San Jose Minimum Wage: Voters, Not City Council Should Make the Decision

By Scott Knies and Matthew Mahood

Rather than allow San Jose voters to decide in November, we hear some San Jose City Council members will push on Tuesday to increase the city’s minimum wage 25 percent, from $8 to $10 an hour, to take effect 90 days after passage.

For a city that moves at a deliberate pace on major decisions, it’s mind-boggling that the council has held next to zero public outreach and has neither analyzed nor debated the serious citywide impacts from such a law before considering it. What’s the hurry?

The proposal is on the table because college students and labor groups have qualified a $10 minimum wage initiative for the fall ballot. But given the lingering effects of the worst recession since the Great Depression, now is not the time for San Jose to dramatically increase the costs of doing business—especially since San Jose shares borders with cities that would continue to pay the $8 minimum.

This will not just affect employers paying the lowest wage. A worker currently making $10.25 an hour will be asking for a similar raise. And so it will go up the line as suppliers raise their costs and pass them along to their customers, making San Jose less competitive.

Moreover, some employee contracts are based on the minimum wage. If it should suddenly increase, it will have a domino effect that employers have had no time to plan for.

Proponents claim higher pay means low-wage workers will have more to spend, thus boosting the economy. But if employers cannot absorb an increase in the cost of labor, they will hire fewer workers, hire more-productive or more-educated workers, lay off workers or pass the costs to consumers.

Government has a patchy record of managing its own wage and benefit structure. Pension and benefit costs have ballooned and become unsustainable. To compensate, the city of San Jose has laid off thousands of workers and reduced essential services. Do the proponents of this wage-inflating measure think these same economic principles don’t apply in the private sector?

In fact, the cost of poor public policy as it relates to employee compensation has gotten so severe, the council has turned to voters for help. In a few weeks, citizens will vote on Measure B to reform pension and benefits. Let’s not repeat the history of making decisions on compensation without thoroughly analyzing the fiscal impacts over the long haul.

Here’s some other alarming provisions of the minimum wage initiative, which have received no airing or study:

  •  An automatic cost-of-living increase each year.

  •  Authority for the city to inspect workplaces, interview people and rifle through business payroll records to monitor compliance with the ordinance.

  •  A possible city-imposed cost-recovery fee on all employers to pay for administering the local minimum wage law.

  •  Mandatory compliance for any business license holder in the city, including nonprofits and businesses not based here but with facilities in the city.

Ironically, a few days ago, economic development representatives launched a new program to persuade businesses to “Choose San Jose.” Said one city staffer, “We have a lot of competition to the north.” Indeed! But if the minimum wage increase passes, businesses might rather “Eschew San Jose” for Sunnyvale or Santa Clara.

So, with the initiative now qualified for the November ballot, we advise the city council not to pre-empt citizens’ right to determine such a critical matter. We need robust public discussion, not hasty action. Let the voters decide.

Scott Knies is executive director of the San Jose Downtown Association and Matthew Mahood is president and CEO of the San Jose Silicon Valley Chamber of Commerce.

39 Comments

  1. > The proposal is on the table because college students and labor groups have qualified a $10 minimum wage initiative for the fall ballot.

    Just curious.  Did the college students and trust fund children who qualified this initiative submit a supporting “Environmental Impact Report”?

    What?

    They didn’t?

    How do they know that the increased numbers of desperate unemployed people resulting from the higher minimum wage, won’t be driven to eating spotted owls and fishing our streams clean of snail darters using checkerspot butterflies as bait?

    I’m worried.

  2. Scott,

    With all due respect, I could not disagree with you more. Have you ever tried to live on a minimum wage salary in today’s economy? The outrageous costs of paying for rent, food, gas for your car, PG&E, and just basic necessities have gone through the roof! Many landlords, property owners, grocery stores, restaurants, retail companies, etc. are making huge profits, but are not passing them onto their hard working employees.

