News and Commentary

Businesses In CA City With Nation’s Highest Minimum Wage Have This Problem

You’d never guess, but businesses in the city with the highest minimum wage in the United States are laying off workers.

Emeryville, California, with a population of 12,000, hometown of Pixar Animation Studios, features a minimum wage of $16.50 an hour, which is almost double what it was five years ago. The Wall Street Journal notes “the median rent for a one-bedroom apartment is $2,840, the median home price is more than $560,000, and a salad costs more than $15.”

Various business owners have had to lay off workers because of the city’s minimum wage; Marcos Quezada of Patatas Neighborhood Kitchen recently laid of 60% of his ten-person staff. He told the Journal of the minimum wage hike, “I just didn’t see how I was going to survive it.” Erik Hansen, the owner of Moomie’s, said he could either raise sandwich prices by up to $1.50 or lay off one of his three workers.

Doug Smith, the co-owner of Rudy’s Can’t Fail Cafe, hiked the price of the cafe’s Deuces Wild special to $14.50 from $11 in 2015 and the Crunchy Asian Salad to $15.50 from $10. But he allowed that the hike in prices won’t cover his labor costs. Marilyn Boucher, owner of the Broken Rack, said she cut hours of her employees that she had been planning to raise before the wage hike. She told the Journal, “We’re all up against a brick wall.”

California’s minimum wage is $12 an hour; it will ascend to $15 an hour by 2022.

The Journal noted, “An analysis released in early July by the Congressional Budget Office projected that a $15 federal minimum wage would boost the pay of 17 million workers who would otherwise earn less than $15 an hour and lift 1.3 million Americans out of poverty but also result in about 1.3 million lost jobs.”

In May, The Daily Signal noted that Restaurant Business Online had reported, “Nearly 1 out of 10 in areas with a recently increased minimum wage have closed an operation since the cost hike, and 71 percent have attempted to pass along the rise to customers by raising menu prices, according to new research.”

The Daily Wire reported in March, “According to a new survey of 197 working economists conducted in February, 74% oppose raising the federal minimum wage to $15 an hour and almost half (43%) think that the federal minimum wage should be eliminated altogether … 88% of economists thought an acceptable federal minimum wage should be less than $15; 66% agreed that an appropriate federal minimum wage would be $10 an hour or less. 84% thought a $15 minimum wage would negatively affect youth employment; 77% believed that the minimum wage hike would have a negative impact on the number of jobs available.”

In February, the Mercatus Center at George Mason University released the results of a study linking rising minimum wages to declining teen employment rates. According to the study, although there could be three possible reasons for the decline in teen employment in the United States since 2000 — a rising minimum wage, rising returns to schooling, and increasing competition from immigrants — the authors found that the higher minimum wage was the predominant factor. Additionally, the study suggested that higher minimum wages for teens led to lower future earnings.

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