A ballot proposition in San Jose aimed at boosting the city’s minimum wage has made few friends in the business community.
“It makes absolutely no sense to me,” said Kam Ravazi, the exasperated owner of Loft Bar and Bistro on Second Street in San Jose. “Downtown is already struggling as it is for businesses to survive.”
It’s a fear held by many business owners and entrepreneurs in San Jose, that a proposed $2-hike in the minimum wage will deal a blow to companies in the form of employee layoffs, reduced hours and higher costs passed on to consumers. Voters will decide on Nov. 6 whether or not Measure D is good policy for San Jose. The measure needs a simple majority to pass.
“If you’re a small or medium-sized business, a 25-percent immediate increase in your payroll is significant,” Matthew Mahood told NBC Bay Area.
Mahood is the president of the Silicon Valley Chamber of Commerce, an organization that opposes the minimum wage hike and commissioned a report from Beacon Economics to study its effects.
The results, according to Mahood, cast a dark shadow on the prospects of passing Measure D: 600 to 2,800 job losses if the initiative gains approval.
But do the numbers elsewhere in the country, where minimum wage has already been hiked in some cities and states, validate the concerns of business owners?
The two cities to recently boost their minimum wage, Washington, D.C., and San Francisco, have results that contradict what Mahood is saying: those cities have actually enjoyed economic successes.
Since San Francisco raised its minimum wage to $10.24-an-hour at the start of 2012, unemployment has dropped .7 percent and 13,400 jobs have been added. Those statistics come courtesy of California’s Employment Development Department.
Likewise, in Washington, D.C., where minimum wage is hitched to the federal minimum page plus a dollar, the job numbers since the last raise in 2009 are equally as promising- an unemployment drop of 1.3 percent and some 22,500 jobs created, according to the U.S. Bureau of Labor Statistics.
Despite the numbers, Mahood is not convinced.
“San Jose is not San Francisco, and it’s not Washington, D.C.,” Mahood said. He called those cities “economic islands” because they are destination spots that attract jobs, regardless of economic conditions elsewhere.
“We have business districts that are one street across from each other, and you’re going to have a situation where businesses one on one side of Bascom Avenue, or one side of Steven’s Creek, are paying one wage rate while another competing business on the other side of the street is paying another rate,” Mahood continued, arguing that some San Jose companies will simply move elsewhere.
To widen the scope, eight states have raised their minimum wage since the start of 2012.
To date, only Colorado has seen a rise in unemployment of .4 percent from December 2011 through July 2012, according to the Bureau of Labor Statistics.
The remaining states all saw their unemployment numbers go down, with Florida witnessing a sizeable drop of 1.1 percent, and states like Ohio and Arizona experiencing drops of .7 percent.
But Mahood argues that the economy is improving anyway, and unemployment across the country is starting to level off.
Additionally, he adds that when a state raises its minimum wage “you’re not pitting one city against the other within that state.”
For his part, at least one small business owner in San Jose warned of the dire consequences for his restaurant if Measure D passes.
“I would absolutely cut back on my employees, and I would absolutely do less hiring, just to make up the difference of [lost money],” Ravazi said.
Voters will decide on Nov. 6 whether or not Measure D is good policy for San Jose. The measure needs a simple majority to pass.