Business

San Francisco Plans to ‘Put More Money into Consumers Pockets’ by Raising Minimum Wage Above $10

On January 1st, San Francisco will become the first city in the nation to scale a $10 minimum wage. The city’s hourly wage for its lowest-paid workers will hit $10.24, more than $2 above the California minimum wage and nearly $3 more than the working wage set by the federal government.

Although some workers may see this as a positive, many business owners fear this will force them to cut workers.

Watch the Associated Press update:

“It’s a psychological boost,” said David Frias, who is a 34-year-old usher at a movie theater and a security guard for a crowd control firm. “It means that I’ll have more money in my wallet to pay my bills and money to spend in the city to help the economy.”

San Franciscans passed a proposition in 2003 that requires the city to increase the minimum wage each year, using a formula tied to inflation and the cost of living. It’s just another way the progressive people of the City by the Bay have “shown their support for the working-class” in a locale where labor unions remain strong and housing costs are sky high.

Karl Kramer of the San Francisco Living Wage Coalition said a “decent wage” for a single adult without children in the city would be $15–yes, $15–and that doubles when you have at least one child or more. But like other advocates of better wages, he’s still pleased that San Francisco will be the first in the nation to top $10.

“It helps workers’ morale in a time of economic crisis; they feel that they’re able to tread water and get some relief from the recession,” said Kramer.

While the city may have enacted this out of an attempt to provide a “decent living wage,” some workers say it’s still not a wage to live on, that the 32-cent hike “seems like peanuts.”

And some employers say it could lead to layoffs by small businesses already forced to pay federal, state and city payroll taxes as well as a slew of other city-mandated taxes.

Daniel Scherotter, chef and owner of Palio D’Asti, an upscale Italian restaurant in the Financial District, said the city’s minimum wage hike from $9.92 to $10.24 means that his highest-paid employees—the waiters who make most of their income from tips—will see more money in their pockets while his salaried kitchen staff will have to take the hit.

If Scherotter raised menu prices to make up the difference, he’d risk going out of business in this economy.

What the average San Franciscan may not know, he said, is that business owners also must pay another $1.23 to $1.85 an hour per employee for health-care coverage if they don’t offer health insurance.

Did we forget to mention that San Francisco is also the only city in the state that charges a payroll tax of 1.5 percent; it also mandates nine paid sick days annually per employee.

“So that drives me nuts, that as a chef, I have to cut my kitchen allowance,” Scherotter said. “What I pay for a waiter is more than double what Manhattan pays, it’s more than double what Chicago pays, and it’s four times what Boston pays. And those are … other big, expensive, pro-labor cities. But I pay what they all pay added together for tipped employees.”

Scherotter said the double whammy of recession and wage hikes has led to eight layoffs in his kitchen in the last four years.

“We hear that all the time,” said Steve Falk, president and CEO of the San Francisco Chamber of Commerce.

He said that by the time you add up all the mandates and taxes that city employers must pay for their minimum-wage workers, the payroll burden is at least 25 to 40 percent higher than other Bay Area cities.

He gave the example of catering companies bidding for the contract at the city’s Treasure Island. In the end it went to a Napa firm over a San Francisco catering company because Napa was able to come in lower.

“You can’t on one hand as a city impose mandates and fees on a local business and then exclude them because their costs are too high when they go to bid on a city contract or a city service,” Falk said. The chamber of commerce is calling on the city to build in a 25 to 30 percent bid allowance for San Francisco companies.

“Fortunately, it’s a very attractive place to own a business and businesses thrive here because of the number of visitors,” Falk said. “But we always worry: where’s the tipping point?”

That tipping point needs to lean toward the worker, said David Madland, director of the American Worker Project at the Washington, D.C.-based Center for American Progress Action Fund. He said the best studies on minimum wage indicate that the benefits outweigh the burdens placed on employers.

Really?

“I think it’s a big deal when a city is making a commitment that says, ‘Our workers are going to get paid a livable wage for a day’s work,’” he said. “It‘s also very important that in today’s economy when a core problem is lack of demand … that a city is actively taking steps to put more money into consumers’ pockets.”

But how does that work? As the saying goes, “there’s no such thing as a free lunch.“ When there is a ”lack of demand“ and you want to ”put more money in consumer’ pockets,” where does that money come from? If you take a greater chunk from the employer with the idea of rewarding the worker, what happens to the employer? And after you’ve milked the employer, what happens to the worker?

