Without waiting to see how the Jan. 1, 2016, state minimum wage increase to $10 an hour will affect their communities, Oakland, San Francisco and Los Angeles charged ahead by raising their local minimums to $15 an hour.
Now the city of Sacramento is about to convene a task force to determine whether we should follow suit.
The proposal poses a huge risk at a critical juncture in our city’s economic renaissance. A drastic increase will undermine the progress we’ve made toward creating a vibrant capital city and deal a blow to those restaurateurs, craft brewers and innovators who are driving our recovery. And it will counter the large public investment we’ve made to bring people into downtown Sacramento and persuade them to stay.
With what’s at stake, this task force should convincingly answer several questions before it recommends any changes to a minimum wage already set to increase in January.
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The cost of living in the Bay Area is significantly higher than Sacramento, so why would we see those cities as comparable to ours? We are a regional economy, so why does it make sense for one city to increase labor costs by 50 percent over other regional jurisdictions?
No conclusive studies have been completed on the impacts to jurisdictions that did raise the minimum wage. Shouldn’t we at least wait to see how the outcomes unfold before we jump into this experiment?
Now, as we are poised to capitalize on the progress we’ve made since the recession, we’re being asked to trudge into the dark blindly. There is much uncertainty in this debate, but there are also certain unshakable facts we’ve learned from our Sacramento Metro Chamber members.
A $15 hourly wage would add $12,000 per employee per year to company costs, and that’s without potential increases for non-minimum-wage employees to keep the pay scales fair.
Increased wages will cause low-margin, labor-intensive businesses to raise costs, and those costs will be passed on to everybody, including senior citizens and others living on fixed incomes.
Sacramento will put itself at a competitive disadvantage at the very time it is trying to bring new businesses and expand existing ones. Some chamber members stated they will simply move to surrounding cities such as West Sacramento or unincorporated Sacramento County if an increase is enacted.
The job market for our youths will tighten because businesses will hire fewer interns and first-time employees when Sacramento already has a higher youth unemployment rate than the national average. This loss will result in a decline in lifetime earnings for each youth who loses an opportunity.
In the face of these concerns, the ultimate question the city must ask is this: Do we want to jeopardize the resurgence of Sacramento if we’re wrong? We will never have a second chance to capture this moment.
Let’s not stunt the steps we’ve taken to grow. Instead, let’s keep Sacramento working and proceed cautiously and thoughtfully.
Peter Tateishi is president and CEO of the Sacramento Metro Chamber of Commerce.