City employees are recommending delaying any decision about increasing Richmond’s minimum wage until experts can further study its potential effects, according to a report provided by Councilman Tom Butt’s e-forum Monday.
The minimum wage ordinance is scheduled to go before City Council on Tuesday.
The mayor-backed proposal would increase the minimum wage in the city from the state’s minimum of $8 to $12.30 by 2017. The increase would be implemented in phases, with the wage going up to $9 on July 1, $9.60 in 2015 and $11.52 in 2016.
San Francisco’s minimum wage is currently the region’s highest at $10.74 an hour, while San Jose’s is $10.15.
Mayor Gayle McLaughlin and her Richmond Progressive Alliance (RPA) colleagues have been pushing hard for the wage increase, saying it is long overdo and will benefit the economy. Last month, however, the ordinance failed to pass council after some councilmembers criticized the mayor for neglecting to consult with them and with the local business community, and for failing to properly study the impacts. The council then directed city staff to further study the wage proposal and offer recommendations.
On Tuesday, according to Councilman Tom Butt, city staff will recommend hiring economists to study the impacts even further, as they believe the studies that McLaughlin and the RPA have presented supporting a wage hike don’t do enough to show whether the proposal is good for Richmond.
One issue, staffers said, is that while the current wage proposal would help people working within city limits, it would not apply to Richmond residents who work outside the city. That could negate assertions from McLaughlin and her supporters that residents would spend more in Richmond, boosting the economy, as a result of a wage hike.
There is also concern over whether businesses will slash jobs in reaction to the wage increase. There could be a “significant” impact on teen employment, the city report said.
If no jobs are lost as a result of the wage increase, additional wages paid in Richmond could range from $6.7 million to $13.3 million, the city said. Also, the proposal would cost the cash-strapped city about $150,000 annually to enforce the wage increase and also to pay the higher wages for Recreation Department aides.
The city noted that some studies say wage increases have little to no impact on a local economy, others say otherwise, such as a survey that said San Jose restaurants cut jobs by 42-percent and reduced hours by 45-percent after wages were increased.
“Just because research shows a specific positive or negative impact of minimum wage increases in a jurisdiction, or at the state or federal level, does not mean that the same will necessarily hold true in Richmond,” city staffers reported. “It is important to recognize a jurisdiction’s industrial structure, demographic characteristics, and other factors, when comparing different minimum wage laws.”
Here is how city staff recommends moving forward:
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