    I have had several friends lose their businesses because the cost of their lease has gone up dramatically, and they were drowning under the costs of City fees, permits, insurance etc.

    At what point do you think that companies/landlords/property owners/etc. are going to start helping the very people who work so hard to feed their families, and help them be successful survive?

    • > Many landlords, property owners, grocery stores, restaurants, retail companies, etc. are making huge profits, but are not passing them onto their hard working employees.

      > I have had several friends lose their businesses because the cost of their lease has gone up dramatically, and they were drowning under the costs of City fees, permits, insurance etc.

      How in hell are landlords and property owners making huge profits if the businesses who lease those properties are “drowning under the costs of City fees, permits, insurance etc.”, cancelling their leases and going out of business?

      Is there a waly for landlords and property owners to make huge profits if no one is leasing their property?

      You’re not making any sense.

      • Lou,
        Stop selective reading and reasoning. May be you’ll get it if you try reading it again… One example of something you missed, “I have had several friends lose their businesses because the cost of their lease has gone up dramatically…”

        Santa Clara County has the one of HIGHEST rents in the Bay Area…Hum…

        • Kathleen:

          Your still not making any sense.

          If your “several friends” lost their businesses because their leases have gone up dramatically, I can only conclude that they are not paying the leases any more and those landlords and property owners who were “making huge profits” from the lease payments are no longer making profits, huge or otherwise.

          How in hell is this a problem that raising the minimum wage is going to fix?

          I don’t get it.

          But, then, I’m a troglodyte.

        • Lou,
          My friends were paying their leases on time, but went out of business when their leases were doubled and in some cases trippled.

          The bottom line for me is that you can’t keep squeezing blood out of an orange. Somewhere along the line we need to work together to make things fair for everyone. Like I said, I’m all for businesses making a profit, but there has to be some kind of fair compensation for the hard working people who are making their bosses business successful.

          I don’t know anyone who can make ends meet on minimum wage, even if they are sharing a place with someone else.

        • Lou,
          I have explained but apparently, you don’t get it. I’ll give it one more shot and then I’m done.

          You asked, “How does a greedy landlord come out ahead and make a giant profit if he doubles or triples the lease and the tenant can’t pay the lease and goes out of business?”

          You’ve got me there Lou, but they do it every day. Make no sense to me either. They do get tax deductions for vacancies, and often times sell their properties to large corporations, or to developers. And yes Lou, they make a profit…

          You asked, “Do you think a greedy landlord derives some smug satisfaction from walking around in his empty building and telling himself that “I would be making a billion gazillion dollars if someone would pay me a gillion gazillion dollars to rent this close”?”

          That’s the point Lou. They aren’t loosing anything. Look around at how many empty store fronts there are. Funny how many of these places end up as a tax deduction at the end of the year, and in some cases end up being torn down and sold to huge corporations to build retail stores, or housing. They push small business out and bring in big ones who can afford their prices. I have watched this go on for at least a decade now.  It’s a no brainer.

          “And what does this have to do with the minimum wage?”

          EVERYTHING. If people don’t earn a fair wage, then they can’t spend money, or pay their bills. I think you are smart enough to figure out that if people don’t spend money, businesses collapse, if people can’t afford to pay their bills, business passes the loss on to others, and or collapse.

          I don’t know about you but my credit card and bank fees have gone up because people who have defaulted left me and YOU to carry the burden felt by these corporations. It is a simple fact Lou, businesses will pass on their loss to us when they are failing.

        • Kathleen:

          You STILL haven’t explained:

          How does a greedy landlord come out ahead and make a giant profit if he doubles or triples the lease and the tenant can’t pay the lease and goes out of business?

          Do you think a greedy landlord derives some smug satisfaction from walking around in his empty building and telling himself that “I would be making a billion gazillion dollars if someone would pay me a gillion gazillion dollars to rent this close”?

          And what does this have to do with the minimum wage?

        • > They push small business out and bring in big ones who can afford their prices.

