Here’s another example to point to when opponents of a higher minimum wage claim that it would cost jobs. The minimum in San Jose, California, has gone from $8.00 an hour to $10.00 and then $10.15, and University of California-Berkeley economist Michael Reich has been studying the results:
[The minimum wage increase] directly and indirectly affected 70,000 of the city’s 370,000 workers, Reich says.San Jose restaurants, which Reich says were most affected by the pay increase, raised menu prices by an average 1.75%, according to his study. He says there has been no discernible impact on employment.
The unemployment rate in the San Jose metro area, in fact, has fallen to 5.4% from 7.4% in March 2013. The San Jose Downtown Association says the number of restaurants in the district has increased by 20% the past 18 months.
So 70,000 people have gotten a raise, unemployment has fallen, the resulting price increase is 1.75 percent in the industry most affected, and the number of businesses in that most-affected industry is actually growing. Some restaurant owners say they’ve been hurt by the increase, but others have been surprised by how well it’s gone:
Chuck Hammers, who owns five Pizza My Heart outlets in the city with about 115 employees, says he was panicked until he realized the pay hike would also affect his competitors. To offset a 4% increase in costs, he raised the price of pizza slices by 8%, or 25 cents for a $3 slice of pizza. “Ninety-five percent of customers didn’t even notice,” he says, adding that his sales were unaffected.
As always, there is more going on economically in San Jose than just a minimum wage increase. But this example joins a long list of others—like strong small-business job growth in Washington, the state with the highest minimum wage—showing at least that a higher minimum wage does not, by itself, cost jobs. And of course, for the 70,000 workers who got a raise, it means the ability to get a cracked tooth fixed or find a place to live on their own or eat out occasionally.