News

Mixed reactions accompany South Bay minimum wage increases

Mountain View will increase minimum wage by 25 cents

In 2017, Kirk Vartan turned his award-winning A Slice of New York pizza into a co-op, cutting his workers into equal partnership.

Part of the deal includes being paid at least $21 an hour to start, attributed in part to the San Jose business's unique structure. The pay rate is much higher than city's minimum wage of $15.25 an hour, and closer to Vartan's goal of a living wage for his workers.

So it might not matter in the short term that San Jose, where one of Vartan's two restaurants is located, raised its minimum wage Jan. 1. But to Vartan, the bare minimum isn't enough.

The minimum wage goes to $15.45 an hour from $15.25 an hour. San Jose is one of several cities in the region to implement a minimum wage hike.

Cupertino will increase its minimum wage to $15.65 per hour from $15.35 per hour. Los Altos, Palo Alto and Santa Clara will increase their minimums to $15.65 from $15.40 per hour. Mountain View and Sunnyvale — both tied for the highest minimum wages in the region — will increase to $16.30 from $16.05 per hour.

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That leaves the most populous city in the region — once a national leader in raising wages — almost $1 per hour behind the highest minimum wages in the South Bay, and far short of the living wage of $20 an hour for a single person with no children for Santa Clara County as calculated by the Massachusetts Institute of Technology.

Scott Myers-Lipton, a sociology professor at San Jose State University, agrees.

"San Jose, which was a leader in the minimum wage debate, now is at the bottom of the heap," said Myers-Lipton, who in 2012 led a group of students to campaign successfully for a $2 minimum wage increase in San Jose. "We're in last place."

A 2016 study, conducted by economists at the University of California, Berkeley, found raising the minimum wage to a then-high of $15 in San Jose would result in a wage increase for 31.1 percent of the city's workforce and an annual pay increase of 17.8 percent for those getting raises.

It would disproportionately benefit Latino workers who are more likely to hold low-wage jobs and would show "improved health outcomes for both workers and their children," the study said.

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The study also found businesses could absorb most of the payroll increases by raising prices an average of 0.3 percent, which was below the annual inflation of 2.5 percent from 2014 to 2019. Restaurants would have to increase their prices by an average of 3.1 percent.

The issue of price increases is where Myers-Lipton and Vartan disagree.

While Myers-Lipton sees a guaranteed increase in both wages and happiness across the board for workers and business owners, Vartan sees misguided policy.

"I saw senior elected officials speak about how minimal an increase to wages would be to a business, cities with ivory-tower analysis or theory," Vartan said. "But how does that theory hold up in a business where labor makes up 45 percent of your expenses? Saying there is a minor impact to profits is a joke."

That increase for restaurant operators, Vartan said, is just simple math.

"I am all for raising wages," Vartan said. "My problem is being told how to do it. The reality is, customers pay for everything. If expenses go up, so do prices."

Myers-Lipton said, however, that is what is expected. A 2 percent to 3 percent increase was something both Myers-Lipton and the UC Berkeley study predicted.

"The numbers are clear about the positive impact of the minimum wage (increase)," Myers-Lipton said.

The pandemic has crippled much of the service industry, which employs a disproportionate number of low-wage and minimum-wage workers, many of whom are Black and Latino.

Some business owners say lost revenue due to the pandemic is an even greater reason they should fear a wage increase.

According to a new Public Policy Industry Report, the unemployment rate for workers earning less than $30,000 from August to October was just over 25 percent and has likely "stripped away" many wage gains made by the lowest income earners.

All the more reason, Myers-Lipton said, that communities should be increasing minimum wage.

"Why in San Jose are we at the bottom of the heap — almost $1 behind Mountain View and Sunnyvale?" he said. "A dollar an hour increase would be incredibly helpful."

He said the warnings against wage increases from business advocacy groups have proven false. And with a pandemic to deal with, that false information might be even more devastating for businesses than wage increases.

Eddie Truong, the director of government and community relations for the Silicon Valley Organization, said the city should hold off on an increase because of the pandemic.

