By Alejandro Lazo
SAN FRANCISCO--Proponents of a $15 minimum wage have found
fertile territory in Silicon Valley, where the region's booming
technology industry is credited for helping drive soaring housing
prices and a sizable income gap.
California is on track for a $15 minimum wage by 2022, but some
Silicon Valley cities are opting to hit that target faster, prodded
by a campaign aimed at organizing low-wage workers in the
region.
The city of Santa Clara is the latest to propose an accelerated
$15 minimum wage, following the lead of San Jose and six other
Santa Clara County cities. The City Council plans to vote on a
measure that would raise base pay to $15 by 2019 next month.
Mountain View, where Alphabet Inc.'s Google is based, will have
a $15 minimum wage next year, as will Sunnyvale. The $15 target
will be reached in 2019 by San Jose, the region's largest city, and
home to companies such as PayPal and eBay. Cupertino, hometown to
Apple Inc., also will hit the $15 target in 2019, as will Palo
Alto, Milpitas and Los Altos.
Minimum pay in all of these Silicon Valley cities are expected
to continue to climb beyond $15, because all of the cities mandate
more pay increases based on a regional inflation index.
The increases in one of the costliest regions in the country are
being enacted when there is still much debate and research around
the effectiveness of such wage increases. Proponents say raising
the local minimum wage remains the easiest way to address
stagnating pay. Critics say the rush toward a $15 minimum wage will
hurt businesses and cost jobs.
In Seattle, two academic studies released this month found
conflicting results in that city's wage boost. The University of
California, Berkeley, found Seattle's food-service workers
benefited with a modest wage increase and no reduction in jobs. But
a study from the University of Washington found employers cut
worker hours and reduced employee earnings.
Many localities are barred by state law from boosting local
wage. Cities in California, which allows for local wage laws, have
been on the forefront of raising hourly pay locally.
State legislatures in Washington, Arizona, Colorado, and Maine
have all approved measures to raise their states' minimum wages to
$12 an hour.
Twenty-six states have local minimum-wage pre-emption laws on
the books that block smaller jurisdictions from setting their own
wages, according to the National Conference of State Legislatures.
At least 10 states considered pre-emption laws this year.
David Neumark, an economist at the University of California,
Irvine, said minimum-wage increases aren't an effective policy tool
for alleviating poverty and the potential effects of a $15 minimum
wage widely remain an unknown.
While smaller increases leave room for businesses to adjust
margins through prices or by varying their workforce, a move toward
a mandated $15 base salary will likely leave little room for
anything other than layoffs, he said.
Michael Reich, a professor at UC Berkeley and one of the authors
of its Seattle wage study, said such concerns are overblown. San
Jose's 2013 minimum wage increase to $10 in 2010 led to an average
1.5% price increase at restaurants.
In Silicon Valley, the median household income is $101,980--the
nation's highest, according to U.S. Census data. Some question the
impact of a minimum-wage boost in one of the most expensive regions
of the country. Data recently released by the U.S. Department of
Housing and Urban Development says a family of four in San Jose
with an annual income of $84,750 is considered low income. In San
Francisco, $105,350 is seen as low income, and in New York City, it
is $76,300.
Unions and other activists say their efforts to raise wages in
Silicon Valley are part of a campaign to organize service-industry
workers and other low-wage employees in one of the wealthiest
regions of the U.S. Activists say raising base pay will help the
lowest-rung workers make ends meet, and boost incomes for those
already making $15.
"We call it the invisible workforce," Derecka Mehrens, a founder
of the "Silicon Valley Rising" campaign, which has been organizing
low-wage workers in the area. "It is a wealth-producing region, and
some of the wealth should be shared."
Blanca Rosell, 57 years old, lives in Sunnyvale, Calif., which
borders Santa Clara, said she works 70 hours a week, splitting her
time at a Burger King in Mountain View and a Carl's Jr. in Santa
Clara.
In Santa Clara, where she has worked more than six years in a
Carl's Jr., she holds a supervisory position and is paid $11.75 an
hour. At the Burger King, where she has worked six months, she is
paid $13, because of that city's higher minimum-wage policy.
The jobs barely help cover the rent in her $1,850 one-bedroom
apartment in Sunnyvale, where she lives with her two sons, her
eldest son's wife, and that couple's two younger children, she
said. Her son works assembling motors at the Tesla factory in
nearby Fremont.
She says she doesn't want to move because she wants her
15-year-old to be able to attend high school in the area.
"The rent is very high, and we don't make a whole lot, and so we
can't make it paying all the bills," she said.
Ms. Rosell said a minimum-wage increase in Santa Clara would
help retain workers because many low-wage workers are drawn to
neighboring Mountain View for higher pay. She believes an increase
in Santa Clara's minimum wage will allow her to work fewer
hours.
Chris Horton, president of Santa Clara's Chamber of Commerce,
said while the chamber supports "a living wage" the accelerated
wage increase the city is considering will hit the bottom line for
small businesses.
Ravinder Lal, who employs 15 people as the owner of two UPS
Stores in San Jose and Santa Clara says he made about $150,000 more
in revenue than last year--but $50,000 less in profit, generally
brought on by higher costs due to wage increases in San Jose.
He says he already pays people more than the minimum wage but
increases require him to also bump up workers making $15.
"Most small-business owners that I know, in this valley, are
struggling just like somebody working, because it is so expensive,"
he said.
Write to Alejandro Lazo at alejandro.lazo@wsj.com
(END) Dow Jones Newswires
June 28, 2017 05:44 ET (09:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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