Minimum wage rise in San Francisco will improve the workerslifestyle, drive up consumer spending, stabilize the economy andimprove employment.
The most crucial role of minimum wage rise is raising low wages. Abroad consensus of research by economists agrees that minimum wagelaw raises pay for workers. According to Huff post (1), San Francisconow has the highest minimum wage in the state. Workers get a whopping$10.74per hour from the previous $10.24. The wage rise hasconsistently increased from $8.5 in 2004 to be the best in thecountry so far. Thompson (1) revealed that a decade ago, SanFrancisco raised its minimum wage from $6.75-8.50 per hour marking a26% increase. San Francisco first adopted the minimum wage law in Nov2003 (Reich et al. 3). An estimated 54,000 workers who make up to 11%of the city workforce have benefited from the wage increase.
Apart from the current minimum wage, residents of San Francisco willbe voting for another proposal underway on a minimum wage of $15 perhour to be operating in business by 2018. This wage would rise sinceMay 1st to 12.25 to $13 and $14 in July 2016 and July 2017respectively before getting to $15 in July 2018 (Reich et al. 4). Itis already a proposed case with estimations being made on theresulting wages and the impact it will have on prices, employment andbusiness costs.
Improving workers lifestyle
Being able to access basic needs like good education, food anddecent housing and clothes is the goal of each employee. Researchreveals that most affected workers are largely adultsdisproportionately women or people of color asserts Reich et al. (2).New research reveals that the impact of minimum wage as familypoverty reduction especially for working families. While looking atimpact of low wageworker earnings it is important to consider thefact that low paid workers are not able to contribute to the growthof the economy. There is a dire need to boost their wages andincorporate them in the economic growth if the city and state are toattain their development goals. This can be done through implementingwage laws that encourage workers to be productive.
Drive up consumer spending
Consumer spending alone drives the economy up by 70% and increasesthe demand to jump start production and rehiring. Raised minimumwages give workers who are
also consumers money including the low income consumers leading toimmediate spending on the local businesses and needs. The fairminimum wage act would generate $22billion in new economic activitiesacross the city (Thompson 1). Strengthening minimum wage helps builda sustainable economy without increasing costs for taxpayers. Manyfamilies rely on the minimum wage to go on with increased job lossesafter the great recession. Hit companies like manufacturing,construction, finance were hard hit leading to workers losing jobs.
Stabilize the economy and improve employment
Interesting findings reveal that there are no statisticallysignificant negative effects on the economy, employment or full timejobs following the law implementation asserts the Huffington post(1). In fact, the San Francisco economy has never been this good.Employment growth has been impressive outpacing California and otherlarge cities in the US. Economists have acknowledged that increasingthe minimum wage does not mean that the employment or the economywill fall. Increased labor costs can be absorbed through variouschannels such as worker turn over and improved efficiency or lowerprofits. San Francisco is one city that utilizes creative strategiesto ensure that the minimum wage law does not affect its economy. SanFrancisco ensures that the city has reached its minimum intendedeffect through high impact enforcement and education strategies.Since 2004, to mid 2012, the enforcement agency in San Franciscoprocessed 616 minimum wage worker complaints and recovered $5.8m backon behalf of 3004 workers (SIIAC 4). The San Francisco office oflabor standards assigns officers shared responsibilities of the citypaid sick leave law and 7.5 minimum wage enforcement forapproximately 611000 workers in the city (SIIAC 4).
The economy has positively been affected by the minimum wagegreatly. Having a stable economy that sustains citizens is the goalof every state. According to SIIAC (18), the common question ofraising minimum wage acts as a stimulus and engine to economic growththrough job creation and the expenditure on local communities. Onestudy estimated that the first minimum wage for San Francisco wouldresult to $45m in additional to spending low income families onclothes, food and other items that are accessible in the localneighborhood. Researchers from Chicago analyzed the future of minimumwage and its effect on household spending. The calculated $1.75increase from $7.25-9 per hour would raise an aggregate householdspending by almost $48 billion shortly (Reich et al 5). This risewould increase the GDP by 0.3%. The economic policy instituteestimated that the Miller bill would result in an additional$35billion wages paid by 2016 to workers. According to SIIAC (18),this rise would lead to a projected consumer spending that wouldprovide a net increase of $22.1 GDP and create roughly 85,000 newjobs.
Research on the minimum wage increase has been carried out toinvestigate whether it is a good thing for San Francisco’s economyor not. New job growth has been concentrated in the low wageindustries with 58% of the jobs being created after the recession.Growth occupations that developed after the recession include lowwage jobs in food preparation, customer service, health aides,service workers, home cares, sales persons, personnel, clerks andretails all rising fast after the recession. These occupations carrymany low wageworkers who can greatly benefit from the minimum wage.Their contribution to the growth of the economy is massive. With theminimum wage, it would be possible to boost their pay scales meetingthe needs of millions of employees in San Francisco and America too.
In conclusion, raising the minimum wage for workers is a good thing.With minimum wage the economy is stimulated through increasedconsumer spending. The impact of minimum wages on business isimperative as it directly affects the economy in a positive way.Minimum wage has also impacted businesses in terms of how manyworkers are hired, who is hired and the price charged for goods andservices. Workers are likely to benefit from minimum wages throughincreased productivity. Raising wages especially in low wageindustries encourages workers to stay longer with their currentemployer. A study in San Francisco’s airport found the annualturnover for security screeners to have escalated when the hourlywage rose from $6.45-$10. As the workers get their wages they areable to access better services and live comfortably. In terms ofemployment, minimum wage costs do not cause loss of jobs but opensroom for more employment.
Huffpost San Francisco. San Francisco minimum wage increases makesit highest in the nation, 2013, retrieved fromhttp://www.huffingtonpost.com/2013/01/02/san-francisco- minimum-wage_n_2397920.html
Reich, Michael, Ken Jacobs, Annete Bernhardt and Ian Perry. SanFrancisco proposed city minimum wage law: A prospective impactstudy, Center on wage and employment dynamics, Institute forresearch of labor and employment, Policy brief, University of California, Berkeley, 2014, retrieved from http://www.irle.berkeley.edu/cwed/briefs/2014-04.pdf
Schmitt, John. Why does the minimum wage have no discernibleeffect on employment? Center for economic and policy research,Washington DC, 2013, retrieved from http://www.cepr.net/documents/publications/min-wage-2013-02.pdf
Seattle Income Inequality advisory committee. (SIIAC) Localminimum wage laws: Impacts on workers, families and businesses,2014, retrieved fromhttp://murray.seattle.gov/wp- content/uploads/2014/03/UC-Berkeley-IIAC-Repo*/rt-3-20-2014.pdf
Thompson, Lynn. ‘Studies look at what happened when cities raisedminimum wage,’ the seattle times,2014 retrieved fromhttp://www.seattletimes.com/seattle-news/studies-look-at- what-happened-when-cities-raised-minimum-wage/