$15/hr: Great Idea....For San Mateo

The Daily Journal attempted to get its arms around a proposal to raise the minimum wage in San Mateo to $15 an hour with a long article filled with quotes from various community members.  Here is an excerpt

Brad Goldberg, owner of the downtown restaurant Vault 164, noted the average cost of rental properties in the area can stretch into the thousands of dollars; to the point where even $15 an hour may not allow someone to afford to live here.

“Unfortunately, I think the answer of raising the minimum wage isn’t going to be effective. It’s really going to come down to getting control over what and why it’s so expensive. That seems to be the bigger issue,” Goldberg said.

Goldberg said most of his employees are already paid above minimum wage and he can’t imagine cutting staff in response to an increase.

Yet as Gosula and (Chamber of Commerce CEO Cheryl) Angeles noted, Goldberg said the cost of increasing payrolls will trickle down — it’s just a part of business.

“I do want the minimum wage raised, yeah absolutely. But the question is going to be: where does the money come from to do this?,” Goldberg said. “And that’s a tricky one, because it’s like everything else, when something goes up, whether it’s the cost of meat or your rent, the simplest answer is always just to raise prices.”

I think this is a fabulous idea...for B'game and Belmont.  San Mateo should go for it.  After the 67% increase, B'game will probably get a nice influx of small businesses and we might even get a few restaurants back from San Mateo -  Roti, Moon McShane's and Gao Paong come to mind.  SM Deputy Mayor David Lim starts talking about carve outs for certain types of businesses and workers, so the gerrymandering of incomes is apparently on the table, too.  I say go for it.  You just have to ignore supply and demand as any number of economists...and business owners know:

The belief that increasing the minimum wage is socially beneficial is a delusion.  It is short-sighted and ignores evident reality. Workers who retain their jobs are made better off but only at the expense of unskilled, mostly young, workers who either lose their jobs or can’t find a job at the legal minimum.  A higher minimum wage attracts new entrants but does not guarantee them a job.  What happens on the demand side of the market is not surprising: if the minimum wage exceeds the prevailing market wage (determined by supply and demand), some workers will lose their jobs or have their hours cut.

You always want to live next to the regime (city, state, etc) that is doing the ignoring.

Comments

[resident]

It is disappointing to read about politicians and even some business people like the Chamber who think they can manipulate the economy to their choosing. Such a huge increase in a major cost for some businesses can never be justified and I don't see why it is even legal!

[Joe]

Looks like the slippery slope has caught San Mateo:

From the DJ:

San Mateo is closer to ensuring low-income workers are earning at least $15 an hour by 2019 after officials unanimously voted to proceed with a law that would require local businesses to pay higher than the state’s minimum starting in just six months.

- See more at: http://www.smdailyjournal.com/articles/lnews/2016-07-19/san-mateo-seeks-15-by-2019-city-council-unanimously-approves-minimum-wage-increase/1776425165276.html#sthash.0CdNUK8s.dpuf

["Bread & Roses"]

All people should be given "Bread & Roses" by the taxpayer...by force of the government.

What is Democratic Socialism and what is it not?
https://youtu.be/-XgdtHewGR0

[Joe]

Here is one for the I Told You So file:

https://www.theinquirer.net/inquirer/news/2479078/amazon-go-lets-you-trade-your-privacy-a-cashier-less-lunch-buying-experience

Instead of making small talk with cashiers or battling a self-service checkout that refuses to recognise your shopping in the bagging area, Amazon Go lets you waltz in, pick up a sandwich, and walk straight out.

"Our Just Walk Out technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When you’re done shopping, you can just leave the store. Shortly after, we’ll charge your Amazon account and send you a receipt."

[Joe]

The Sunday Chronicle section titled "Insight" is always good for a head-scratcher or two. I like to call it "Nearsight" as in near-sightedness or myopia.

This weekend's winner is Richard Walker who pens a piece titled "The dark side of prosperity" similar to the title of a book he has written--guess you can get almost anything published these days.

Walker talks about the bottom third of the workforce and writes "Wages rise only when there is pushback by unions, living wage ordinances and immigrant rights advocates." I know a slew of bosses and managers who would be very surprised to learn this. They imagine that they make offers of employment with wages that are attractive enough to get someone to take the job. Who knew it was just the unions, the government and the immigrant advocates?

[Steve Kassel]

And with unemployment in San Mateo County below 2%, prospective employees have a significant advantage.

The nonsense is that the left would have you believe that a minimum wage is supposed to be a living wage. It isn't. A minimum wage is for those without skills, without experience and without many choices.

Given that we are at full employment, many businesses with entry level openings have no choice but to pay $16 an hour and up.

You can even find gross, but unfortunately necessary jobs like poop scoopers and needle retrievers in San Francisco starting at $71,000 with benefits. (Just read it over the weekend)

[Steve Kassel]

I wasn't clear that the value of the benefits is included in the $71,000, rather than in addition to the salary.

