Written by Christopher Wysocki, Executive Director, CASE
Ms. Delfina Geiken
City of Berkeley, Commission on Labor
2180 Milvia Street
Berkeley, CA 94704
Dear Ms. Geiken:
On behalf of the more than 9,000 members of the Consumer Alliance for a Strong Economy, I want to take this opportunity to express our strong opposition to a proposed minimum wage increase in the City of Berkeley.
Under a proposal to be undertaken by the Commission on Labor, the minimum wage will increase from $6.75 to $8.50 per hour – an almost 26% increase that will cause serious harm to the smallest businesses least able to absorb the increased costs associated with this mandate.
It should be remembered that a minimum wage is most often a “training” wage paid to people just entering the workforce. Many teenagers working at their first job or unskilled workers new to the workforce are paid a minimum wage while they develop the skills and experience necessary to advance up the salary ladder. The data available on minimum wage earners suggests that an overwhelming majority receive substantial salary increases within one year of entering the job market.
In addition to the negative impact this measure will have on small businesses, it also will have a harmful effect on consumers in the Berkeley area. A 26% increase in labor costs can only mean a substantial increase in prices charged for goods and services. The mandatory wage increase will most certainly result in higher prices at local restaurants, drycleaners, independent retail outlets, and countless other businesses inside the Berkeley city limits. Small businesses simply cannot absorb a mandatory wage increase without raising prices on consumers.
It is my understanding that businesses engaged in public contracts in the City of Berkeley are subject to a living wage. While we may disagree with this public policy as well as a mandatory minimum wage, we fully understand the City’s right to dictate salary levels when public money is being spent. The proposal on the table here, however, will impose undue burdens on private entities with no other connection to Berkeley other than the fact they are located inside the city limits.
I further wish to caution the City of Berkeley that it is very possible that an increase in the city’s minimum wage could well result in a substantial loss of business tax revenue as a result of lost jobs due to relocation. Unlike San Francisco where most consumers would have to pay a toll to travel over the Bay Bridge or the Golden Gate Bridge to benefit from lower prices associated with a lower minimum wage, the same is not true of Berkeley. Consumers inside your city limits have a much easier time traveling to a lower wage market with lower prices.
A minimum wage increase should be viewed under a dynamic economic model before a final decision is made. The mobility of Berkeley consumers along with the possible relocation of businesses into lower wage cities makes the proposal to raise the minimum wage a dangerous one.
After a review of the City Manager Staff Report, it seems only prudent that Berkeley not move forward with a minimum wage increase at this point. Staff’s own admission is that the City faces a fiscal crisis, and an honest dynamic review of a mandatory minimum wage increase will most certainly reveal a negative economic impact.
The Consumer Alliance for a Strong Economy is a non-partisan, non-profit organization dedicated to promoting pro-small business and pro-consumer policies in the State of California. Representing over 9,000 members across the state, I appreciate the opportunity to have the Consumer Alliance for a Strong Economy officially go on record as opposing the proposed minimum wage increase in the City of Berkeley. If you have any questions, please do not hesitate to call me at (916) 444-1502 or visit our website at www.ConsumerAlliance.org.
Sincerely,
Christopher Wysocki
Executive Director
Consumer Alliance for a Strong Economy