Earlier on The Blaze, we asked why California was such a mess as we presented her wretched economic statistics:

  • Top Marginal Personal Income Tax Rate: 10.55 percent
  • Top Marginal Corporate Income Tax Rate: 8.84 percent
  • Unemployment: 11.9 percent
  • Personal Income Tax Progressivity: $36.19
  • Property Tax Burden (per $1,000 of personal income): $27.18
  • Remaining Tax Burden: (per $1,000 of personal income): $16.13
  • Debt Service as a Share to Tax Revenue: 8.7 percent
  • Public Employees Per 10,000 of Population (full-time equivalent): 502.1
  • State Minimum Wage: $8.00
  • Average Worker’s Compensation Costs: $2.72
  • Right to Work State: No

Perhaps these figures are the product of a rampant and widespread misunderstanding of the fundamentals of business and economic growth. On the other hand, perhaps using the word “misunderstanding” is giving too much credit.

Watch Milton Friedman, economic policy advisory for the Reagan administration, explain the problem with minimum wage:

The Associated Press contributed to this report.

Comments (186)

1 2 3 ... 5
  • Hickory
    Posted on December 12, 2011 at 7:28pm

    Now, that burger flipping job will drive up the cost of the burger. Then the burger joint will close and move out of Commiefornia because of no business. Brilliant, yep brilliant. Now what?

    Report Post » Hickory  
    • 13th Imam
      Posted on December 12, 2011 at 7:43pm

      If 10 $ /Hr is good , 20 $ /Hr would be twice as good. Come to think of it 30 $ /Hr would be almost perfect. Maybe Free breakfast and lunch and afternoon snacks for all college students. Maybe free tuition to all Clown College or Cowboy Poet University’s, Free Cheese

      Report Post » 13th Imam  
    • ACLUHater
      Posted on December 12, 2011 at 7:48pm

      More proof that liberals think with their emotions (and politics) rather than logic.

      Report Post »  
    • Secessionista
      Posted on December 12, 2011 at 7:54pm

      Exactly, 13thImam. But you are thinking too small. Why not make it 100 smackers an hour?

      These liberals know that their policies don’t work, and they know they are telling lies. If 10 bucks works, then 20 bucks would work twice as well, just as you said. Someone should ask them why they hate the 99%‘ers because they didn’t raise it to 20… 10 is still WAY to small of a salary, they deserve better! ;-)

      Report Post » Secessionista  
    • decendentof56
      Posted on December 12, 2011 at 8:13pm

      Result?…….
      More companys leave Kal.

      Report Post »  
    • AmericaLastStandForFreedom
      Posted on December 12, 2011 at 8:21pm

      Very BAD idea. Businesses will pass on the raises to the consumers and they WILL lose business.
      Raises should be given because of REWARDS FOR HARD WORK and NOTHING ELSE, a forgotten or IGNORED virtue of businesses.

      Report Post » AmericaLastStandForFreedom  
    • tbl10
      Posted on December 12, 2011 at 8:24pm

      I have said this for years, the only beneficiary of a minimum wage increase is the government. When minimum wages goes up, they take in more payroll taxes. As the price for commodities and services goes up they collect more sales tax. Finally with the increase of wages you are likely to have your income tax increased. So lets see who actually wins the consumer or the government. I think we already know the answer to that.

      Report Post »  
    • Mess23
      Posted on December 12, 2011 at 8:25pm

      All Ya’ll are thinking way too small, even you seccessionista. If you extrapolate this to the extreme, it will be the Have‘s and the Have Not’s, better known as – those who serve the Have’s…

      Report Post »  
    • Secret Squirrel
      Posted on December 12, 2011 at 8:38pm

      .
      Hey San Fran!
      If $10 would help the economy, why not $30?

      I guess it’s lost on San Fran morons that that $10 must be stolen from
      people who earned it. Why not let them spend it?

      I like Winston Churchill:
      “Government spending it’s way to prosperity is like standing in a bucket
      and trying to lift yourself off the ground by pulling up on the handle.”

      Report Post » Secret Squirrel  
    • AOL_REFUGEE
      Posted on December 12, 2011 at 8:45pm

      Good luck with that, San Fran. (Not really. I hope you die the horrible death you deserve by your own stupidity.) HIgher minimum wage will just mean more unemployed.