[hollyroller@gmailcom]

I do not believe that a State and Federal $15.00 minimum wage increase will not effect anyone.

With the exception of anyone who is making less than $15.00 per hour.

My first job-1976, which was Unionized;
I earned @$12.00 per hour.
42 years ago.
42 years ago.
With Medical benefits too.
Illegals are a big part of the problem.
The employment by Specific Multi-National/ International Food business's are responsible for the illegal aliens coming to the US.
These Food Corporations' are the ones who should be financing and paying for "The Wall."
When has anyone seen any punishment/fines of the LARGE Corporations' willfully hiring illegals?
What a mess.
Maybe we really do need a "King" as leader of "The Free World."

[Joe]

Sigh. A study session on a local B'game minimum wage---don't we have enough issues that need attention without trying to change the economics of employment for the worse?

Burlingame Minimum Wage Study Session

Monday, February 3rd, 6 PM, Burlingame City Hall, 501 Primrose Road

Join us for a discussion about local minimum wage in Burlingame and other cities throughout our region. We welcome all stakeholders to participate in this information-gathering study session.

[Joe]

Double Sigh. This idea didn't die already?????

Attempting to keep pace with pay hikes paid across the Peninsula and eventually the rest of California, Burlingame officials laid the groundwork for increasing the city’s minimum wage.

The Burlingame City Council discussed Monday, Feb. 3, plans to raise the local rate by the start of next year, moving ahead of a law which will eventually require cities throughout the state to pay $15 per hour.

Citing the extraordinarily high cost of living in Burlingame and San Mateo County, officials and residents largely agreed policy should be established to help those living on the fringes of affordability fend off the threat of displacement.

https://www.smdailyjournal.com/news/local/burlingame-weighing-minimum-wage-hike/article_97f5e01a-4a32-11ea-97b6-2bb857421e20.html#utm_source=smdailyjournal.com&utm_campaign=%2Fnewsletters%2Fheadlines%2F%3F-dc%3D1581174011&utm_medium=email&utm_content=headline
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Just to reiterate again and again: the minimum wage is designed as a raw entry level wage for low-skilled workers trying to gain work experience. It's not a "living wage". It suppresses the demand for entry-level employees and thus does the exact opposite of it intention. Rinse and repeat Econ 101.

[Barking Dog]

Austin Walsh getting quotes from low hanging fruit Ms Cornell and Mr Dunham(according to his social media still doesn't have a job even with a Yale and Stanford education) is comical. Austin, go ask the merchants up and down the Ave and Broadway how they feel about how this will effect their businesses.

Totally agree...minimum wage wasnt designed or meant to be a living wage.

[Just Visiting]

Joe,
You have citations for your "Econ 101," in which raising minimum wage actually suppresses wages?

Here are some stories about economists who feel differently:
https://www.epi.org/publication/raising-the-federal-minimum-wage-to-15-by-2024-would-lift-pay-for-nearly-40-million-workers/

https://www.vox.com/future-perfect/2019/11/20/20952151/should-minimum-wage-be-raised

https://www.marketwatch.com/story/15-minimum-wage-reduces-poverty-doesnt-cut-jobs-berkeley-study-says-2019-07-08

There are economists who worry about whether increased minimum wage reduces the number of available low-skill jobs, but the evidence is mixed, at worst--and still needs to be compared against the wage growth for the people in the work force.

Burlingame is considering accelerating the statewide jump to $15/hour by one year. Hardly a radical move.

[Joe]

Just Visiting, I'll take the bait for just a moment since you could easily have worked your way past the EPI references on Google to more respected organizations. Economic Policy Institute (EPI) is a joke of an organization. So here is a source that lays out the danger:

https://media4.manhattan-institute.org/pdf/ib_36.pdf

"Specifically, using time-tested modeling techniques, such as those that Holtz-Eakin used while at the CBO, the authors found that a $15-per-hour minimum wage could mean the loss of 6.6 million jobs. What’s more, despite the fact that there would
be some Americans whose wages would be lifted by a higher minimum wage, the effect on the poor would be minimal—of the increase in income for low-wage workers, only 6.7 percent would go to families in
poverty. In other words, this is reverse–Robin Hoodism: taking jobs and income from the poorest to give to those who are better-off."
-----
There's 15 pages more to ponder, so have at it.

[Just Visiting]

Come on, Joe, a conservative advocacy group is the the best you've got?

https://www.factcheck.org/2011/09/american-action-network-american-action-forum/

So you can point to the economic advocacy org you like, and you don't like EPI.

https://www.citylab.com/equity/2019/04/minimum-wage-by-state-jobs-data-employment-economic-research/587992/

https://www.dropbox.com/s/m42bwe6omlcvkiv/Research%20Brief%20CDLZ.pdf?dl=0

http://davidcard.berkeley.edu/papers/njmin-aer.pdf

The point is the data doesn't support your "Econ 101" argument. Is there a live dispute about the overall impact? Sure. We know it pushes wages up. The question is how many jobs are lost as a result, and the data is far from overwhelming in your direction.

