New Analysis: $10 Minimum Wage in San Jose Could Kill Over 1,000 Jobs, Poorly Targeted to Low-Income Families
25% Hike in Labor Costs Could Worsen 40 Percent Unemployment Rate for Bay Area Teens
Publication Date: May 2012
Topics: Minimum Wage
WASHINGTON – Today, the Employment Policies Institute (EPI) released a new analysis assessing the impact of a proposed ballot initiative to raise the minimum wage in the City of San Jose to $10 an hour and index it for inflation. The City Council will hear testimony on the initiative tomorrow, May 22nd, and can either adopt the ordinance outright or submit it to the public for a vote.
According to EPI’s analysis of Census Bureau data, if the city minimum wage were increased to $10 per hour, approximately 34,000 people would be directly affected. The average family income of an affected employee in San Jose is $60,342 per year.
Drawing on past economic studies on the impact of a higher minimum wage, EPI estimates that employment among less-skilled and less-experienced jobseekers could fall by over 1,000 jobs.
The data also show that the proposal is poorly targeted to intended beneficiaries. Over 60 percent of the beneficiaries of the proposed wage hike are either living at home with family (e.g. a parent or relative) or have a spouse that also works; only 3.5 percent are single parents with children. Nearly 47 percent of the beneficiaries of a proposed wage increase to $10/hour are young adults age 25 and under.
The full analysis, which also includes responses to common “myths” about the minimum wage, is available here: http://www.minimumwage.com/wp-content/uploads/2012/05/SanJoseBrief_Final.pdf.
“Past economic research has clearly shown that raising the minimum wage is a poor way to reduce poverty, and has unintended consequences for the least-skilled jobseekers,” said Michael Saltsman, research fellow at EPI. “Raising by 25 percent the cost to hire and train inexperienced employees in the Bay Area—and putting those costs on autopilot—will only put a job further out of reach.”