“Given the State of California’s recently adopted 25 percent increase in the minimum wage to $10.00 per hour by 2016, the San Diego Regional Chamber of Commerce supports federal efforts to equalize the national minimum wage in order to promote an equitable and competitive business environment, as well as help our nation’s workforce and create jobs. The proposal to create a separate minimum wage in the City of San Diego and significantly increase the rate well in excess of what has been adopted by the State of California not only puts San Diego at a competitive and economic disadvantage, it would also hurt the very workforce the proponents are purporting to help.”
-Jerry Sanders, President and CEO of the San Diego Regional Chamber of Commerce
Comments 41
San Francisco has one of the highest minimum wage rates in the Country and an unemployment rate (5.3%) that most municipalities would kill for.
“the San Diego Regional Chamber of Commerce supports federal efforts to equalize the national minimum wage in order to promote an equitable and competitive business environment”
Of COURSE it does. Rather than fight for economic freedom, the SDRCC joins the kleptocracy.
HQ – Aren’t you assuming that all minimum wage workers live in the city they work in? I’m pretty sure they are the users of BART.
Also looking at the cost of living there its probably a better example that raising the minimum wage fails to give a “living” wage.
Hypocrisy, is your point that raising the minimum wage will decrease unemployment or that raising minimum wage won’t kill jobs?
Elliott,
I am not sure that I understand the point of your question, but I am quite sure the same dynamic (low wage City workers living outside the City) exists in San San Diego.
As for your latter point, I totally agree. Would your solution be to pay theses workers even less?
Michael,
I don’t think the facts I presented are sufficient to prove the first point but they certainly are a good argument for the second one.
HQ: The San Francisco argument is wrong. I lived and worked in Silicon Valley, which includes San Francisco, for 12 years in a high tech executive job in the late 1990’s. As the center of the high tech industry, Silicon Valley is a monster economic engine with many extremely well-paid jobs. Of course the unemployment rate is low no matter the level of the minimum wage.
To encourage working, I favor taking federal and state government money from welfare and directing it to subsidize a couple of dollars an hour for low paid jobs. At least people would be working rather than being paid to be lazy. Too many able bodied people in California get welfare instead of working because they make as much money sitting at home as working.
I can’t find any rentals in San Francisco where a person making $13 an hour can raise a family of 5. Can you?
Also, the unemployment rate in Rancho Santa Fe is almost nothing. Why not propose a law that everyone is made into a millionaire? Or maybe it is the $1500+ a month HOA fees they pay that lead to such low unemployment levels?
Michael,
Your second point is completely irrelevant and I am sure you knew that as you were typing it. Or were you trying to say, that if we raise the minimum wage to more than $1,000,000 per year, we would have no unemployment.
Your first point begs the question: Would these minimum wage workers be better off at $8.00 per hour?
Dan,
San Francisco has not always had low unemployment , but I am more interested in your second paragraph. Yours is an idea that I am hearing more often. I am not sure that I am on board yet, but it is intriguing. What if we eliminated all (or at least most) social programs, but the government paid everyone a minimum livable wage? This would allow anyone who wanted to earn more a better chance of landing a good job.
“Raises” the question. Not “begs the question”.
I was being a touch sarcastic with my second point because I believe the point about San Francisco is irrelevant for a number of reasons. So I put a sillier, but equally as irrelevant point in to compare it.
Regarding the rest, people making $8 an hour are better off working towards a job that pays them more because the work they do is more valuable than $8 an hour.
It is reasonable to conclude that if the cost of labor goes up, companies will do more to control that cost, meaning not hire as much.
Ya know,
Thanks for the grammar lesson, but I am not sure my use of “begs the question” was incorrect.
Michael seemed to be making the point that since a person could not support a family of five on $13 per hour, it somehow made no sense to raise the minimum wage to $13 per hour. I pointed out the logical fallacy in his comment by asking if that person was really better off without that increase. I believe “Begs the question” is the proper terminology.
On the other hand, I find that your suggestion to say “raises the question” makes no sense since the answer to the question I asked is self-evident. “Raises the question” would imply something thought provoking was said that led to a follow-up question that needed to be answered. That was clearly not the case here.
It has been a long time since I sat in a college grammar class; thanks for the refresher.