      Report Post » AOL_REFUGEE  
    • sWampy
      Posted on December 12, 2011 at 8:48pm

      When minimum wadge is raised, it starts a bad ripple, those that were making $2 over minimum now want $2 above the new minimum, those making $5 more want $5 more than the new minimum, so it doesn’t just cost the business paying people minimum, it causes wadges to go up across the board, forcing almost all businesses to raise their prices.

      Report Post »  
    • waggie
      Posted on December 12, 2011 at 9:26pm

      The only thing progressive California is going to do is to put small businesses into bankruptcy, or force more businesses to move overseas or to another state! Just what they need! More people out of work! Idiots.

      Report Post » waggie  
    • pamela kay
      Posted on December 13, 2011 at 1:26am

      HICKORY, well the state will go bankrupt and Obama will want to bail them out.

      Report Post » pamela kay  
    • Marci
      Posted on December 13, 2011 at 2:01am

      The people demanding such wages see zero correlation in the wage increase and the cost of goods. They don’t get it, nor will they ever get it.

      Report Post » Marci  
    • marion
      Posted on December 13, 2011 at 2:33am

      More money in a person’s pocket, higher prices paid for products. It’s the perfect inflation storm. Just one more way to keep the population unemployed and growth low so the government can support more people on the backs of the rich.

      My grandparents survived the Great Depression, they were in their early 20s I believe. Back then, those that had money and saved it were the ones that survived once WWII was over. Those that spent money or failed to hold onto their money during that time, well, those with money either bought those companies,land, whatever and became history notes and prospered.

      It’s not that big business or the rich are getting richer, they are just saving their money for better times and this administration hasn’t supplied the proper conditions to allow low to medium risk, it is being kept at high to very high risk, and the smart ones will weather this. I suspect there are some out there that understand this, probably Great Depression survivors or children of Great Depression survivors.

      Report Post »  
    • obfuscatenot
      Posted on December 13, 2011 at 3:47am

      simpletons……if wages go up, there will be fewer workers….fewer people paying taxes……easier to remain in office because more people will be on the dole….BUT…..how to pay for everything? Oops.

      Report Post »  
    • kaydeebeau
      Posted on December 13, 2011 at 6:13am

      Does the movie usher think that the cost of the movie ticket will remain unchanged? Does the movie usher think that those things he purchases won’t go up? How is it that those on the left can’t seem to follow any thought past 2 or 3 steps to see the end results?

      Report Post » kaydeebeau  
    • lukerw
      Posted on December 13, 2011 at 7:52am

      History & Economics support… that raises in the Minimum Wags… reduces Jobs… and some Businesses are forced to structure.

      Report Post » lukerw  
    • Gold Coin & Economic News
      Posted on December 13, 2011 at 8:02am

      “It means that I’ll have more money in my wallet to pay my bills and money to spend in the city to help the economy.”

      Brilliant there Mr Security Guard dude, the next time you go to McD’s and have to spend $10 to stuff a Big Mac into your fat pie-hole, don’t go whining about corporate profits. There are consequences to a $10 / hour minimum wage.

      Report Post » Gold Coin & Economic News  
    • Bruce_Almty
      Posted on December 13, 2011 at 10:14am

      Every 18-year old should be paid enough to own a McMansion in the city. After all, it‘s not their fault they’re only qualified to bus tables; the state gave them the best education money could buy.

      Report Post » Bruce_Almty  
    • AvengerK
      Posted on December 13, 2011 at 11:18am

      Will the last business leaving California please switch the light off? Thanks.

      Report Post »  
  • Rational Man
    Posted on December 12, 2011 at 7:26pm

    This is not a job creating idea. It’s a job and business killer. Atificial stimulus at the expense of employers who are hurting and in the dark as to whats coming down the pike for them. And Ca. is already in line, (if not first in line), to get a bailout.
    When will Ca. ever learn?

    California Debt Clock
    http://www.usdebtclock.org/state-debt-clocks/state-of-california-debt-clock.html

    Report Post » Rational Man  
    • TAXLORDCOMETH
      Posted on December 12, 2011 at 8:14pm

      Add to that San Fransisco is totally bankrupt as well. They cannot hope to pay for all of their promises to city workers.