          Oh.  You mean that a better managed business, with products and services that customers desire more, and MORE EMPLOYEES, takes over the premises and pays the landlord a high rent?

          What’s the problem?

          Maybe the weak business who can’t afford to pay the rent should learn how to be better businesses, stop whining, and stop asking politicians to give them handouts.

        • > We can agree to disagree.

          No.  We can’t.

          California is a one party political culture.

          If we agree to disagree, we’re just accepting political division, and the dividers will have won.

          We have to agree.

          I think the best way for us to reach consensus is for you to undergo sensitivity training so you can learn to relate to my feelings of powerlessness when people disagree with me.

        • You’re right Lou. I should be ashamed of myself for respecting your opinion, and your right to have one that differs from mine. I apologize. wink

  3. Scott,

    Having worked for years with you on planning downtown events, I was shocked to not hear a peep out of you about downtown plans to close street in SOFA area.

    What’s up with that?

    Let voters decide seems to be the theme of Chuck on alot of issues, mainly Measure B.  He can claim it was the will of the people. Why because he is hoping the general public is not educated to do real research when it comes to voting on isues!.  Do you really think they care what hard working employees in downtown SJ make for a living?

    Most people know downtown is no longer safe to visit after dark.  Better to go to Santana Row.

  4. I’m with Scott, the minimum wage increase will provide very little benefit if the result is firing a substantial amount of employees in order to bring costs down to the same level or businesses relocating elsewhere. I would greatly prefer a program that offers free or highly subsidized training available to anyone for entry level tech sector jobs, where there is high demand and the starting salaries are $20-30/hr.

    • That’s a great idea.  But the free and the subsidies thing not so much in my book.  I think it’s fair to the city, taxpayers and workers if the subsidies were repaid with simple interest via the city acting as an employment placement agency of sorts.  It could expand beyond the tech sector too.

  5. Scott,

    Another question,  have you abandoned downtown SJ now that you are seeking another job on the Santa Clara Water District Board? 

    Maybe you need to get one of those minimun wage jobs since you did not do much for our downtown.  Just because you have a creek by your house does not qualify you to be on the board.

    The same board that is preparing a November ballot measure asking voters to renew a $52-per-year parcel tax to continue for another 15 years water-quality programs and flood control work under its Clean, Safe Creeks program.

    The same company that in under investigation for polluting our very water.

  6. Isn’t it telling that when this website has debated San Jose PD salaries, there have been dozens of posts by officers feeling sorry for themselves (“how can we possibly make it on just 130,000?!”)but when there is a debate about some schmuck making 8.25, it’s just me and Lou the Troglodyte? I doubt police officers have the slightest idea of what real suffering feels like.

    Anyway Kathleen,the problem with the minimum wage increase is that it makes employees more expensive. The owners will respond to this increased expense by A)firing employees B)working the employees like dogs c)moving to under-the-table shenanigans. All of these things are really bad. Think it’s hard to get by on 8 bucks? Try getting by when you’re unemployed. We need to support poor people by having good school systems, not by passing feel-good laws that gets poor people fired.

    @Lou: How in the world did you think to connect a minimum-wage law with environmental protection? It’s like your some sort of conservative troll mad genius.

    • dhkelly

      Really show me the facts how many retirees make 130K.  I would really like to know,  other than a few chiefs, DC’s and maybe a few Cpts and city managers like Deb.  Line public safety and dedicated employees do not make make this.

      So you three haters needs to get you facts straight, post them or just go away angry.

      EVERYONE NEEDS TO REMEMBER THIS IS NOT JUST ABOUT PUBLIC SAFETY, IT EFFECTS ALL CITY EMPLOYEES!

      • I didn’t say retires, I just said officers. I am under the impression that 130,000 is a very reasonable expectation, especially if the officer is willing to work a little overtime, and you take into account his pension. This is far more money than could be made by the average or even above average San Jose resident, it’s far more than a teacher makes, etc. and no, I do not consider policing to be inherently more difficult than being a teacher, or being a truck driver or being a gas station attendant.

        • dhkelly said, “and no, I do not consider policing to be inherently more difficult than being a teacher, or being a truck driver or being a gas station attendant.”

          Are you being serious?

        • Patrol officers do not make 130K, sure you can look at the city posts because they inflate saleries by including medical, dental etc.  but after taxes, paying into retirement, etc.  Take home pay is not all that great.

          OH and there is no overtime without supervisor approval, that is why most officers work other jobs on their DAYS OFF to supplement their pay.  GO FIGURE.

        • >“by including medical, dental etc.  but after taxes, paying into retirement, etc.”

          It must be so hard making 130,000, and then having to pay taxes. And it is so unfair that the 130,000 figure includes dental and medical. Everyone knows that those shouldn’t be counted as income, even though they are given as compensation for your work. And it must be so hard for officers to contribute to their own retirement plans, when everyone else on Earth is getting free retirement. No wonder you work overtime…you guys are practically starving.

          Oh wait. The median income for males in San Jose is $49,347. For females it is close to 13,000 less. This is for working people. Many working people live on even less. They are not given health care. They do not have retirement packages. They work overtime because their kids need to eat. And you guys sit around crying about making six figures because…you could be making even more in Santa Clara?

          Real San Jose residents get by on so much less than you, and you still don’t have enough. Do you expect to be paid like doctors? How about like lawyers? You are a cop. A public servant. You make tons more than teachers, tons more than secretaries, tons more than private security. If you hate your pay, then quit. We can replace you.

        • Starting salary for a San Jose police officer is $72.5k.  It takes 5 years to get to top step, which is just over $97k.  After taking a mandatory 17% (it was almost 23% last fiscal year) out for the retirement fund, going up to 19.39% in July (unrelated to Measure B) hundreds of dollars a month to medical (varies depending on the plan you choose; no it’s NOT free) and taxes, take home is less than $50k for entry-level, and around $60k for top step.  Maximum overtime pay for patrol officers and supervisors is three hours per week.  Any other overtime must be taken as “compensatory time.”  There are very few exceptions to that rule, and it’s been in place for many years.

          If measure B passes, an additional 16% will be taken out for retirement, for a total of just over 35%.  Virtually all other police officers in the state contribute between 0% and 10% to their retirement funds.  And that’s for a 3% per year accrual rate (i.e. 3% @ 50 or 55.)  San Jose’s accrual rate is 2.5%, and you need to be 50 years old with 25-years’ service, or 55 with 20 years. 

          Businesses and municipalities alike have to compete regionally when it comes to compensation in order to attract high-quality candidates.  San Jose PD is dead-last in overall compensation, and far below every other agency in Santa Clara County.  Honestly, I could go to work as a patrol OFFICER for virtually any agency in the Bay Area and make several hundred (in some cases over a thousand) dollars a month more than I make in San Jose as a SUPERVISOR, along with getting a substantially better pension.  For example, top step pay for a San Francisco Police Officer is $110,448, they pay 9% into retirement, and they’re just the middle of the pack in the bay area.

          So how easy will it be to replace officers who are leaving?  When SJPD recently put out the call for new applicants only 800 people applied for 70 authorized positions.  About 30-40 are likely to make the cut.  By contrast, when Oakland PD announced it was hiring earlier this year, they had 2,500 applicants for 55 positions.  The City has already dug a staffing hole that will take years to even begin to dig itself out of.

        • Having worked as a professional driver and a college instructor, I can tell you that law enforcement is substantially more challenging and difficult than either.  Gas station attendant?  Are you kidding?  I’m not trying to be disrespectful, but you clearly know very little about being a cop.  Find a local Citizen’s Police Academy and educate yourself.

