San Francisco Wins a Battle in the Fight For $15

San Francisco Career Fair Helps Military Veterans Find Jobs

Source: Getty Images

Lost in the hullabaloo of the 2014 midterm elections, in which two more states (and Washington D.C.) voted to legalize marijuana and four traditionally red states voted to raise their minimum wages, was that the west coast liberal bastion of San Francisco will also be seeing a minimum wage bump — all the way to $15 per hour. Normally this would have been much bigger news, but it was seemingly left out of the national narrative as there were simply many other things going on, but it is sure to be huge news for the thousands of workers who will be getting a raise.

According to the San Francisco Examiner, the passing of Proposition J will see the city’s lowest-paid workers get a raise to $12.25 per hour on May 1, 2015, followed by more gradual raises to the eventual target of $15 per hour in July of 2018. Following that, increases will tied to the Consumer Price Index. San Francisco already had the highest minimum wage in the nation at $10.47 per hour, and this increase to $15 represents roughly a 30% jump.

“Tonight, San Francisco voters sent a message loudly and clearly to the nation that we can take on the growing gap between rich and poor, we can give a well-deserved raise to our lowest-wage workers, and we can do it in a way that protects jobs and small business,” mayor Ed Lee said in a statement, released upon the measure’s passing. “I grew up washing dishes in my family’s restaurant. I know firsthand that a few dollars more an hour can make a difference in the lives of hardworking families struggling to afford our City. Tonight, I’m very proud that San Francisco came together – business, labor and nonprofit leaders – to pass a consensus measure that will now give our City the highest minimum wage in America.”

Lee is right. San Francisco, along with its northerly west coast neighbor of Seattle, will have the highest minimum wage in the country at $15 per hour. Both cities will have a few years before the new level is fully instituted, giving businesses time to adjust and figure out ways to make things work.

Naturally, the biggest concerns with the higher wage are that it will result in jobs being lost and the possibility of businesses even fleeing these two cities. While those concerns are justified, it’s hard to say what will happen at this point. It is hard to think that businesses that pay minimum wage, like McDonald’s for example, are going to simply close up shop and leave two of the biggest markets in the country. But it will be interesting to see how they adjust.

Arif Ali/AFP/Getty Images

Photo by Arif Ali/AFP/Getty Images

Some residents are also concerned that having the lowest earners make a few more dollars per hour will have a negative effect on everyone else in the form of rising prices for goods and services. “Fifteen dollars is a little high. You have to adjust accordingly. Otherwise, items like milk, bread and water will go up and make it even harder to live,” Allison Clark, a local resident, told local CBS affiliate WDTV.

Even though Seattle decided to go through with its minimum wage increase a while back, it has yet to happen, so there really isn’t anywhere to look for a prediction of what’s to come. But one thing is for sure, San Francisco is one of the most expensive cities in the country to live in, and is experiencing a lot of growing pains as the inequality gap leads to gentrification of neighborhoods and rents rise to unaffordable levels. To put things in perspective, WQED News, a Bay Area NPR affiliate, has reported that in order to afford a one-bedroom apartment in San Francisco, workers need to make a whopping $29.83 per hour.

Maybe $15 per hour actually isn’t enough?

There has been a study done, fortunately, in preparation for the ballot measure’s passing. According to a brief from The Center on Wage and Employment Dynamics at the University of California in Berkeley, the bump to $15 per hour will effect 142,000 workers, a total of 23% of the city’s workforce. It’s expected that workers will see their incomes increase by $2,800 per year as well. Best of all, researches think businesses will be able to absorb it with little issue.

“Our analysis of the existing economic research literature suggests that businesses will adjust to modest increases in operating costs mainly through reduced employee turnover costs, improved work performance, and a small, one-time increase in restaurant prices,” the study concludes.

If those predictions hold to be true, then it could push even more voters and lawmakers to support wage increases across the country. For now, it’s simply a matter of watching it all play out.

More from Business Cheat Sheet: