Newsom should spare California a minimum wage disaster

Original Article:

  • Author: Michael Saltsman

  • Publication Date: December 2015

  • Newspaper: OC Register

  • Topics: Minimum Wage

Lt. Gov. Gavin Newsom is running for governor in 2018 and proudly campaigning on a $15 minimum wage statewide, pointing to the policy’s so-called success in San Francisco.

“I can tell you as a former mayor of a city that had the highest minimum wage in the United States, the city has never done better economically,” Newsom recently told Bill Maher on the television host’s talk show.

That might be true for tech companies with double-digit profit margins and employees who earn many multiples of the minimum wage. But for small businesses most impacted by higher labor costs, Newsom’s rhetoric rings hollow.

Look no further than San Francisco’s restaurant industry, which has been hit hard by the $15 minimum wage that passed in November 2014 and is currently phasing in. Abbot’s Cellar, once one of the city’s top 100 restaurants, closed its doors earlier this year and cited the minimum-wage hike as a determining factor. For Source, a now-shuttered vegetarian restaurant, the increased labor costs were the “nail in its coffin.”

Independent book stores like Comix Experience and Borderlands Books were saved only by creative customer fundraisers that helped them cover the cost. The closure of Luna Park in the Mission is another sad tale: Soon after the $15 wage was passed, the restaurant’s owner decided to close his doors for good.

Proponents point to the continued existence of a restaurant scene in the City by the Bay as proof that $15 is not only workable, but good for business. For instance, Newsom’s own Plumpjack Group was initially interested in buying the Luna Park location. But these businesses survive on a clientele who can afford $16 cheeseburgers and another $6 for the fries to go with it. (That’s the going rate at Plumpjack’s Balboa Cafe on Fillmore Street.)

Business owners in San Francisco who serve a more traditional clientele aren’t so lucky. As the owner of Roosevelt Tamale Parlor, a popular Mexican eatery that went out of business recently, put it, “There’s only so much you can charge for tamales.”

That goes double for cities and counties far from the rarefied air in San Francisco.

Labor markets in Imperial County, for example, already struggle to supply even more-experienced job-seekers with work. The unemployment rate for all employees hovers around 22 percent. Across all occupations, the median hourly wage is $13.79. Even supporters of a higher minimum wage are uncomfortable with a wage floor that’s much higher than half of the median wage, which means $15 would be economic suicide for Imperial County.

Newsom is a successful businessman. Californians should be grateful for the jobs and investment he’s created, but they should also expect Newsom to know that not every business is the same as one of Plumpjack Group’s high-end boutiques, wineries or resorts.

Instead of backing a $15 California wage floor that even left-of-center economists acknowledge doesn’t make sense, Newsom should let San Francisco be San Francisco – and let the rest of the state preserve the entry-level opportunities that so many jobseekers rely on.