states (including California) and Washington D.C. require employers to pay a minimum wage that’s higher than the federal minimum.

In Oregon, for example, the minimum wage is $9.10, and it’s $9.32 (the highest of all) in Washington state. When July comes, California’s minimum wage will be the third-highest in the country behind the two other West Coast states.

How come San Diego can get to have its own minimum wage?

Some states, such as New Mexico and California, allow cities to set their own minimum wages. San Francisco’s is the highest in the nation at $10.74 (although a city in Washington state is in a bid to push S.F. out of the top spot — more on that in a moment). As of last year, San Jose set its minimum wage at $10; it’s now at $10.10 thanks to inflation.

In San Jose, the minimum wage doesn’t just affect employers in the city. “Employers that maintain a facility in San Jose or are subject to the city’s business tax are required to comply with the ordinance. Employees who perform at least two hours or more of work per week in San Jose, even if their employers are based outside the city limits, are covered by the minimum wage ordinance,” the Mercury News reports.

At least one other California city may join San Francisco and San Jose. Just up the coast from us, Los Angeles is poised to consider boosting the minimum wage for one group — hotel workers at larger hotels — to a whopping $15.37 an hour.

“The $15.37 exact amount is meant to align with what Los Angeles International Airport workers make (before a recent raise) thanks to a 1999 ‘living wage’ law,” Huffington Post reports. The online publication says the minimum wage has a good chance of passing.

How high is the cost of living here?

The cost of living, many will argue, is too damn high, to borrow a phrase. One recent report named San Diego the ninth most expensive place to live in the country, with costs almost a third over the national average. Our mortgages and rents are especially high. 

Gloria argued that’s precisely why San Diegans need more than $8 an hour: “Although California’s minimum wage is scheduled to increase in 2016, that translates into an annual salary of less than $21,000, which is simply not enough in a city with a high a cost of living like ours,” he said in the State of the City address.

What’s this I hear about some town called SeaTac?

If you’ve flown to Seattle, you’ve probably been to SeaTac (short for Seattle-Tacoma), a city of 27,000 that’s home to the region’s airport. By a tiny margin, voters in November approved a minimum wage of $15 an hour, by far the highest in the nation.

But a judge’s ruling may prevent thousands of workers at the airport from being affected. The dispute hinges over whether the airport must follow city laws or is a separate jurisdiction because it’s run by the region’s port.

What happens if a higher minimum wage passes?

On the federal level, an estimated 11 percent of employees would get a boost in pay.

But there’s a complication: It seems that many employers ignore the minimum wage and pay their workers less. The public radio station KQED reports that San Francisco alone — a city whose population is significantly smaller than San Diego’s — could be home to 39,000 workers who are illegally paid less than the $10.74 minimum.

What’s with that unusual state ballot measure?

If you’ve been in California for a while, you may remember Ron Unz, the wealthy libertarian businessman who made a high profile but failed bid for governor in 1994. Now, he’s pushing a state ballot measure to boost the minimum wage to $12 an hour because that “would solve many of our economic problems at a single stroke.”

In a New York Times commentary, Unz says that a minimum wage will save taxpayers billions of dollars by boosting incomes so many Americans will no longer need services like food stamps.

“Businesses should pay their own employees rather than quietly shifting the burden to government programs and the American taxpayer,” he writes.

Unz’s critics suspect his motives are not pure. “He believes a bill that raises wages will help drive out immigrant workers,” writes columnist Amy B. Dean for Al Jazeera America. “Here’s how that works: Unz takes as gospel the traditional conservative belief that raising the minimum wage will destroy jobs.”

What do supporters of a higher minimum wage say?

Increasing the minimum wage “will be good for our economy. It will be good for our families,” President Obama declared last year. The idea is that increasing the minimum pay will put more money in the pockets of poor people.

Supporters are dreaming big. “Wages in the $22- to $25-an hour range will be needed to create good, family-supporting jobs — comparable to what manufacturing jobs paid back in the day — in many of America’s largest cities,” writes columnist Richard Florida in The Atlantic.