This is a far cry from the economist unanimity that rent control is a bad idea.

[Joe]

What does the American Action Network you are "factchecking" have to do with the Manhattan Institute I referenced? Read up on MI - they appear to be pretty centrist to me and certainly more competent than EPI.

On top of that, you are really only looking at half the minimum wage picture. As those wages go up, businesses costs (many small businesses costs) go up and prices go up. People cry about affordability and then support something that raises the cost of living. Can we agree that there is economist unanimity about that? And that it will just make life harder for our local brick-and-mortar businesses to survive? The little talked about story in B'game is how many empty storefronts there are. Just because the state is making a giant mistake (as they are wont to do a lot) doesn't mean we should accelerate the deleterious effects.

[Just Visiting]

1) American Action Forum is one and the same with the American Action Network, a co-publisher of the piece you linked. So what does it have to do with it? Everything.

2) One would expect a moderate price increase for goods and services at businesses that employee minimum wage workers, most of whom are not selling life's necessities. Consumers pay a fraction more so that employees can make more. That's the point. Particularly in a place like Burlingame (and the entire peninsula), where the average wage is exceptionally high, but a large portion of the workforce is in very low wage jobs, that's the rationale for forcing a higher minimum wage. The market hasn't done so (because low-wage workers have essentially zero market power, unless unionized, in which case they generally aren't minimum wage workers), so--in part to limit the amount of public assistance the government pays--the government steps in to raise the floor.

Most locally-owned businesses already pay $15 or more per hour as their floor. That's not what's driving businesses out.

[Joe]

The Manhattan Institute does the research. The AAN/AAF are 501c3 and c4 that don't do the actual research and don't have economists on staff or anything. That's why you don't like them. But is it fun to watch you attack the messenger and not the message. Did you read much of the piece?

One man's "moderate price increase" is another man's straw breaking the camel's back. A lot of the union wages are also indexed to the minimum wage so do not pretend a minimum wage increase doesn't ripple all the way up the hourly ladder. Minimum wager earners have "essentially zero market power" because they have few unique skills until they are trained and become more valuable. And even that argument wilts in a 2.3% unemployment econmomy like we have here now. I get it--you want government to fix everything while you ignore the Law of Unintended Consequences. Just like AB5. Tack on Prop 13 split-roll, transportation taxes (FASTER), gas taxes, EV taxes instead of gas taxes and a dozen more, but then yell "affordability".

Lastly, if most locally-owned businesses already pay more than $15, then Why Do It?

[Phinancier]

Just wait until Newsom and The Weiner take over PG&E, outlaw natural gas and start raising electric rates through the roof to pay for green energy. That's when your pocketbook will have an gaping hole.

[[email protected]]

The statement that Staff will have to be reduced is total BS.
90% of every Restaurant in the World operates on a very thin line. However, a higher wage for everyone will allow a few more people to afford go to Restaurants.
FYI
My first job out of Highschool...1977 my wage was $10.64 per hour plus Health Benefits.
I bet Dollars to Donuts most contributors to this site are at least Millionaires too.
Time to let others move up.

[Christopher Cooke]

Douglas Holtz Eakin is the guy who brought us the Bush tax cuts. You remember those, they were one in a series of “tax cuts that will pay for themselves “ but then blow up the deficit. I think George 41 was correct when he termed that style of economics “voodoo”. So, pardon me while I express skepticism at his so-called Manhattan Institute study that tries to justify not increasing the minimum wage when it goes against more recent research

[Just Visiting]

Joe,
You don't like one messenger, but you do like another. The determining factor is your politics. You latched on to one messenger and refused to read the rest. The MI/AAF talk about "projected" job loss, but the evidence is far from certain that there is any significant job loss. To the contrary, most major empirical studies do not show it--as the data you refuse to read shows.

Yes, most local businesses already pay $15 or more, but some do not--including major national chains who certainly can afford to pay. And the difference in the pockets of those who rely on minimum wage--and the statistics show way more people than you would like--is dramatic. A minor increase in the cost of your coffee makes a huge difference in the wallet of the two or three job-holding person cleaning the counters--and the family they support.

Joe, I'm not going to convince you, because you aren't interested in challenging your own worldview, but for others who come here for information, I don't want them just to get your misguided opinion.

[Joe]

Well JV, it sounds like we are more alike than we might think. We both shoot messengers we don't like, ignore studies that disagree with our worldview and call each other "misguided". Thanks for the discussion.

[No Milton Keynes]

I'm no egghead like you guys but if the price of something goes up doesn't the demand go down?

[KRN]

Dear No Milton Keynes

If the price goes up there is a decrease in the Quantity Demanded (the Numerical Units) , but not a drop (or shift) in the entire Demand.

A Change in the Quantity Demanded vs. A Shift in Demand.

I used to teach Economics to the local kids.... Now they have no idea about Milton Friedman because his ideology is not allowed in the classroom.