"Restaurants are particularly affected because the inability to have dining indoors or outdoors and to have minimum wage increases on top of that. Plus, restaurants, in general, are a thin-profit industry," he said.

Also Jan. 1, the statewide minimum wage bumps up to $13 per hour for businesses with 25 employees or fewer and $14 for all other businesses. In 2022, those amounts will increase by $1, respectively. Businesses with 25 employees or fewer have an extra year to comply with the state's goal of reaching $15 an hour by 2023.

This story, from Bay City News Service, was originally published on San Jose Spotlight here.

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Mixed reactions accompany South Bay minimum wage increases

Mountain View will increase minimum wage by 25 cents

by /

Uploaded: Sun, Jan 3, 2021, 9:53 am

In 2017, Kirk Vartan turned his award-winning A Slice of New York pizza into a co-op, cutting his workers into equal partnership.

Part of the deal includes being paid at least $21 an hour to start, attributed in part to the San Jose business's unique structure. The pay rate is much higher than city's minimum wage of $15.25 an hour, and closer to Vartan's goal of a living wage for his workers.

So it might not matter in the short term that San Jose, where one of Vartan's two restaurants is located, raised its minimum wage Jan. 1. But to Vartan, the bare minimum isn't enough.

The minimum wage goes to $15.45 an hour from $15.25 an hour. San Jose is one of several cities in the region to implement a minimum wage hike.

Cupertino will increase its minimum wage to $15.65 per hour from $15.35 per hour. Los Altos, Palo Alto and Santa Clara will increase their minimums to $15.65 from $15.40 per hour. Mountain View and Sunnyvale — both tied for the highest minimum wages in the region — will increase to $16.30 from $16.05 per hour.

That leaves the most populous city in the region — once a national leader in raising wages — almost $1 per hour behind the highest minimum wages in the South Bay, and far short of the living wage of $20 an hour for a single person with no children for Santa Clara County as calculated by the Massachusetts Institute of Technology.

Scott Myers-Lipton, a sociology professor at San Jose State University, agrees.

"San Jose, which was a leader in the minimum wage debate, now is at the bottom of the heap," said Myers-Lipton, who in 2012 led a group of students to campaign successfully for a $2 minimum wage increase in San Jose. "We're in last place."

A 2016 study, conducted by economists at the University of California, Berkeley, found raising the minimum wage to a then-high of $15 in San Jose would result in a wage increase for 31.1 percent of the city's workforce and an annual pay increase of 17.8 percent for those getting raises.

It would disproportionately benefit Latino workers who are more likely to hold low-wage jobs and would show "improved health outcomes for both workers and their children," the study said.

The study also found businesses could absorb most of the payroll increases by raising prices an average of 0.3 percent, which was below the annual inflation of 2.5 percent from 2014 to 2019. Restaurants would have to increase their prices by an average of 3.1 percent.

The issue of price increases is where Myers-Lipton and Vartan disagree.

While Myers-Lipton sees a guaranteed increase in both wages and happiness across the board for workers and business owners, Vartan sees misguided policy.

"I saw senior elected officials speak about how minimal an increase to wages would be to a business, cities with ivory-tower analysis or theory," Vartan said. "But how does that theory hold up in a business where labor makes up 45 percent of your expenses? Saying there is a minor impact to profits is a joke."

That increase for restaurant operators, Vartan said, is just simple math.

"I am all for raising wages," Vartan said. "My problem is being told how to do it. The reality is, customers pay for everything. If expenses go up, so do prices."

Myers-Lipton said, however, that is what is expected. A 2 percent to 3 percent increase was something both Myers-Lipton and the UC Berkeley study predicted.

"The numbers are clear about the positive impact of the minimum wage (increase)," Myers-Lipton said.

The pandemic has crippled much of the service industry, which employs a disproportionate number of low-wage and minimum-wage workers, many of whom are Black and Latino.

Some business owners say lost revenue due to the pandemic is an even greater reason they should fear a wage increase.

According to a new Public Policy Industry Report, the unemployment rate for workers earning less than $30,000 from August to October was just over 25 percent and has likely "stripped away" many wage gains made by the lowest income earners.