“Or were you trying to say, that if we raise the minimum wage to more than $1,000,000 per year, we would have no unemployment.”
Would it Seriously, if minimum wage was $1,000,000 per annum, what you think would happen to unemployment?
Whenever people on the left talk about raising the minimum wage and how great the results would be, there are a few things that they never mention. The reduction in full-time employment as workers hours are reduced and others are laid off. Something else that goes unmentioned is how much employment goes underground, through cash payments and hiring of illegal immigrants at or below the old wages.
Brian,
“Or were you trying to say, that if we raise the minimum wage to more than $1,000,000 per year, we would have no unemployment.”
My comment was a sarcastic response to Michael’s comment about the unemployment rate in Rancho Santa Fe.
Let me make my point clear: When the City of San Diego passed the Living Wage Ordinance, the doomsayers on the right were hysterical with their claims that businesses would flee to neighboring cities and that substantial job losses were imminent. That didn’t happen and raising the minimum wage will also not cause any mass exodus of jobs and businesses.
Exhibit A is the City and County of San Francisco, a liberal bastion that many on this site would call the most anti-business region in California, if not the entire country. This is the same City and County that boasts an unemployment rate just over half that of the state and 30% lower than the nation as a whole.
Author
Sorry, some host server issues late yesterday, with a number of comments lost in cyberspace. Posted now, with issues resolved.
HQ,
“Michael seemed to be making the point that since a person could not support a family of five on $13 per hour, it somehow made no sense to raise the minimum wage to $13 per hour. I pointed out the logical fallacy in his comment by asking if that person was really better off without that increase. I believe “Begs the question” is the proper terminology.”
That is only the point he was trying to make if you need him to try and make that point because you just used “begs the question” incorrectly. San Francisco is too expensive so only the rich can live there which is why they have a low unemployment. That is what actually appeared to be the point made.
themarshallplan,
What people on the right forget is that increases in the minimum wage actually do not cause a decrease in hiring although I guess if you say it often enough, it becomes gospel. What people on the right also forget is that the underground economy is already alive and well and was even when the minimum wage was much lower than it is today.
Michael,
“It is reasonable to conclude that if the cost of labor goes up, companies will do more to control that cost, meaning not hire as much.”
That is only reasonable to conclude if you assume that companies have surplus labor that they currently don’t need to meet their customers’ demands.
Oh my! HQ, that’s the old Marxist nonsense that passes for economics in union halls, Sacramento and DC.
Labor is a component of a business. To be profitable (as opposed to being a drain), labor (like all components of an enterprise) must produce on average a higher additional revenue than the laborer is paid — including ALL costs and risks of employing another.
Using salary alone as a benchmark, a person who is paid $8 an hour but produces $10 of goods and services for his or her employer is a good business expenditure. But if that same employee must now paid $15 an hour while producing at the same level, that’s not gonna go well for the business owner.
There are many more palatable alternatives to losing $5 an hour with such an employee. Automation is one. Cutting back on less profitable production is another. If a fast food restaurant, that would likely mean operating the business only during the most profitable meal hours — it would be too expensive to operate during the off hours.
Hypocrisy questioned
Of course the hiring of illegal immigrants and under the counter cash wages has always been going on. So I will rephrase my statement; Increasing the minimum wage will lead to an increase in the hiring of illegal immigrants and untaxed cash wages. As for your assertion that increasing the minimum wage does not cause a decrease in hiring, I did say it would also lead to higher unemployment and an increse in part-time employment and a reduction in full-time employment. An example of this, while it does not involve raising the minimum wage, is the requirements of Obamacare on full-time employees, and businesses reducing the hours of their full-time employees in order for them to qualify as part-time so they avoid the increase cost.
Richard,
Or you can charge an extra $0.10 for a hamburger. The fact is that cities throughout the country that have increased their minimum wage have not seen a mass exodus of businesses, a mass exodus of jobs nor an increase in the unemployment rate. Some of the cities with the highest minimum wage (Seattle, Portland, San Francisco, Santa Fe) also have the most robust economies.
