The good news for some Bay Area workers is that, effective Jan. 1, their take-home pay will be higher because numerous cities have approved ordinances boosting the minimum wage.
The better news for many employees is they’re likely already making considerably more money than the new mandated minimums call for.
To retain workers in a region notorious for its high housing costs, many businesses have been beefing up salaries in recent years, a practice that was amplified during the pandemic when they found themselves severely short-staffed.
“Because of the pandemic and the tight labor market, we have seen wage increases by employers unilaterally without a need for a policy, but a lot of those wage increases are happening in certain industries, like leisure and hospitality,” Enrique Lopezlira, a labor economist and director of the Low-Wage Work program at the UC Berkeley Labor Center, said in an interview Thursday.
He cautioned that some of the higher pay may be temporary and could drop if conditions change, which is why he believes having a minimum wage policy is critical.
“Employers can give wage increases, but they can also take them away — so this puts in a floor for that,” Lopezlira said.
And even under current conditions, some of the pay increases are modest. One employee who works at a Jack in the Box in Castro Valley and asked not to be named said he saw a slight bump in his paycheck a few months ago from $14 to $15 an hour.
But it’s still difficult to survive on that in the Bay Area, he said, adding that “I’d like to see future increases.”
Statewide, the minimum wage will increase to $15 an hour on Jan. 1 for businesses with 26 or more employees and $14 for those with fewer workers.
But in the Bay Area, workers in many cities will get more.
Mountain View and Sunnyvale will raise the minimum wages to $17.10 an hour, joining a small group of cities that require businesses to shell out more than $17 per hour.
Emeryville is on that list. Its $17.13 per hour minimum wage, which went into effect last July, is one of the highest in the nation.
For many cities that have already hit $15 per hour minimum wages, this year’s boost is mostly based on calculations baked into ordinances that adjust amounts in line with the Consumer Price Index.
In Belmont, for example, the minimum wage must increase by the lesser of either 3.5% or the percentage equal to the previous year’s increase in the CPI. The result for this Jan. 1 will be an increase from $15.90 to $16.20 per hour.
Local cities where minimum wages will exceed the $16-per-hour threshold include Palo Alto at $16.45, Los Altos and Santa Clara at $16.40, El Cerrito at $16.37, and San Jose, Redwood City and San Mateo, all at $16.20.
Others will stay closer to the $15 per hour minimum: Oakland will be $15.06, Daly City’s at $15.53, Richmond’s at $15.54, East Palo Alto’s at $15.60, Half Moon Bay’s at $15.56, Menlo Park’s at $15.75, San Carlos’ at $15.77 and South San Francisco’s at $15.80.
Like the state, some cities require bigger businesses to give bigger pay boosts than smaller ones. In Novato, for example, businesses with 25 or fewer employees will have to pay them at least $15 an hour, while those with between 26 and 99 employees will pay $15.53, and “very large” businesses with 100 or more employees will have to pay $15.77.
The effectiveness of minimum wage increases has long been debated. Critics argue they ultimately result in fewer jobs and force some struggling businesses to close. Proponents counter that minimum wages ensure working people can survive.
Research is mixed, though recent studies from UC Berkeley and other academic centers have shown that increases in minimum wage are a net positive for workers and the economy, UC Berkeley Labor Center’s Lopezlira said.
“We’ve seen productivity has been growing in the U.S., but wages haven’t increased,” Lopezlira said. “So for a long time, employers have been benefiting from the increased productivity without passing that along to workers.”
In any case, even the highest local minimum wages are not enough for many people to comfortably afford housing costs in the Bay Area.
An analysis by the National Low Income Housing Coalition released earlier this year found it takes the equivalent of more than four full-time minimum wage jobs to afford a two-bedroom apartment in San Jose or San Francisco and still be able to pay for food, health care and transportation. Workers in Oakland and Fremont would need three minimum-wage jobs to pay for the same costs in their areas.
In expensive areas with tight labor markets like the Bay Area, market forces often drive wages more than policy does. This year the average wage of restaurant and grocery workers rose above $15 an hour for the first time, according to the Bureau of Labor Statistics. Wages increased 4.2% from September 2020 to September 2021.
Costco increased its minimum wage to $17 an hour in October. That same month, Bank of America announced it was raising its U.S. minimum hourly wage to $21 as part of a plan to bring it to $25 by 2025.
In a December public memo, the CEO of T-Mobile, Mike Sievert, said the company would set its nationwide minimum pay at $20 an hour.
The move helped the company attract good employees, Sievert explained in the memo. “It’s a job-seekers’ market, which means competition to keep and find top talent is competitive,” he said.
Meanwhile, efforts to pass laws increasing the minimum wage continue.
A ballot initiative sent to the state attorney general’s office — dubbed the “Living Wage Act of 2022” — calls for increasing California’s minimum wage to $18 per hour by 2026. That would involve raising the minimum by about a $1 per year, adjusted for small or large businesses.
The act could be on the November ballot if it receives enough signatures to qualify.