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San Francisco increases minimum wage, but may do little to help

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Photo Illustration by Tessie Navarro / Multimedia Editor

As of Jan. 1 of this year, the city of San Francisco has the highest minimum wage of any place in the nation. The current minimum wage in the city is $10.24 an hour, $3 more than the national minimum wage. San Francisco is one of three cities with its own minimum wage, the others being Sante Fe, N.M. and Washington D.C.

The increase, while based in good intentions, might do more harm than good.

The wage hike has sparked criticism from the business community. Often referred to as “the restaurant city,” San Francisco restaurant owners say the wage increase has forced them to cut kitchen staff and some have even considered moving their restaurants out of San Francisco.

The increase, however, is not new to the city. San Francisco first voted to create its own minimum wage in 2003, establishing $8.50 as the minimum, and it has been climbing ever since.

The San Francisco Living Wage coalition said that $10.24 still is not enough to make one’s way out of poverty in San Francisco. The coalition says in order to meet livable wage standards,  a single person would need to make $15 an hour, and a parent with children would need to make $36. So despite the increase in minimum wage, the amount is still not nearly enough to cover living expenses in San Francisco.

Problem is, you’d be hard pressed to find any voter or business person who’d be okay with raising the minimum wage to over $15 an hour, plus healthcare and other expenses.

Meanwhile, here in Los Angeles, contract workers and employees of the hotels near LAX are paid a living wage of $10.42 plus an additional $1.25 for health benefits. People working at LAX and the Van Nuys and Ontario airports are reported to earn at least $10.42 an hour plus an additional $4.55 for health benefits.

In 1998, Barbara Eherenreich, the author of Nickel and Dimed: On (Not) Getting By in America, said in her book that the living wage for a family of four across the nation was $14 an hour, translating to an income of $30,000 a year. The book was chosen for the 2008 Freshman Convocation here at CSUN. Eherenreich said that those figures account for both healthcare costs as well as childcare, which are usually factors not taken in account for when setting the minimum wage.

“I was a bit irritated that the faculty chose that book for the freshman convocation,” said CSUN Economics Professor Shirley Svorny. “It doesn’t make much sense from an economic perspective. Minimum wage forces employers to pay employees at such a rate that the price of goods goes way up. That affects consumers, especially young people. Employers don’t have that much incentive to hire young college-aged students to pay minimum wage to. It in some ways hurts the same people it is trying to help.”

However, a 2004 peer reviewed study conducted by the University of California, Berkeley concluded that though the added cost of increased minimum wage was passed on to customers, it had no significant impact on employment numbers or the likelihood that employers would move their businesses elsewhere. However, the wage boost did increase the time that employees spent working minimum wage jobs.  This means that although an increase might help in the short term, it could hurt in the long-term, as socially mobility will be lessened with employers finding no incentive to promote their minimum-wage employees.

“While it is true and not unprecedented for cities and states to set their own minimum wage to reflect their average cost of living, if you really care about the working poor you shouldn’t be looking at the minimum wage,” said Svorny. “It doesn’t really have that much effect on the poorest Americans. You should be looking at earned income tax credit if you really want to help the poor. The money that they will earn from the tax credit far exceeds any profits they’d make from the increase in minimum wage.”

A much better way to improve the living conditions of the working poor is by providing education, which is rising in cost every year. To help people develop the skills necessary to achieve a level of social mobility that will allow them to thrive, we need to sustain low-cost programs for college students and affordable adult programs resistant to cuts.

Education might be a time-consuming method to help the working poor, but it is successful. It still remains unclear whether minimum wage increases will have a significant help. My fear is that won’t.

8 Comments

  1. VladLenin Mar 22, 2012
  2. BurgerLess Mar 22, 2012

    If you’re trying to support a family of four on the minimum wage earnings of one person, you’ve already made some pretty bad life choices.

    1. VladLenin Mar 22, 2012

      “Choices” imply personal responsibility. It is easier to blame society, or government.

    2. Karol Altamirano May 17, 2012

      Sometimes that’s not of any fault of the parent who is trying. A parent that may have been the primary provider could leave one day and never come back. The one left behind may have become unemployed because of the financial crisis or is left with having to work only at minimum wage. Please do not be so quick to assume everyone who is struggling in that situation just made poor decisions. Things happen to even the best of us that are really difficult but it’s for our refinement and learning in this life.

      1. BurgerLess May 17, 2012

        Welcome to the party Karol. “Sometimes” is a pretty squishy word. There are exceptions to every situation. But on the whole, starting a family on government assistance and expecting society to pick up the tab requires a multitude of errors.

        1. Matt Chimento Aug 14, 2012

          I think Karol means to say that its stupid to assume that people just up and PLAN ON starting a family on govt assistance as you claim Americans do… No one planned for the economy to tank, no one plans for a husband or wife leaving them or passing away to unforeseen circumstances… The safety nets that exist are terribly managed, and i do agree that people need to plan better… But how about getting everyone in America a reasonable quality of education so they have the know how to even make these better decisions you want them to make…

  3. VladLenin Mar 22, 2012

    It has been found(or it had been found) that successful people hold(held) part-time, low paying jobs. These entry jobs develop work skills that “workers” leverage later in their careers. Raising the minimum wage, reduces(or eliminates) these entry jobs, and robs workers of this critically important experience.

    Good article.

    Liberalism is a disease. While “good intentioned”, Liberal ideas almost always result in negative outcomes.  Liberal social policies were the death of Detroit.  They are now killing California. As college(CSUN) indoctinates the next generation, sadly, it doesn’t appear that we can turn the corner, unless students WAKE THE HELL UP!

    Vlad

    1. Matt Chimento Aug 14, 2012

      So liberal policies like a 40 hour work week, and overtime pay, and all sorts of other social stimuli are killing us? I don’t completely disagree with the notion that many liberal policies have some really shitty outcomes, but you just sound like an ideological right wing hick… how about a little balance? WTF has all the conservative policies that Bush enacted gotten us?! It sure as hell wasn’t Obama Care or any of his policies that plunged us into the mess we have been in since Bush so conveniently finished his 2nd term, only just in time to alleviate the blame for his 8 years of horse shit policies…

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