As for your specific example of fast food restaurants only being open during the most profitable hours to save on labor costs – perhaps, but consider this: even when closed, the owner is paying rent, insurance, franchise fees, some utilities, etc. Every hour without revenue means the owner needs that much more revenue per hour if the business is going to turn a profit.
Ya know,
In San Francisco, only 36.9% own their own homes, 67.4% live in multi-family housing and 13.2% live below the poverty rate (http://quickfacts.census.gov/qfd/states/06/06075.html)
The statement “only the rich live there” may apply to Rancho Santa Fe, but it certainly doesn’t apply to San Francisco.
HQ, the pointing to other cities’ minimum wage increases is flawed on several fronts:
1. The current minimum wage in many areas is not far removed from what the market price would be for available unskilled labor. Stated differently, if the the minimum wage were dropped in San Francisco, with local competitive pressures (and the enticing welfare alternatives that pay one for NOT working), it’s doubtful the wage voluntarily paid would drop all that much — plus the customer base is more well-to-do than in most areas.
2. The AMOUNT of the increase is a crucial factor. One study claiming little effect was for a 15% increase — in an area where even most unskilled labor was already paid higher rates. The current propose San Diego increase from $8 to $13+ is a 63% increase.
3. The effect will be felt over time — a short term analysis won’t show the full effect. As the mandated price of unskilled labor exceeds its level of productivity, alternatives WILL be sought. In essence, a significant minimum wage increase is a welcome subsidy for the automation industry.
What would happen to employment if the minimum wage was $1,000,000 per annum, HQ?
HQ, you airily dismiss concerns about a soaring minimum wage as “a dime more for a hamburger.” Nice round number — a dime. But total nonsense as a fact — unless you assume the average hamburger sells for about 50 cents.
Look back at my figures. Assuming the tight profit margins of the food industry forces the price increase on to customers, here’s the math.
A sit-down restaurant figures about 1/3 of its cost is labor. Let’s round down to 30%. Then if we increase the price of labor 63%, that translates to an 18.9% increase in prices. To make the “dime” work, the average restaurant (pre-minimum wage increase) hamburger will have to cost about 51 cents. My experience is that such restaurant prices haven’t been seen since the 1950’s. But then I don’t live in HQ’s parallel universe.
HQ, I understand the difference between fixed and variable costs. I’m not sure that you do.
If the revenue coming in per hour does not cover the VARIABLE costs, it’s an unprofitable time to be open. As long as the variable costs ARE covered, it’s better to not close the doors. What higher variable costs do is narrow the timeframe when revenue covers variable costs.
If it always made sense to stay open to just somehow cover the fixed costs, all restaurants would operate 24/7. VERY few do — because (to state the obvious) they find that they can’t cover the variable costs in the off hours. With a 63% increase in labor costs, the number of “off hours” will grow dramatically.
The 30% figure for the cost of labor cited (without citation, of course) by Richard Rider, even if true, includes many factors other than just the wage. Some, like payroll taxes, would also rise with an increase in minimum wage; others, like training costs, would probably decrease. The other fallacy in Mr. Rider’s calculations is his assumption that all of the employees are currently making minimum wage and that all would be looking at the same increase in pay.
It is unlikely that a 63% increase in the minimum wage would raise labor costs at a even a low-paying business like fast food by more than 20-30%. Accepting Mr. Rider’s contention that labor is 30% of this type of business’ total cost (I would still like to see a citation for that), the owner would need to raise prices 6-9% or less than a dime for anything on the dollar menu.
As for Brian’s question about what would happen if everyone was mandated to make at least $1,000,000 per year, my guess is that $1,000,000 wouldn’t buy as much as it does today. Of course this is very different than providing the bottom 20% of employees with a few extra bucks per hour.
Sounds like economics by the threat of force is inflationary while the private economy lowers costs (and thereby increased prosperity) for all
Brian,
Increased prosperity for ALL? Is that what you think we have today? I guess in your world, those that can’t afford bread can just eat cake.
Oh good grief, HQ–nobody is unable to afford bread.
The whole minimum wage argument is a scam. Less than 5% of the workforce earns is (down from 13%, 40 years ago). Most are under the age of 25 (and eligible for mom and dad’s Obamacare plan)., and 45% of them work part-time.
The minimum wage scheme is a wealth transfer from working-class people to suburban teenagers.