What do opponents say?

Critics say higher wages will lead to fewer jobs. “No one argues that increasing the minimum wage increases the number of unemployed workers who find jobs. In the end, the trade-off is clear. People who keep their jobs get more money; those who lose their jobs, or fail to get new ones, suffer,” write a pair of researchers in an L.A. Times commentary

They point to a report that suggests only 11 percent of the poor would benefit from a minimum wage hike since many poor people don’t work or are young and may live with their parents.

So what’s the truth about the potential impact?

The Atlantic puts it this way: “Researchers have been fighting over this question for a century — one of the first major government studies on it, involving Oregon’s early minimum-wage law, was conducted in 1915 — and the answer, I hate to tell you, is still murky.”

Economists, the story says, are divided, as a recent survey made clear.

There’s another complication: What happens if higher wages translate to higher prices? Things cost more — including that Chipotle burrito (no guac) — and everybody ends up with much less purchasing power, especially when it comes to industries that rely on low-paid workers like fast food and gas stations.

And, as Forbes columnist Susan Adams wonders, if the employers forced to raise prices “are McDonald’s or Walmart, that could again burden disadvantaged families, since they are the ones who eat and shop there.”

So will prices skyrocket? Probably not, The Atlantic says. According to one researcher’s estimates, a minimum wage hike of 10 percent would have a tiny effect on prices overall, although fast food costs would jump by 4 percent.

How does the ‘Living Wage’ fit into all this?

Under its “Living Wage” ordinance, the city of San Diego requires contractors who work for the city at a cost of more than $25,000 to provide certain minimum levels of pay and benefits to their employees. Currently, employers must pay at least $11.65 plus $2.34 worth of health benefits per hour or $13.99 per hour without benefits.

A divided City Council passed the law in 2005 after a mammoth debate. How’d things go? “Businesses not dying in spite of living wage,” says a headline in the U-T from 2010. The story said “it seems clear that the worst fears of the critics haven’t come true.”

What about alternative ways to help the poor?

Conservatives and even a few liberals are intrigued by the idea of increasing the Earned Income Tax Credit, which lowers taxes for poor people. “The credit goes only to poor families, and not to relatively affluent college students, spouses or retirees,” Forbes’s Adams notes.

So a young single mother making minimum wage would get a boost but not a college student whose parents are paying her way and takes a fast-food job for spending money.

Still, as Adams notes, the credit isn’t a perfect solution: “I suspect that many minimum-wage workers, even though they’re entitled to spread out the income tax credit during the year, have a tough time figuring out how to set that up and can’t afford to pay an accountant to do it for them.”

So what’s next?

Gloria is pushing for a measure on the November ballot. “No one who works full time in this country should live in poverty,” he writes in a U-T commentary, using almost identical words as President Obama in his State of the Union speech last year.

Obama’s not likely to get anywhere because of opposition in Congress. But states and cities are picking up at least some of the slack.

Voice of San Diego is a nonprofit that depends on you, our readers. Please donate to keep the service strong. Click here to find out more about our supporters and how we operate independently.


Randy Dotinga

Randy Dotinga

Randy Dotinga is a freelance contributor to Voice of San Diego and president of the American Society of Journalists & Authors. Please contact him directly at randydotinga@gmail.com and follow him on Twitter: twitter.com/rdotinga

  • 1112 Posts
  • 5
    Followers

Show comments
Before you comment, read these simple guidelines on what is not allowed.