All the more reason, Myers-Lipton said, that communities should be increasing minimum wage.

"Why in San Jose are we at the bottom of the heap — almost $1 behind Mountain View and Sunnyvale?" he said. "A dollar an hour increase would be incredibly helpful."

He said the warnings against wage increases from business advocacy groups have proven false. And with a pandemic to deal with, that false information might be even more devastating for businesses than wage increases.

Eddie Truong, the director of government and community relations for the Silicon Valley Organization, said the city should hold off on an increase because of the pandemic.

"Restaurants are particularly affected because the inability to have dining indoors or outdoors and to have minimum wage increases on top of that. Plus, restaurants, in general, are a thin-profit industry," he said.

Also Jan. 1, the statewide minimum wage bumps up to $13 per hour for businesses with 25 employees or fewer and $14 for all other businesses. In 2022, those amounts will increase by $1, respectively. Businesses with 25 employees or fewer have an extra year to comply with the state's goal of reaching $15 an hour by 2023.

This story, from Bay City News Service, was originally published on San Jose Spotlight here.

Comments

OldGuy
Registered user
Whisman Station
on Jan 3, 2021 at 12:27 pm
OldGuy, Whisman Station
Registered user
on Jan 3, 2021 at 12:27 pm
18 people like this

Let's assume the entire wage increase is passed on to the customers.

If I understand the figures correctly, a meal that now costs $30 will cost $30.90 instead.

That is no big deal---I will gladly pay that if it gets the workers closer to a living wage.


Bill
Registered user
Rex Manor
on Jan 4, 2021 at 8:28 am
Bill, Rex Manor
Registered user
on Jan 4, 2021 at 8:28 am
9 people like this

Many classes of service workers like domestic help, caregivers, landscapers etc. are now moving into the underground economy. When you factor in taxes, benefits, workers comp insurance and a small profit for a service firm or legitimate business operator the underground worker can make good money and pay no taxes with cash at a rate lower the the business owner. The irony is that the higher you make a minimum wage it actually creates economic incentives to work around the system and expand gig worker markets.


"show yer math"
Registered user
Rex Manor
on Jan 4, 2021 at 8:33 am
"show yer math", Rex Manor
Registered user
on Jan 4, 2021 at 8:33 am
Like this comment

Bill: "the underground worker can make good money"

Care to specify your definition of "good money"?


Steven Nelson
Registered user
Cuesta Park
on Jan 4, 2021 at 3:07 pm
Steven Nelson, Cuesta Park
Registered user
on Jan 4, 2021 at 3:07 pm
Like this comment

Mountain View and Sunnyvale - IMO also showed their alignment with low-wage and minimum-wage worker families by being solidly for (all voting precincts) County School Board incumbent Grace Ma for Reelection. She in many peoples' views (a majority of Voters in her District) has a concern that manifests itself in her excellent support for poor family pre-K education through all of Santa Clara County.

I do not think MV with it's new Council will be in danger of curtailing it's past public policy efforts to "promote the general Welfare".


Dan Waylonis
Registered user
Jackson Park
on Jan 4, 2021 at 3:45 pm
Dan Waylonis, Jackson Park
Registered user
on Jan 4, 2021 at 3:45 pm
5 people like this

Alternatively, both employers and employees could decide what wage would be amenable to bother parties. But the difference between a low paying job and no job at all is vast.


Raymond
Registered user
Monta Loma
on Jan 4, 2021 at 7:44 pm
Raymond , Monta Loma
Registered user
on Jan 4, 2021 at 7:44 pm
4 people like this

About half of minimum wage workers are under 25, perhaps still picking up basic skills. About half also reside in non-poor households. The real minimum wage is zero, which the unemployed earn. When the employee fails to generate about double his or her wage, the job vanishes. When the min wage rises, people who are already employed have the best chance or remaining employed. The previously unemployed are more likely to remain unemployed. The "ins" may rise a little, the "outs" stay out.
It is convenient for pro-min wage research that the businesses that fail and the newly unemployed or still unemployed workers are so much harder to find and interview than are the surviving businesses and employees.


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