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Tuesday, October 23, 2012

San Francisco's Minimum Wage Is Highest in the Nation, But Will That Help the Economy?

Posted By on Tue, Oct 23, 2012 at 4:20 PM

click to enlarge Even with a wage increase
  • Even with a wage increase
San Francisco will have the highest minimum wage in the nation starting Jan. 1, 2013, when employee paychecks increase by a whopping 31 cents to $10.55 per hour.

Currently, the sometimes grumpy folks serving your sandwiches and coffee earn $10.24 an hour. But rising inflation tells us it's time for a pay increase.

This might be hard to believe, but not everyone thinks giving minimum-wage workers more money is a good idea (Can you guess which sandwich shop thinks that?). In fact, a new study released by the Employment Policies Institute, a Washington-based nonprofit group that studies public policy, says that raising the minimum wage actually hurts local employment because businesses are less apt to hire.

For younger employees -- those between the ages of 16 and 19 years old -- the unemployment rate is hovering at about 25 percent, and increasing wages won't help chip away at that number, said Michael Saltsman, a research fellow with the Employment Policies Institute.

Although raising the minimum wage might seem like a good way to help pull people out of poverty, what it really does is force businesses that hire minimum-wage workers to cut back on employee hours or jobs, said Saltsman.

As a result, he said, many youngsters miss out on the "crucial job experience they need to move on to other career opportunities."

"San Francisco's goal of reducing poverty is much better served by other means, like the working families credit," said Saltsman.

On top of that, increasing minimum wage is not not targeted; when you raise the amount businesses are paying their employees, they might be giving more money to a second-wage-earner who really doesn't need the extra cash.

But let's not forget how this minimum wage increase is really killing low-income folks and young adults: No more $5 foot-long sandwiches from Subway.

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Coburn Palmer

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