Economist article describes Emeryville Minimum Wage “Leap of Faith”
As Emeryville approaches the one year anniversary of its implementation of its highest in the nation Minimum Wage Ordinance (MWO), another national publication has turned a curious eye towards our city. International news source The Economist joins The Nation, CNN and The LA Times as publications that are looking to understand the impacts that Economists and labor activists seem to disagree on. Publications looking to forecast what’s to come for other cities as they look to emulate what our city has volunteered to be the guinea pig for. One question that no publication has asked is “Why Emeryville?” and investigate the relationship between labor groups and the local politicians that orchestrated this.
The article titled “Maximin” outlines the history and drivers behind the $15 movement that originated in New York and provides a data-driven assessment of what the known impacts are. The article notes that as many as 17m employees have received a pay increase as a result of local minimum wage ordinances including ours. More cities are slated to follow suit with an eventual $15 wage and the entire state of California is slated to reach the mark in 2023.
During the local MWO study sessions, Small Businesses pleaded for an impact study that would take into account their unique operating models that differ from the formula retail and fast food businesses that were often cited. While chains generally receive little sympathy from the public, small businesses within our community are more scarce and are cherished for the vibrancy and uniqueness they bring to our city. Council ultimately opted to forgo the study and implemented the ordinance 60 days after the first reading.
In The Economist piece, Mayor Dianne Martinez alludes to a forthcoming economic impact study, but justifies council’s “fast track” approach saying “there are times where you have to take a leap of faith”. It’s worth noting that Martinez and fellow Councilmembers Scott Donahue and Jac Asher all declared a preference for an East Bay “regional” approach presumably in alignment with Oakland’s Measure FF prior to the 2014 election before changing their stance and pushing for Emeryville to adopt its own unique model.
Progressives and labor groups have continually noted that despite most economist warnings, large jumps in the minimum wage would be offset by higher employee retention and the low wage earners themselves contributing back into the local economy. There’s also the argument that government subsidies would be reduced as full-time employees would make enough to no longer need or qualify for them.
Jobs that are not physically tied to our city or compete in global markets can more easily dodge these impacts by moving jobs or their location outside our city. One of these businesses is a small sports analytics company called Match Analysis that hires entry-level data collection employees and competes with companies that use cheaper labor from countries like India and Russia. Match Analysis reduced staff by 13 positions recently as a direct result of our Minimum Wage Ordinance.
Match Analysis is surely not the only company that has reduced staff, eliminated shifts or even shuttered completely due a sharp rise in labor costs, but exactly how many jobs have been lost (or gained) due to our MWO is unknown. The Economic impact study is reportedly finally underway with the hiring of new Economic Development Manager Chad Smalley. A study that will hopefully shed light on whether the MWO is lifting workers out of poverty as desired … or causing layoffs, business closures and expediting automation. The larger question is if adjusting minimum wage is truly the best way of remedying poverty and alleviating affordability largely fueled by our ongoing housing crisis.
The only economic data the city currently provides is their monthly progress reports that track new business licenses and closures. These reports indicate that Emeryville has shed more businesses than it’s added for four out of the past 5 months. The data does not account for if the business fits the city’s large or small business threshold or is in fact a sole proprietorship and not applicable. On July 1st, large Businesses over 55 employees will increase to $14.82 and small businesses of less than 55 employees will jump $.75 to $13/hr.
The Economist is a weekly news publication founded in 1843 and based in London. According to Wikipedia, The Economist takes an editorial stance of classical and economic liberalism which is supportive of free trade, globalisation, free immigration and cultural liberalism. In 2006, its average weekly circulation was reported to be 1.5 million, about half of which were sold in the U.S.
MAXIMIN: Some cities have raised minimum wages dramatically.
They may regret it
EMERYVILLE, a tiny city of 12,000 lying on the eastern shore of the San Francisco bay, is rather cruelly known by residents of its bigger neighbours primarily as a place to buy furniture. A huge IKEA, a Swedish homeware shop, greets visitors to the city, which has no fewer than four shopping centres. But Emeryville has a better claim to fame; its many shoppers are served by some of the best-paid retail staff in the country. Since July 2015 the city’s minimum wage, for all but the smallest firms, has been $14.44 an hour, nearly double the federal minimum of $7.25 and almost 50% higher than the state minimum of $10. Emeryville is one of dozens of cities across America to have boosted its minimum wage in recent years, but it has gone further than almost any other towards the $15 campaigners seek.
That goal emerged in New York in 2012, when 200 fast-food workers went on strike demanding higher pay and a union. Those strikes were repeated, grew, and then spread nationwide (the last national strike was in April). At the same time, local politicians began to take action. After more than a decade with barely any changes to local minimum wages, they rose significantly in a handful of places in 2013. The next year 12 localities raised them, including Bay-area cities Berkeley, Oakland and San Francisco. In 2015, sixteen more, including Emeryville, followed suit.
Read more on The Economist →