Many of the Bay Area’s lowest-paid workers are receiving a pay bump this month as several cities increase their local minimum wage.
While the wage hikes are welcomed by labor advocates who say low-income workers are being squeezed to the breaking point, they add that it’s not nearly enough to address the region’s affordability crisis.
In Fremont, with 223,000 people, the minimum wage rose July 1 from $16 to $16.80, a 5% increase meant to keep up with higher prices for rent, food and other goods and services. In Berkeley, the minimum wage increased from $16.99 to $18.07.
“I only wish that they were bigger increases,” said Isaiah Toney, deputy director of campaigns for East Bay Alliance for a Sustainable Economy, an organization that addresses economic equity issues and advocates for low-wage workers and communities of color. “We see not only that wages aren’t keeping up with cost-of-living and inflation increases, but other costs are increasing faster — like housing.”
In the San Francisco-Oakland-Hayward region, the median asking price for rent in May was $2,844, according to a report by Realtor.com. That amounted to a 4% drop when compared to the previous May. But in the San Jose-Sunnyvale-Santa Clara region, the asking price rose 1% in the same time period, from $3,314 to $3,347.
“I worry about a sort of crash moment where there’s lots of low-wage workers who suddenly see their housing costs (become) 40% to 50% or more of their income,” Toney said. “And that there’s a crisis in paying rent even greater than the current crisis.”
The minimum wage also increased July 1 in Milpitas, from $16.40 to $17.20. In Alameda it rose from $15.75 to $16.52, in Emeryville from $17.68 to $18.67, and in San Francisco from $16.99 to $18.07.
The wage hikes follow similar increases that took effect Jan. 1 across the Bay Area — including in San Jose ($17) and Oakland ($15.97) — where local jurisdictions have policies and ordinances governing minimum wages that are higher than the state’s rate.
California’s minimum wage is $15.50 an hour, a 50-cent bump that also took effect Jan. 1. The federal minimum wage is $7.25 per hour.
Johnathon Carrillo, 19, lives and works in Milpitas, splitting his time between his assistant manager role at An-Jan Feed & Pet Supply and his work as a real estate agent. He makes more than minimum wage but is happy for those who do and says he hopes for a small bump himself as wages go up for the workers around him. He lamented the cost of living but suggested that it’s not as hard to make ends meet in Milpitas as it is in other Bay Area cities.
“If I was in San Francisco, I probably would be crying every single night.” said Carrillo.
Filippo Rebessi, an assistant professor and the interim chair of the economics department at Cal State East Bay, said the modest increases in local minimum wages are not likely to cause a wave of layoffs or reduction in worker hours.
“Should we expect some revolution?” Rebessi said in an interview. “Probably not.”
But the professor noted that there could be localized examples of employers tightening their belts. Businesses such as coffee shops and restaurants that operate on tight profit margins could cut back their hours of operation, lay off employees or reduce shifts.
An increase in labor costs, which Rebessi said can total 50%-60% of spending for some businesses, can dampen the demand for workers.
For some small-business owners, the pain is real.
Santosh Giri and his business partners opened the Nepalese restaurant Kathmandu Cuisine in Milpitas at the start of the lockdown era of the COVID-19 pandemic. Since then, he said he’s navigated an unpredictable supply chain that’s resulted in higher costs for crucial ingredients while trying to keep prices acceptable for customers. For a business that runs on a profit margin of around 2% to 3%, he said the increase in the local minimum wage will bring with it tough choices, such as cutting worker hours or laying off employees.
“All of this sounds not empathetic at all, when you make those decisions,” said Giri, who manages the restaurant of 13 employees.
He added that the restaurant has changed its hours to stay open later than 9 p.m., when other restaurants close. And it raised prices for many items last month.
Frances Eikeberg, who owns Niles Ice Cream Sweets & Eats, says the increase this month in Fremont’s hourly minimum wage will be tough to swallow.
“It’s rough,” Eikeberg said as she greeted a group of customers who had ducked into her shop on a recent hot afternoon.
The owner said she pays the minimum wage to her 11 employees, many of whom are teenage, part-time workers. For most of them, the ice cream shop is their first job, she said. Some work just a day or two a week.
Eikeberg did not say whether the wage hike will lead to any immediate layoffs or cuts in hours for her workers. But she suggested the added cost of doing business could mean higher prices for a banana split down the line.
“I have a lot of customers that make comments about (higher prices),” said Eikeberg, who says she typically raises prices at the beginning of the year to keep up with inflation. “And I said, ‘I have to do what I have to do because of the economy.’ ”
Fremont’s ordinance, approved in 2019, increased the local minimum wage to $15 two years earlier than mandated by the state. The minimum wage is now adjusted annually based on inflation using the local consumer price index, which the U.S. Labor Department says is the average change over time in the prices paid by urban customers for a market basket of consumer goods and services.
Ronda Borgen, who works at an antique shop in the Niles neighborhood of Fremont, said she won’t be affected by the local minimum wage adjustment because she works as part of a collective and isn’t paid an hourly wage. But she lamented the high cost of living locally, saying her adult son has had to take on side jobs to be able to stay in the area.
“Everything is higher here, it seems like,” she said.