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.
