San Jose Debates Endorsement of State Minimum Wage Hike

Two years after upping its local minimum wage, San Jose may back a statewide effort to raise the minimum to $13 an hour by 2017.

The City Council will vote Tuesday whether or not to support the bill by state Sen. Mark Leno (D-San Francisco). Leno's legislation, introduced in December, would hike the state's hourly minimum wage to $11 by 2016, $13 by 2017 and start yearly inflation adjustments in 2019.

Mayor Sam Liccardo, who voted against San Jose's minimum wage increase in 2012 because it didn't allow for small businesses to gradually phase in, said the policy makes more sense at a state instead of municipal level.

"We recognize that a booming economy has not carried all of our residents along with it and that thousands are left behind facing much higher housing costs," Liccardo told San Jose Inside. "We need to find ways of ensuring that everyone can participate in the prosperity of the region."

Under existing law, California's minimum wage will reach $10 an hour by Jan. 1, 2016. Some local cities already have a higher minimum wage than that figure. San Jose's is $10.30, with yearly adjustments based on the Consumer Price Index. Oakland recently upped its base hourly wage to $12.25 effective this month. San Francisco voted in an incremental climb to $15 an hour by 2018. Berkeley agreed to a $12.53 minimum by October 2016.

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A statement from Leno's office stressed that, despite those local efforts, more than a quarter of Californians live in poverty.

Mayor Liccardo, Vice Mayor Rose Herrera and council members Raul Peralez and Magdalena Carrasco co-signed a memo supporting the wage hike.

"We all agree that no San Josean or Californian who works full-time should have to live in poverty," they wrote.

The group points to a study by the Congressional Research Service, which shows the purchasing power of the federal minimum wage ($7.25/hour) has steadily dwindled since 1968, when it equated to $10.77 in today's dollars.

"The problem of a stagnant minimum wage is magnified in California, and in particular, places like Silicon Valley," the mayor and council members' memo stated.  "As we well know, the cost of living in San Jose is one of the highest in the nation and the gap between rich and poor continues to widen."

Councilman Johnny Khamis said the state bill would threaten small businesses, namely pho restaurants, taquerias, independent bookstores, dry cleaners, neighborhood grocers and other mom-and-pop shops. The only survivors, he said, would be national chains that can "replace people with technology."

"Minimum wage jobs are not jobs intended for supporting oneself and one's family over the long run nor for maintaining a certain standard of living, they are stepping stones to better jobs," he wrote in a memo. "Instead of raising the minimum wage to the point where people can be complacent in a training-level job, people should be motivated to do their best to improve their earning potential as they build skills and develop specialized knowledge, starting at minimum wage and moving upward from there."

Instead, Khamis proposes an age-based minimum wage.

Councilman Chappie Jones agreed in his own memo that the wage increase is a step in the right direction, but he suggested there should be some exceptions: small business, youth employment organizations and nonprofits.

"These businesses are a pathway for minorities and immigrants to enter the middle class and achieve the American dream," Jones wrote. "Often times these businesses operate on very thin margins—think of the small coffee shop or restaurant that employs less than 15 employees. An increase in the minimum wage could force them to reduce the amount of workers they employ or even force them out of business."

Liccardo said he hopes legislators will be open and flexible in their approach.

While some studies in the wake of San Jose's minimum wage hike reinforced the idea that restaurants were forced to cut pay and lay people off, figures from the city's Office of Economic Development contradicted those claims.

About a year ago, NBC Bay Area found that in the year after the city's minimum wage increase, the jobless rate dropped, the number of businesses expanded and the hospitality industry actually added 4,000 jobs.

More from the San Jose City Council agenda for March 10, 2015:

  • San Jose may sign an amicus brief opposing an effort to block President Obama's executive action to protect 5 million undocumented immigrants from deportation. A Texas judge's order forced the Obama administration to delay the program less than two days before federal agents were about to start processing applications for immigration relief. San Jose plans to join the U.S. Conference of Mayors and National League of Cities in their amicus brief in the appeal of the Texas v. United States lawsuit to support Obama's immigration reform. Here's a copy of the brief and some background on the lawsuit. "It's important that we continue to be a place where immigrants feel welcome and have the opportunity to succeed," Liccardo said.
  • Both Bay 101 and Casino M8trix had glitches in surveillance, preventing city regulators from keeping an eye on things for a period of time.
  • Labor negotiations remain at a standstill, but Liccardo said that the council stands ready to negotiate without preconditions.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

8 Comments

  1. No before and yes now…. ‘more sense at the state level” ???? Sounds like double talk to me

  2. Minimum wage rate + housing costs + 1968 statistics

    Isn’t it wonderful to be corrupt and powerful enough to make your case using information that contradicts it? Minimum wage circa 1968 did not pay the rent in this valley, not for a single worker and certainly not for one with a family.