    • dhkelly,

      I think it’s time that “excessive” profits stop being the focal point, and working together takes precedence. I have no issue with businesses making a profit, so long as they are willing to pay a fair wage for hard work.

      • Thank you!  Unions and city need to work together to lower the pension issue.  I hope everyone watches ch 11 @11pm to see Pete Constant admitting he he is double dipping in salery, why “because he can”.

  7. If it’s going to be on the ballot anyway, then let the people decide.  I’m for it, but I think it doesn’t make sense for the Council to decide in advance of a scheduled election.

  8. San Francisco has a minimum wage of $10.25 But San Francisco also has an infrastructure that supports its minimum wage.  San Jose on the other hand does not.  At first glance I think to myself.  It’s about time, this will attract workers from other cities but then wait the San Jose economy just isn’t robust enough to support it.  So yeah a minimum wage is a good idea but it will drive businesses out of CSJ.  Unless of course that is the plan. 

    What would be ideal is if people started socializing, shared housing and expenses, and if lease agreements were not so heavy handed in favor of the landlord. For example if I rent a two bedroom apartment for $1500 a month for my wife and kids and I, then furnish it with all the amenities and we decide to go spend a year in Bangkok, I should be allowed to sublet it, maintain my residency and rent it out to a person of my choosing for whatever price I negotiate.

    • Thank you president, I mean NC, go to Bangkok and enjoy your life there. Maybe then you will realize our freedoms here that we have fought for and appreciate our military and what they are doing for us.

      God Bless America and our hero’s over seas.

      • Wow Rick that was really out of left field there…

        All my brother was saying was, he wished he could “flip” an unfurnished apartment into a furnished one, and make a little profit from doing so.

        Doesn’t seem all that unreasonable to me, sounds like capitalism at its finest. Unless you hate capitalism.

  9. “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” — Abraham Lincoln

      • The point is, neanderthal, that the greed shown by Corporate pigs, who are only interested in their own bottom lines, need to be held in check by those who produce FOR them.  I am sure you understand the greed and hypocrisy shown by the banking institutions, the real estate markets, the oil companies, health insurance companies, developers, etc…..cannot even be remotely compared to small business enterprises.
          Their safety and greedy ways are only a revolution away.  Understand now?

        • And I thought I was the left-winger on these boards! So what happens when the minimum wage goes up, and a bunch of poor kids and ex-cons get laid off? How are you going to help them then? Oh, let me guess, with a revolution! 

          This measure is bad for poor people, and will result in kids losing their summer jobs at best, adults losing their full-time employment at worst. We shouldn’t play social experiments with the livelihoods of our poorest citizens.

        • > This measure is bad for poor people, and will result in kids losing their summer jobs at best, adults losing their full-time employment at worst. We shouldn’t play social experiments with the livelihoods of our poorest citizens.

          dh:

          I think you’re a failure as a left-winger.

          Turn in your food stamps, your roach clip and your granny glasses.

        • dhkelly,

          Watchdog is correct, one of the major reasons our economy is in this shape is due to corporate greed, and government loans made to them to bail their greedy butts out!

          Many people of all walks of life are unemployed or under employed. Many hard working, tax paying citizens are now receiving public aid, if they are lucky enough to qualify for it.

          Government’s answer to fixing their budgets is always taxing those who can least afford it. Business uses price increases to raise their profit margins on the backs of underpaid, and in most cases uninsured workers. These are facts you cannot dispute!

          The time has come for us to demand fair wages, training and education in areas that will increase the skills of dedicated workers, rather than outsourcing American jobs overseas, and to hold government, and businesses accountable for their bad faith practices.

          The revelation has already started all across the world. People are fed up and they are showing it with protests and boycotts.

  10. if you want voters to decide , then why do we even need a Mayor , council,city manager???  didnt you get your vote when you voted for your councilman?? How is it o.k. to take Measure B which is blatently illegal to the voters but not the raising of the minimum wage. This city is going over the edge and Mayor Reed and his band of misfits are driving the bus

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