September 20, 2012
New study predicts negative economic effects of San Jose’s Measure D
A soon-to-be released study by Beacon Economics examining the ramifications of San Jose’s Measure D – a ballot measure that would increase the minimum wage to $10 per hour and index it to the CPI – shows what many businesspeople and policymakers already know: Increasing the minimum would cost San Jose jobs while undermining efforts to grow the local economy.
Key preliminary findings from the study include:
- Measure D will increase wage costs for firms in the City of San Jose by between $70 million per year to $78 million per year
- $18.6 million and $21.1 million in increased wages will be borne by the city's restaurants and hotels.
- $10.7 and $12.2 million will be shouldered by the retail trade industry.
- $5 million increase wage cost in manufacturing
- Measure D will increase overall payroll costs for San Jose businesses by about $90 million, though litigation and compliance costs could drive this number higher. It will only generate $25 million in economic activity.
- Only 43.4 percent of the increased wages are expected to be spent in the local economy. The majority of minimum wage workers in San Jose live and spend outside of the city.
- Measure D will result in a loss of 1,000 to over 3,100 jobs.
Because of these negative consequences, the California Restaurant Association, the San Jose/Silicon Valley Chamber of Commerce and numerous other groups are mounting an aggressive campaign against the proposal.