      Report Post »  
  • cassandra
    Posted on December 12, 2011 at 7:26pm

    great idea progressive San Fran so why not make it 15 bucks an hour your going to drive businesses out any way but at least it will look like you are doing something for the people, is there ANYBODY in that state that is sane??????

    Report Post »  
  • possom
    Posted on December 12, 2011 at 7:22pm

    Why people continue to live in california is beyond me let alone start a business there!

    Report Post » possom  
    • Cousin_of_Marx
      Posted on December 13, 2011 at 1:44am

      Why people continue to live anywhere is beyond me. Why don’t we all cryogenically freeze ourselves indefinitely? Or at least until the Second Coming.

      Personally, for me, San Franciscans are much too right-wing and heteronormal.

      Report Post » Cousin_of_Marx  
    • sbleve
      Posted on December 13, 2011 at 8:26am

      I ain’t got no place to shed da anchor – my house and property value is continuing to fall. A likely buyer is not going to invest until the train-wreck crash stops moving and the dust settles.

      Report Post » sbleve  
    • This_Individual
      Posted on December 13, 2011 at 11:12am

      California is a state of 38 million people with over 1200 cities. Frisco does not represent the rest of the state, especially those of us in the Southern part of the state who tend to not be so kind to socialists(Los Angeles being the exception). Before you talk shhh about someone’s state, educate yourself.

      Report Post »  
  • TRILO
    Posted on December 12, 2011 at 7:22pm

    Why anyone does business in this city or the state of California in general is beyond me. Everyone seems to complain but they stay. I left that state many years ago and am thankful I did.

    Report Post » TRILO  
    • pamela kay
      Posted on December 13, 2011 at 1:32am

      TRILO, have you ever wondered how California gets away with all of these stupid laws and rulings and is never questioned by the government as far as the right of the state, yet the rest of us get battered if we try to have our own state laws. Look at AZ for instance. This is BS.

      Report Post » pamela kay  
  • seejanemom
    Posted on December 12, 2011 at 7:21pm

    It sounds good to these workers because most of them were publicly edumocated.

    So riddle me this……when THEIR COST for the goods and services that THEY CONSUME doubles, how exactly are they putting mo’ money in thay pocket?

    Report Post »  
  • Darmok and Jalad at Tanagra
    Posted on December 12, 2011 at 7:19pm

    So now instead of that 6 dollar McDonalds meal, you will pay seven dollars. And that minimum wage earner still is even, or on the losing end.

    Look, if you are trying to live and raise a family on minimum wage, you took one heck of a wrong turn in life. If you are still over the age of 30 and earning minimum wage, that is all you will ever be worth.

    And before a bunch of you start yelling, at 18 I earned minimum wage, then guess what, I did such a good job, in 6 months I got a 50 cent an hour wage, then in a year I got a dollar raise, then a year later I got another dollar an hour raise. By the time I was 21 I was earning almost twice minimum wage. That is the way it works. But if you don’t learn a skill, or jump jobs, get fired, or are simply a loser, guess what employers are going to pay.
    And if you are an employer and won’t pay above minimum wage, you will constantly be rotating through workers or you will be stuck with losers.

    Simple management and economics, but hey, lets hear all those stories from people how their boss won’t give them a raise, or how they were laid off, or the buisness they had went under and the only job they can get is paying minimum wage.

    Everyone remembers this wonderful loser:
    “Oh thank you Mr OBama for taking time out of your schedule. What is in your plans to help someone like me who has been working at McDonalds for the last 3 years and still make minimum wage?”

    Report Post » Darmok and Jalad at Tanagra  
    • mils
      Posted on December 12, 2011 at 7:29pm

      do they inbreed in sf?…
      I think people will still go there…it is a great place to visit…They will not go as often, sta as long, as the costs in general will be going up.
      Why would a business go to SF? SF will lose in the endrun.

      Report Post »  
    • RaginHippo
      Posted on December 12, 2011 at 7:30pm

      Well said. Amen.

      Report Post »  
  • M 4 Colt
    Posted on December 12, 2011 at 7:18pm

    You know what this is good new!!!!! This means that more company’s will now get fed up with California bull sh it and pack up and move to a good right to work state like TEXAS!!!! and we would love to have them and welcome them!!!!

