Minimum Wage Battle Not Over in San Diego

24/7 Wall St.

With a population of around 1.34 million, San Diego is the largest city in the United States to have passed an ordinance to raise the minimum wage beyond the federally mandated level of $7.25 an hour. The San Diego City Council originally approved an ordinance on July 28 to raise the minimum wage in the second-largest city in the state to $11.50 by January 2017.

On August 8, the Republican mayor vetoed the ordinance, and on Monday the Democratic-backed ordinance overrode the veto by a vote of 6 to 2. Because only six votes are needed to override a mayoral veto, there was little chance that the mayor’s veto would stand because the original vote had been 6 to 3 in favor of the wage hike.

Virtually immediately following the vote to override the mayor’s veto, a group called the San Diego Small Business Coalition said it plans to begin collecting signatures to force a referendum on the minimum wage ordinance. If the required number of signatures (nearly 34,000 within 30 days) is received, the voters of San Diego will get to vote on whether to raise the minimum wage.

Interestingly, another group called Raise Up San Diego has been formed to urge voters not to sign the referendum petition. Among the backers of this group are Irwin Jacobs, founder of Qualcomm Corp. (QCOM). The group has raised some $300,000 so far, according to a report at the KPBS website.

Under the ordinance, San Diego’s minimum wage rises to $9.75 in January 2015, $10.50 in January 2016 and $11.50 the following year. Future increases are indexed to inflation beginning in 2019. The statewide minimum wage rose from $8 an hour to $9 last month and will rise to $10 an hour in July 2015.

Several studies of the impact of minimum wage increases have demonstrated that the increases have little impact on total employment numbers. One University of California study concluded:

We find that California’s businesses are likely to absorb the increased labor costs of either [of two] minimum wage [increase proposals] largely with offsets from increased worker productivity, from declines in recruitment and retention costs, and with small price increases in the restaurant industry (the industry most affected by minimum wage increases).

The battle over raising minimum wages is virtually never about the impacts. Like so much else these days, it is about a person’s political beliefs. That almost guarantees that the battles will never end.

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