Hike in minimum wage goes to the ballot in San Jose

Residents of San Jose, CA will vote in November on whether to raise the city’s minimum wage 25% from $8 to $10. The proposed law includes annual adjustments for inflation. This law will be similar to a minimum wage ordinance put into law in San Francisco.

I expect to hear a lot of economists weigh in on this issue, but it was interesting to read one councilwoman say that this is an economic AND a moral issue. Given these higher wages will be paid by businesses and consumers (that is, the law will nt suddenly create new money that was previously non-existent), I think introducing morality will cloud proper analysis.

I am also now interested to know whether anyone has studied the impact of the minimum wage law in San Francisco. It seems strange to me that cities in the same metro area could have dramatically different minimum wages. For low margin businesses that can move, they will prefer to go to lower wage cities. Workers will tend to look for work in the higher wage city but will also face impossibly high housing costs, resulting in commutes that can nullify wage gains. These are just a few examples of things that economists might study.

For more details see “San Jose City Council leaves minimum-wage hike to voters” in the San Jose Mercury News.

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