    Report Post »  
    • CatB
      Posted on December 12, 2011 at 7:21pm

      As would Florida … welcome welcome.

      Report Post »  
    • chips1
      Posted on December 12, 2011 at 7:48pm

      Make sure you have plenty of crowbars so you can seperate them.

      Report Post »  
    • Psychosis
      Posted on December 12, 2011 at 8:20pm

      only if they leave the liberal moonbats in cali……………..dont bring your bad habits with ya

      Report Post » Psychosis  
  • KingCanon
    Posted on December 12, 2011 at 7:17pm

    Such a stupid vicious cycle. What idiot can’t figure out when an employer pays more an employee pays more. Does anyone know where I can find a hearty helping of common sense in this world?

    Report Post » KingCanon  
    • Therightsofbilly
      Posted on December 13, 2011 at 12:13am

      Not too many places to find that any more King. Hopefully enough of us will instill some of it in our kids to keep it alive.

      Raising the minimum wage is just their way of being able to tax the greedy, wealthy business owner, without having to call it a tax.

      And the money gets redistributed directly to the bottom of the chain.

      SNEAKY LEFTIES

      Report Post » Therightsofbilly  
    • Therightsofbilly
      Posted on December 13, 2011 at 12:36am

      To the bottom of the chain of “working people” that is.

      Report Post » Therightsofbilly  
  • 82dAirborne
    Posted on December 12, 2011 at 7:16pm

    If the free market will pay a Pro sports player millions of dollars a year (or every game) I think that’s fine. But to have the government mandate wages is unconstitutional. Where do they think they get that power? I carry a pocket constitution with me and I can’t seem to find that section.

    Report Post » 82dAirborne  
    • CatB
      Posted on December 12, 2011 at 7:23pm

      Minimum wage does little for the little worker (unless they lose their job then it does a LOT of damage) or business .. however … did you know that most UNION contracts are tied to the minimum wage .. in that if it goes up . .. so does the UNION pay scale .. even though it is already way above. That is what this is about … UNION WORKER PAYOFFS.

      TEA!

      Report Post »  
    • progressiveslayer
      Posted on December 12, 2011 at 7:24pm

      You are correct sir it isn’t there,it’s just that progressives that run cities into the ground like D.C Detroit
      San Francisco and many others know better than us simple folk,and the constitution,that’s foreign to filthy progressives.

      Report Post » progressiveslayer  
    • Darmok and Jalad at Tanagra
      Posted on December 12, 2011 at 7:49pm

      It’s in the Welfare section, right under the Healthcare section.

      Report Post » Darmok and Jalad at Tanagra  
    • 82dAirborne
      Posted on December 12, 2011 at 8:20pm

      @ Darmok and Jalad at Tanagra

      Oh of course! The “Good and Plenty” clause! How stupid of me. Please forgive my ignorance. Here I was thinking that the founders meant what they said, what they fought for and the things that they wrote about in the founding of the greatest nation the world has ever seen.

      I just hate it when I show my stupidity in public.

      Report Post » 82dAirborne  
    • Darmok and Jalad at Tanagra
      Posted on December 12, 2011 at 8:30pm

      Sorry, I was suddenly channeling Charlie Rangel. I am still trying to figure out where the Dept of Education falls under the constitution.

      Report Post » Darmok and Jalad at Tanagra  
    • 82dAirborne
      Posted on December 12, 2011 at 8:37pm

      Two paragraphs down from the E.P.A. Or is the Federal Reserve? I can’t remember.

      Report Post » 82dAirborne  
    • RIGHT_CHRIST
      Posted on December 13, 2011 at 3:54pm

      I missed the part where we are a Christian nation sworn to defend Christmas in this vicious war against Christmas. Obama spent WAY too much on Happy Holiday decorations for the Muslim socialistic anti-american Kenyan he is. I didn‘t miss the part in Michele Bachmann’s church charter that states the pope is the antiChrist, though. Good thing 90% of Latinos are Catholic. In fact, we should make a stand for true, American Christianity, and in our fight against Satan’s communistic Sharia Law, form our own American Christianity Constitution declaring CHRISTIA LAW. FREEDOM

      Report Post » RIGHT_CHRIST  
  • Raisingmy3boysright
    Posted on December 12, 2011 at 7:15pm

    How could anyone in their right mind ( well, see that there seems to be the problem in CA!) own or operate a business in this state is beyond me. There are states with less taxes and no income tax and yet they remain there!