34 comments
Thomas DeSoto
Thomas DeSoto subscriber

Silencing Journalist is so typical in today climate
as real journalism is now suppressed and shoved under the rug,
Journalist right now are being arrested in Ferguson, and many other
states across the nation, etc,... Whistle blowers are persecuted,
character assassinated and arrested for telling the truth, while the
Republican Wolves on Wall Street are awarded billions for their
deception and criminal activities. Rich Republicans have now purchased
many national news organizations and newspapers all across the country
and are totally one sided in their coverage of the issues of the day.
They have become highly political and even straight up liars when it
comes to Republican propaganda working to insight mayhem and violence
around the world. The San Diego Union Tribune is a fine example of the
Republican propaganda machine helping to sway public opinion and using
their powers of persuasion to manipulate the tide of public opinion, as
they support local business owners to avoid raising the minimum wage in
our county. A real news paper would have been on the side of those in
penury struggling to survive the high cost of living and run away
inflation. Rising the minimum wage a few bucks isn't going to bankrupt
anyone, but reading the outrageous spin coming out of the Union Tribune,
or listening to our Republican Mayor of San Diego Kevin Faulconer you
would think this is going to bankrupt all business in San Diego and shut
down every company across the county. It's all such a joke and a
complete fabrication of the facts. There used to be thousands of
independent news organizations in America, but today there are only
nine, who are all owned and controlled by a hand full of wealthy
Republicans who have a vested interest and now have been able to set the
mood of the day to capitalize on their own selfish political agenda to
profit handsomely on the backs of hard working American taxpayers. Our own apathy
allows these types of horrendous take overs to occur unfettered and with
little resistance to ever fight back against the status qoe.

bgetzel
bgetzel subscriber

I like the Alvarez proposal regarding the city council voting on the this issue, rather than go to a ballot measure. Regardless of where one stands on this issue, you have to ask; What do we elect councilman to do? Time and time again, elected officials keep punting issues back to the voters because they do not have the guts to take a stand. So then we end up having an even smaller proportion of the electorate making a decision involving a complex policy issue rather than (supposedly) a group of well informed individuals that a higher proportion of the electorate put in office. With that approach, we may as well all vote on twitter every day and have no elected officials. Let's allow the council to do their job, vote it up or down, and "throw the bums out" if we do not like the decision. 

Bit-watcher
Bit-watcher subscriber

A push from the top would likely be destabilizing.  A free-market can be wrenched, or guided, and this is more in the "being-wrenched" category.  Social purpose legislation, while it attracts supporters for the soft-hearted (and many times soft-headed) who lean toward it, can be dangerous.  The sub-prime mortgage problem Congress initiated is a great (and terrible) example.  

The market is flexible, and if the thought is to squeeze on it in one way, it will still, and _always_ respond, and will respond in ways that the progressives either don't understand, or refuse to consider.  

What this state (and city) needs is to do is to stop the exodus of businesses, middle-income producing businesses.  But California doesn't seem interested in doing that.  A wise observer once stated that there is no way to tax ourselves into prosperity (despite California's best efforts), and mandating "wealth" in this manner, and ignoring what the free-market (as much as it is anymore) will do is short-sighted, and likely to be expensive. 

Minimum-wage jobs were never intended to be a way for folks to sustain themselves.  Bring back the middle-income jobs.  Every time the city threatens the heavier port-district business residents (which DO bring in middle-income jobs), I cringe.  When the city prefers service-sector businesses (which pay the TOT the city seems addicted to) to displace middle-income businesses, it is showing a preference for service-sector wages over middle-income wages.  Threatening Solar Turbines by a housing development was another example -- fortunately, Solar is staying.  However, Hamilton-Sundstrand (United Technologies) is departing, with all its middle-income jobs.  

Being soft-hearted is fine, being soft-headed is just plain being a disservice to the city, and the citizens.

Fred Schnaubelt
Fred Schnaubelt subscriber

If you don’t read the news you are uninformed, said Mark Twain, and if you do your are misinformed.

In your guide to the Minimum Wage at the federal, state and local level, The Voice of San Diego reports that, “On the federal level, an estimated 11 percent of employees would get a boost in pay. Yet the U.S. Bureau of Labor Statistics stipulates only 0.9% of federal workers receive the minimum wage or less.The BLS also reports that only 1.4% of full-time employees in California are paid the minimum wage or less and a 2004 report published by David MacPherson of Florida State University, examined 23 years of data showing nearly 2/3 of minimum wage employees earn more than the minimum entry level learning wage within 1-12 months. This industry-backed group counteracts the union paid economists who maintain there is no downside to raising the minimum wage.

Interestingly some of us older folks remember entry-level jobs that disappeared with the minimum wages increases, such as elevator operators, movie theatre ushers, gas station attendants, newspaper boys, teenager lawnmowers, babysitters, and doormen. Low paying, but nonetheless honest jobs for beginners.Thomas Sowell writes today in Townhall.com about the years when the unemployment rate for black youths was under 10% --- now as high as 40%, “And no neighborhood needs hordes of idle young men hanging around, getting into mischief, if not into crime.” Walter Williams has charted how the black unemployment rate has risen nearly every time the minimum wage has increased.It is sad to read you totally neglect the primary push for an increase in the minimum wage is so millions of union workers above the minimum wage will get pay increases.

 http://www.bls.gov/cps/minwage2012tbls.htm

http://epionline.org/studies/macpherson_06-2004.pdf

Allen Hemphill
Allen Hemphill subscribermember

If you raise a minimum wage from, say, $8 to say, $15 we can confidently say several things: First, some young, inexperienced person who might only be worth $10 to your small business will not get hired at all.

Secondly, we can confidently say that an employee who previously was making $16 an hour will say, "Last week I was valued twice as much as my fellow employee, but today I am valued only a dollar more? I want a raise! A BIG raise!"

Some employees get some immediate gain, some feel some immediate pain, but the market works to leaven the anomalies, and the less productive are still both less productive, and lowly compensated.

Carlynne Allbee
Carlynne Allbee subscriber

A big misconception is that college students are all affluent, "living at home and taking minimum wage jobs for spending money." My college students do not live with their parents, and have minimum wage jobs because that is all they could find that would hire them. From their minimum wage income, they pay rent, food, transportation to and from work and school, and other basics.

Mark Giffin
Mark Giffin subscribermember

The issue income disparity is gaining traction World wide as evidenced by my post on the economic forum in Davos.
What the state has done is a practical necessity at this point but everyone is guessing as to the effect of the increase. The raise, along with the associated increase costs of disability, unemployment insurance, SSI, etc will increase costs. It will affect the smaller businesses more so than the big guys.
What Todd Gloria is proposing will definitely have a huge effect on small businesses more than likely causing many to close. It is a reckless proposal. He is either incredibly ignorant or simply thinks losing some small operations is acceptable.

Carolyn Chase
Carolyn Chase subscriber

Unz’s critics suspect his motives are not pure. “He believes a bill that raises wages will help drive out immigrant workers,”
++ Whether is motive are pure or not just how is this supposed to work? So a biz that is hiring illegally already is going stop hiring illegally because of a new law that tell them to pay more?

Higher prices at wal-mart, McD etc? Those with higher wages will still be ahead.

How does a business value its workers? There is always an understandable reaction against rising costs in any business and an ongoing battle to control or reduce costs. But there is a public interest in having businesses not exploiting people. Businesses who can afford it, should pay a living wage. Some can't - and those will also have other problems that have to be faced. Most can.

It would be interesting to see what does the min need to be soas to not qualify for or need public assistance. I suspect that's where the $12 figure may come into it.

Grammie
Grammie

Nowhere is there any mention of the fact that Union wages are tied to the Minimum Wage. When the bottom rung is raised, ALL wages get a commensurate bump up.

Jim Jones
Jim Jones subscriber

$30 hr wage for everyone, no more and no less and a state guaranteed job! Every single man woman and child, legal or not in Calpers!

Lets really build the economy in a fair way and end the economic division that prevents universal love!

Lets set a real example for the world!

Derek Hofmann
Derek Hofmann subscribermember

It's better for the economy to give money to the poor (or save them money) than to give tax breaks to the wealthy, because the poor will spend it immediately and put it right back into the economy.

It's also better for the local economy to keep money local. Cars, for the most part, are not built in California.

