In San Jose, Higher Minimum Wage Means More Jobs

June 25, 2014

A minimum wage hike in San Jose, Calif., has resulted in more, not less, jobs.

Critics of raising the minimum wage claim it will hurt businesses and cost jobs, but the experience of one California city is refuting the naysayers.

San Jose raised the local minimum wage in March 2013, from $8 to $10-an-hour. It was raised an additional ¢15 an-hour in January.

$10.15-an-hour isn’t much, but it far exceeds the federal minimum wage of $7.25-an-hour.

And according USA Today, it’s making a difference for low-wage workers:

Cherry Lunario, a home care worker in San Jose, says the $2-an-hour raise she got in March 2013 was not a ticket to high living … [But] Lunario, who worked and lived in a home for mentally disabled adults when the increase took effect, says her raise provided about $200 extra a month after taxes. She was able to afford to fix a cracked filling in a tooth after postponing dental visits for several years.

While giving more than 70,000 San Jose workers a long overdue boost to their paychecks, the raise has had no negative effect on the jobs market – in fact the unemployment rate is down, falling 2 percentage points since 2013.

The restaurant industry – one of the sectors most affected by the wage hike – is seeing strong growth, with the number of restaurants in the district increasing 20 percent in the past 18 months according to the San Jose Downtown Association.

As Peter Dreier and Donald Cohen write on Huffington Post, claims that higher wages kill jobs have historically proven to be false:

Indeed, contrary to business rhetoric, studies reveal that that higher minimum wage levels do not force employers to lay off workers. In a study published in the Review of Economics and Statistics, economists Arin Dube, William Lester and Michael Reich compared counties adjacent to state borders, where one state raised the minimum wage and another did not, between 1990 and 2006.

They found conclusively that raising the minimum wage had no impact on employment. A similar study by Alan Krueger – now the head of the Council of Economic Advisers – came to the same conclusion. The Obama White House also noted that Costco, the retail discount chain, Stride Rite, a children's shoe chain, and other firms have supported increasing the minimum wage, saying it reduces employee turnover and improves workers' productivity.

Click here to read more about why raising wages is good for the economy.