    Minimum wage was intended to keep the wage paid for labor of the lowest value (to the employer) from bottoming out due to an excess supply of labor (which we have now due to illegal immigration). Absent a cut in employer taxes (not going to happen), a 25% increase in the price of labor will cause employers to reduce their staffing levels (putting people out of work).

    The only effective way to raise wages here is to reduce the supply of labor, something that could be accomplished by sending the illegals packing. But if that were done then the rental rates would drop and there might not be much need for higher wages. Just think, it might then be possible for the generation of medicinal marijuana burnouts to find work and maybe move out of mom’s basement.

    Gee, it’s almost like things would be fine if the idiots in office would just stick to selling their votes and stacking up the freebies.

  3. Good for the Mayor. We have got to stop hitting people when they do the right thing. I get it, you don’t like him. But let’s not fight over the things on which there is agreement.

  4. > “As we well know, the cost of living in San Jose is one of the highest in the nation and the gap between rich and poor continues to widen.”

    Woodrow Wilson, Franklin D. Roosevelt, Harry Truman, John F. Kennedy, Lyndon Johnson, Jimmy Carter, Bill Clinton, Barack Obama. And the “gap between rich and poor continues to widen”?

    Lyndon Johnson declared “war on poverty”.

    Barack Obama borrowed and spent ten TRILLION dollars on economic “stimulus”.

    And yet, “the gap between rich and poor continues to widen”?

    How is this possible?

    “Insanity is doing the same thing over and over and expecting a different result.”

  5. A couple of points here:

    1. Illegal immigration artificially inflates the labor pool – particularly in lower-skilled and blue-collar jobs, which places the workers in a place of competition with one another thereby artificially reducing wages employers are willing/interested in paying employees in many of these positions. This is the exact opposite of the situation extant with SJPD wherein failure to compete (pay competitive wages/benefits compared to other agencies) for diminishing resources (qualified L.E. recruits/laterals) has created the current staffing crisis at SJPD.

    2. The artificially inflated labor pool has placed legal residents/citizens – especially teens – at a disadvantage when competing for jobs with illegal immigrants. Teens especially are vulnerable because it is far easier for an employer to balance a schedule by hiring employees who have no external, competing commitments such as time at school, college classes and sufficient time for homework.

    3. The lack of job skills/experience makes it harder for college students to find jobs once they get out of school.

    4. The minimum wage was never intended to be a living wage. It was intended to prevent the exploitation of juvenile/adolescent employees. In other words, no one should expect to be able to pay a mortgage/rent/ buy groceries to support a household solely on the income generated from one (or perhaps two) minimum-wage-paying jobs. This issue is directly connected to point #1.

    5. For those who think that increasing the minimum wage (i.e. to $15 or so an hour) is a good idea, Seattle and San Francisco are the case studies for the unintended consequences. Those businesses which are struggling to make ends meet will tend to close down, sending previously employed persons to the ranks of the unemployed. Businesses which might be doing marginally better will reduce operating hours and/or reduce staffing. These things have already occurred in Seattle and SF. One other possibility is that the fast food industry will transition fairly rapidly to more automated service processes. Don’t believe me? Consider that places like McDonalds and Burger King receive much of their meats already cooked and are simply warmed in steam trays. McDonald’s has also been experimenting with automated food ordering from unmanned kiosks. It’s not a huge leap to assume that the fast food industry will quickly spearhead food delivery which is largely automated thereby eliminating a huge cause of overhead costs: the minimum wage employee.

    • Just a very slight point — wages aren’t what’s generally meant by “overhead”. Labor is usually a variable cost, because it can be laid off. Keeping a roof “overhead” is more of a fixed cost. Automated food delivery equipment would add to that.

  6. Labor cost is almost always a major component of whatever product we can buy. It is certainly the largest component of government spending. On the private side, we have seen the elimination of human attendants at parking lots. What could be next? How about eliminating the box office people who give us our tickets to the movies and other venues? A simple ticket dispenser could do that. So too, “refreshments” at the movies could be dispensed like the Automats in NYC. If Google can make a car that can drive on roads without human intervention, why not a bus? Google could make buses that drive themselves. Let’s do the first test in SF so we can terminate the almost universally surly bus drivers employed by SF Muni. Many manufacturing processes are already automated–robots build cars, for the most part. Have you seen the Youtubes of German auto manufacturing plants? Incredible! Robots do almost all the work. Offices can be redesigned so that little robots could do the cleanup at night. Surely machines can be built to harvest and pack for shipment those crops not already harvested mechanically. Eliminate commercial cleaning jobs and crop harvesting jobs and the illegal immigration issue goes away, giving our moribund Congress a pass on that issue so they can spend more time campaigning for re-election. The minimum wage debate can be rendered virtually moot by eliminating most minimum wage jobs via technological advancements. Why aren’t the Apple and Google geeks working on all that instead of stupid stuff like smart watches for geeks who sleep in front of the Apple store for days ahead of product release, and rich dilettantes?