The TransNet half cent sales tax is regressive; therefore, it's bad for the economy because it keeps the poor from putting money back into the economy. It also subsidizes automobiles; therefore, it's doubly bad for the economy because it moves money out of state. So one alternative to raising the minimum wage is to end the TransNet sales tax.

San Diego's minimum parking requirements encourage people to drive and send their money out of state; therefore, it's bad for the economy. They also raise the cost of living (see the article below); therefore, it's doubly bad for the economy. And it takes away our property rights. So a second alternative to raising the minimum wage is to end San Diego's current practice of forcing developers to overbuild parking lots, where "overbuild" means anything beyond the amount of parking where the marginal cost of adding another parking space equals the amount of revenue it would bring (MR=MC).

Why is a politician's answer to every problem to increase spending as Gloria suggests by raising the minimum wage? Why not instead reduce costs, increase freedom, and keep California's dollars in the local economy?Streetsblog Capitol Hillhttp://dc.streetsblog.org/2013/09/16/apartment-blockers/Alan Durning is the executive director and founder of Sightline Institute, a think tank on sustainability issues in the Pacific Northwest. This article, originally posted on Sightline's blog, is #9 in their series, "Parking? Lots!" Have you ever watc...

Mark Giffin
Mark Giffin subscribermember

Meanwhile, in other news.......
http://www.bloomberg.com/news/2014-01-23/davos-makes-inequality-its-business-as-political-backlash-seen.htmlDavos Finds Inequality Its Business as Backlash Seenhttp://www.bloomberg.com/news/2014-01-23/davos-makes-inequality-its-business-as-political-backlash-seen.htmlTap for Slideshow More Davos Coverage >> Reducing inequality is usually the business of protesters at the World Economic Forum in Davos. This year, it's the buzzword for the business elite worried about their bottom lines.

Chris Brewster
Chris Brewster subscribermember

40 hours of work per week, skilled or unskilled, should earn a living above the poverty level of a community.

Mark Giffin
Mark Giffin subscribermember

@Bit-watcher  

The progressives have two agendas with this proposal. 

First of course is to get the minimum wage raised which if they over reach will disrupt business.

The second agenda, which I believe holds more importance with them, Is a populist measure (like this) to help them "get out the vote" for the November elections.

-P
-P subscriber

@Fred Schnaubelt Many of those jobs you listed as going away are because technological changes made them unneeded. Once the technology became affordable (and, in the case of DIY, easy to use) those jobs were outdated, regardless of what the minimum wage was. That trend will continue, whether minimum wage goes up, down, or stays the same.

-P
-P

Mark, I'm wondering what you think about the idea of more of your customers have more disposable income?

Randy Dotinga
Randy Dotinga memberauthor

Do you think there should be a minimum wage at all? Also, it seems unlike that we'll end up with a minimum wage in the $15 range. That seems to be a starting position for negotiation.

I'm visiting San Francisco at the moment. The minimum wage here is $10.74. Just went up on Jan. 1. Would be useful to see if there's been any exodus of businesses as a result over the years they've had a higher minimum wage.

Mark Giffin
Mark Giffin subscribermember

"I can't see how a small business is hurt by this"
I know you can't Chris. Neither can Todd.
As someone who has meet payroll and the associated overhead I can. His proposal is too much too fast and will be destructive to the little guys. It is reakless but hey...
Its easy to be righteous when you have no downside.
I Wonder if he or his staff has visited any small businesses.
Honestly I wonder if he even cares..

Chris Brewster
Chris Brewster subscribermember

Mr. Giffin: My view is that an economy needs a strong middle class to be strong economically, since the middle class is the group with the largest (aggregate) amount of expendable income to spend on things beyond the basics. I also believe, as I noted earlier, that 40 hours of unskilled work should generate enough income to live beyond the poverty level in a community. As minimum wage rises, so will wages above, which may help reduce income disparity generally (assuming that minimum wage will not benefit the super-rich).

I can't see how a small business is hurt by this. If they make widgets and they are in competition with another company that makes widgets, both will have the same labor costs. Its a complicated economic issue and I don't pretend to have all the answers. Clearly economists disagree on this. But with all the concerns about SNAP for example, wouldn't it be nice if anyone with a full time job made enough that they didn't qualify for SNAP because they make enough money to feed themselves? We would all pay for this in terms of more expensive goods and services related to higher labor costs, but all taxpayers pay now.

Randy Dotinga
Randy Dotinga memberauthor

And would that affect public workers? Teachers, cops, postal carriers, trash collectors, etc?

Randy Dotinga
Randy Dotinga memberauthor

Can you give me a citation on that?

Chris Brewster
Chris Brewster subscribermember

Mr. Jones: To answer your question, no I don't think we should seek to reduce diversity. I have visited Denmark a number of times and have relatives there. Religion is a very small part of the life of most Danes.

Randy Dotinga
Randy Dotinga memberauthor

It's easier to say "geepers, why not a million dollars an hour and everybody gets a pony?" rather than settle on a number (or no number, no minimum wage at all) and argue for that.

Eric Spoerner
Eric Spoerner subscriber

Pretty sad if your best argument against a minimum wage hike is the "slippery slope" fallacy.

Chris Brewster
Chris Brewster subscribermember

We're too late to set an example for the world. For that you need to check the world's happiest countries. You'll be happy to know that even Denmark doesn't rise to $30, but you did forget universal healthcare, which they do offer.The World's Happiest (And Saddest) Countries, 2013http://www.forbes.com/sites/christopherhelman/2013/10/29/the-worlds-happiest-and-saddest-countries-2013/Are you better off than you were five years ago? Is the world? The Legatum Institute seeks answers with its 2013 Prosperity Index. Everywhere you look in this world there are signs of instability, destruction, hopelessness. Syria is in civil war. Lib...

Bit-watcher
Bit-watcher subscriber

@Derek Hofmann  Cars used to be manufactured in California.  There used to be slaughterhouses in California.  There used to be lots of businesses in California.  They departed because of cost.  Making California an expensive place to do business, and then trying to boost the wages of minimum wage to "make up" for the shortfall in jobs caused by the exodus of these middle-income businesses doesn't seem to make any sense.  

Jim Jones
Jim Jones subscriber

I agree. A guaranteed $30/hr for every job, a guaranteed 40 hrs a week, and a Calpers retirement for everyone!

Bit-watcher
Bit-watcher subscriber

@Mark Giffin @Bit-watcher  

It's Rome all over again -- bread, without the circuses (that comes in on cable).  

Nothing's changed in 2,000 years.

Mark Giffin
Mark Giffin subscribermember

Peter
My clients were not in the income bracket we're talking about.

Chris Brewster
Chris Brewster subscribermember

Mr. Dotinga: An NPR show host today interviewed the Harvard researcher who issued the recent study on economic mobility in the US. Interestingly, he mentioned that San Francisco is one of the areas of the US where this is least severe.

Mark Giffin
Mark Giffin subscribermember

Randy. read my other posts. I think what the state did is prudent.
I'm saying what Todd is proposing is reckless.

Jim Jones
Jim Jones subscriber

Chris, you bring up "universal healthcare" as if correlation was causality, but you draw the line at Denmark being 98% Christian and 99% white according to their own census, even though those correlate as well?

Where do you get your ideas of what correlations are important? Did you research historical data and find the "happy" subsets of northern Europeans were an unhappy lot before they had "universal health care"?

Just wondering, because on the face of it the attempt to tie universal healthcare to happiness seems transparently non objective.

Jim Jones
Jim Jones subscriber

I'm not offering a slippery slope argument, I am saying that $15 hr isn't enough, and no retirement isn't enough. You can live comfortably here on $30 hr, and no one should struggle with poverty in retirement, so why not do it right?

Jim Jones
Jim Jones subscriber

Gosh, you look at the happiest countries and you quickly notice the lack of diversity, overwhelmingly white Christian countries.

Should we seek to emulate that?