Berkeley minimum wage study for San Jose has guaranteed outcome
Author: Michael Saltsman
Publication Date: January 2016
Newspaper: San Jose Mercury News
Topics: Minimum Wage
The San Jose City Council made the right decision to commission a study on the effects of a regional minimum wage increase to $15. But it made the wrong decision to select a team of economists affiliated with the University of California-Berkeley to conduct it.
The Berkeley research team has conducted similar minimum wage analyses for Los Angeles, San Diego, San Francisco, and Oakland in recent years. It even conducted one for San Jose’s $10 minimum wage proposal in 2012. But since then, its reports have come under fire for being predetermined, biased, and flawed. San Jose residents deserve better.
Los Angeles’ City Council learned this lesson the hard way last year when it selected the Berkeley team to conduct an analysis of that city’s proposed $15 minimum wage. Los Angeles City Councilmembers Mitch O’Farrell and Filipe Fuentes questioned the independence of the Berkeley team because it had previously produced a report for Mayor Eric Garcetti finding that a minimum wage increase would have significant benefits and little to no consequences.
They recommended that the city “seek data from a neutral source.” To no avail. The subsequent report came to a similar rose-colored conclusion.
Email correspondence between the Berkeley team and Garcetti’s office uncovered by my organization through a public records request shows O’Farrell and Fuentes were right to be concerned. In one correspondence from July of 2014 — prior to the start of Los Angeles’ minimum wage debate — Garcetti’s then-Deputy Chief of Staff Rick Jacobs tells UC Berkeley Labor Center Chair Ken Jacobs (no relation) that the Mayor would like to increase the minimum wage, and asks for his help in demonstrating how the policy would “help labor and the economy in general.”
Examining the Berkeley team members’ backgrounds in activism helps explain why their minimum wage analyses are little more than foregone conclusions. Ken Jacobs was previously the co-director of the San Francisco Living Wage Coalition. Another team member, Annette Bernhardt, was previously policy co-director at the National Employment Law Project (NELP), which admits that it is “coordinating the campaign to lift the federal minimum wage to more than $10 per hour.”
This activism is evident in its work. In its analysis of San Francisco’s $15 minimum wage proposal, it found that the hike would have only a negligible impact on business operating costs. But in a later story that made national news, a longstanding local bookstore owner said that the law would cause his operating costs to rise 18 percent — 90 times greater than the Labor Center’s estimate.
In another study done for Oakland, it estimated that the city’s $12.25 minimum wage would cause restaurants to increase prices by just 2.5 percent. But reports from numerous news outlets found that small businesses were forced to raise prices substantially because of the increase, some by 20 percent or more.
The Labor Center achieves its conclusions by downplaying or dismissing the costs and reduction of job opportunities that are associated with wage hikes. It’s an indefensible conclusion: A paper released last month by the Federal Reserve Bank of San Francisco summarized the research on this topic and found that even the latest and most up-to-date research confirms that a higher minimum wage will reduce employment.
Increasing the minimum wage is a significant decision and San Jose is right to take steps to analyze it. But relying on the conclusions of the activist outfit at UC Berkeley will only leave it further behind.