Increasing the Minimum Wage in San Jose

Benefits and Costs

"I provide here an independent economic analysis of the likely effects of Measure D in San Jose.

"The benefits of Measure D: 18.9 percent of San Jose’s workers will obtain pay increases as a result of Mea­sure D. The increased spending power of minimum wage workers will stimulate the region’s economy by about $190 million.

"The costs of Measure D: Rigorous and prestigious academic studies of minimum wage effects across local boundaries indicate that Measure D will not have any disemployment effects. This research has invali­dated previous studies that claim to find disemployment effects.

"Measure D will increase operating costs of the average business by less than 0.25 percent. These costs will be partly offset by cost savings to employers, such as more workers applying for jobs, lower employee turnover costs and higher worker productivity. Prices in low-wage industries such as restaurants will increase by less than 0.71 percent, which translates into less than twenty-five cents on a $30 meal. Price increases of this magnitude do not measurably hurt sales. ..." <Read more>

First published as an October 2012 policy brief by the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment at the University of California, Berkeley. Reich is the director of the institute.