Brian,
I guess a Marie Antoinette reference was too obtuse.
I am not sure where you get your 5% figure from. The UT published a Minimum Wage Q&A on April 23rd and estimated the number of minimum earners in the City of San Diego at 200,000. With a population of 1.4 million, many of whom not of working age, I would guess that the percentage of minimum wage workers is closer to 20% or maybe even more.
I know you like to reminisce about the good old days, but the vast majority of minimum wage earners haven’t been suburban teenagers since John Travolta was driving Greased Lightning.
Way back in 2013, minimum wage workers were:
– overwhelmingly Caucasian (75%+)
– mostly under 25 (50%+)
– heavily teen-aged (25%)
http://www.bls.gov/cps/minwage2013.pdf
Maybe things have changed since then
Brian,
Are we talking about San Diego or the United States as a whole?
I thought the current discussion was about the City of San Diego and its proposal to raise the minimum wage.
Even if you want to talk about the country as a whole, doesn’t it concern you that 75% of the minimum wage earners (I think this qualifies as a vast majority) are past their teenage years and that approximately 50% are 25 or older?
“doesn’t it concern you that 75% of the minimum wage earners …”
Not really, HQ. Over 60% of minimum wage earners earn more money after one year and more than 85% of them are earning more at the end of three years.
I’m more interested in the finding out why a very small subset of people (less than 200,000 nationally) don’t earn more after 5 years. My guess is that they many are part-time workers, keeping the minimum wage job because of its flexibility.
POINT OF INTEREST: I was one of the 800 people who did not win the Padres public address announcer position– a job which pays about $15/hour and only has 80-90 days of work per annum. Why do you think so many people applied for that job and why would a very talented person (from New Hamsphire) work for what is clearly below a “living wage” in San Diego?
There was a great article about a Yale graduate named John Tessmer, renting an apartment in La Jolla in the U-T today. He makes between $15k-$30k per annum as an actor. Why would a highly-educated and talented, 47-year old man, work for so little money?
Answer those questions and you might discover something about some (not all) of the 200,000 people, working for minimum wage after 5 years of employment. Frankly, in a country of 300 million people, I can’t see the logic in destroying so many job opportunities, for so many people, to benefit .0007% of the population…
…unless you’re trying to buy votes.
Brian,
Again, I am not sure where you are getting your numbers, but they certainly aren’t applicable to the 200,000 minimum wage earners in the City of San Diego alone.
Since my Marie Antoinette reference wasn’t understood, I have run out of things to say.
I got the reference but I don’t think you’re reading what I wrote:
I’m not worried about the minimum wage worker who moves up the economic ladder (which 85% do)—that’s normal and there is no need to transfer wealth to those folks.. I”m wondering about the long-term (more than five years) workers at minimum wage.
Brian,
Me too, and there are a lot more of those (and those working barely above the minimum wage) than you seem to be willing to admit to, especially in San Diego.
Let’s start here, HQ:
1- How many people, in San Diego, are making minimum wage that have been at their jobs for five years?
2- How many of them are like the Padres announcer or the actor from La Jolla (or like my parents)?
3- How many are “stuck” because of education, training, or past criminal records?
Let’s start with answering those three questions then decide what we want the expected outcome for this small group of people to be. Isn’t that a more sane approach to public policy which intrudes on property rights?
Brian,
1. I find it interesting that you limit this to those that have been at THEIR job for five years. Many minimum wage earners move from job to job. It is also interesting that we are not including those making just above minimum wage.
2. Like you, I am not worried about the few that are chasing a dream and are not worried about how much money they make. For the record though, both of the people you cite in your example make significantly more than the minimum wage. Also, I am sorry to hear that your parents work at minimum wage jobs – I would think that you would be fighting to get them raises.
3. This is obviously the issue, but we are always going to have a significant percentage of people with low skills and minimal education. In fact, we are always going to have a significant number of jobs that are catered exactly to that demographic. This doesn’t mean that those jobs should pay enough for someone to live a reasonable life. In fact, unless you want the continuation of a multi-generational problem, it would be wise to provide low-skilled workers with a wage that allows them to work an 8-hour day. This would allow them to spend time with their children and we all know that parental involvement is the key to a child’s success.