    Report Post » Raisingmy3boysright  
    • NoRoomForSocialismHere
      Posted on December 12, 2011 at 7:21pm

      It is another way to make those that are responsible to pay for such things as the cost of illegal aliens. The top priority being redistribution of wealth

      Report Post »  
  • Mahakala
    Posted on December 12, 2011 at 7:13pm

    It also mean that San Francisco will not get one more thin dime of my money. There are plenty of great restaurants in the bay area without having to go to the city and pay more for less.

    Report Post » Mahakala  
  • randy
    Posted on December 12, 2011 at 7:12pm

    january 2nd I’ll be laying off workers

    Report Post » randy  
    • CatB
      Posted on December 12, 2011 at 7:19pm

      You and everyone else who has any sense .. I see the bosses putting in more hours .. and the workers getting scr*wed again also. Not to mention the prices going up up up for anything that involves labor .. like a cup of coffee.

      Report Post »  
  • progressiveslayer
    Posted on December 12, 2011 at 7:12pm

    Central planning always fails and SF will learn the hard way.

    Report Post » progressiveslayer  
  • brntout
    Posted on December 12, 2011 at 7:11pm

    AAAAHHHH and to think of her as a First lady? Bottom feeders are what they are.

    Report Post »  
  • BurntHills
    Posted on December 12, 2011 at 7:09pm

    wow, that is unimaginable and unsustainable. just watch the steady flow at the Californication unemployment lines increase now, and no doubt some businesses will close and move out of CA.

    Report Post » BurntHills  
  • Smokey_Bojangles
    Posted on December 12, 2011 at 7:08pm

    And prices on EVERYTHING will go up so no one can afford it. Stupid City deserves everything it does to itself.

    Report Post » Smokey_Bojangles  
  • SolidusRaccoon
    Posted on December 12, 2011 at 7:08pm

    Just wait till your Big Mac costs $25. All this will do is cause unemployment and costs to skyrocket.

    Report Post » SolidusRaccoon  
  • Laus Deo
    Posted on December 12, 2011 at 7:07pm

    Oh, like, wow, man… What a totally awesome idea and stuff. Dude.. Dude.. I can like, feel my ears… They’re so heavy!

    Report Post » Laus Deo  
  • MangoT21
    Posted on December 12, 2011 at 7:06pm

    No marvel that it’s an expensive place to live…public programs and laws like this are passed on to the consumers by over regulated businesses.

    Report Post » MangoT21  
  • cadmstr01
    Posted on December 12, 2011 at 7:05pm

    And then TAX it right back.

    Report Post » cadmstr01  
  • fixer
    Posted on December 12, 2011 at 7:04pm

    are these people insane? isn’t this where nancy pelosi comes from?coincidence or not???

    Report Post »  
  • smackdown33
    Posted on December 12, 2011 at 7:03pm

    Raise the minimum wage to $1,000/hr. It drives inflation and makes the problem worse. They know it. I know it. You know it. They want it, and will get it. They are following the Jewish Marx, Alinsky, Piven plan of social destruction, and they have their hands around our economic throats.

    Report Post »  
    • Buck Shane
      Posted on December 12, 2011 at 7:16pm

      They will improve business with this minimum wage.
      They will improve it in the surrounding areas. Business will go to where services and products are priced best. Every dollar of business that goes to the burbs will come from business that would have been done in the city.
      Why not pass a law that everybody must make $1,000,000 a year. Then, nobody will be poor, right. The OWS people will have to protest themselves. Along with eliminating poverty, it will give us entertainment.

      Report Post » Buck Shane  
  • SouthGA
    Posted on December 12, 2011 at 7:02pm

    Ignorant liberals will never ever learn. Mandatory $10 an hour minimum wages will put more people out of work and drive more business out of business or out of Kalifornia you dolts! Liberals are so stupid!

    Report Post »  
  • dmerwin
    Posted on December 12, 2011 at 7:01pm

    The economics of this are as follows:
    Price of a burger goes up.
    Price of a movie ticket goes up.
    Rent is already “too damn high”.
    Fewer people will eat out, go to movies and on and on.
    Citizens of San Francisco remain clueless.

    Report Post » dmerwin  
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