Exhibit CC 05-17-2016 Item No. 20 Minimum Wage Presentation (2)The Effects of a $15 Minimum Wage
by 2019 in Santa Clara County
by Michael Reich, Claire Montialoux,
Annette Bernhardt, Sylvia Allegretto,
Sarah Thomason, and Ken Jacobs
With the assistance of Saika Belal and Ian Perry
Summary of Key Findings
April 2016
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2015
workforce 2017 2018 2019
Baseline schedules*
San Jose & Sunnyvale 431,000 $10.53**$10.76**$11.00**
Palo Alto &
Santa Clara City 211,000 $11.25**$11.50**$11.75**
Mountain View 84,000 $13.00 $15.00 $15.37**
Rest of Santa Clara
County (state schedule)180,000 $10.00 $10.00 $10.00
Scenario schedule
Santa Clara County
(except Mountain View)906,000 $12.00 $13.50 $15.00
Scenario B: Santa Clara County $15 by 2019
* The schedules used for this analysis were those that were in effect as of March 1, 2016. Proposals being considered by individual cities were
not used. We do not take into account the state minimum wage increase enacted on April 4, 2016.
** Where minimum wages are scheduled to increase according to CPI, we estimate the increase using the average annual CPI increase over the
past 10 years. Mountain View’s minimum wage is indexed to the San Francisco CMSA CPI-W . All other cities are indexed to the U.S. All Cities
CPI-W .2
Schedule of California minimum w age increases
State schedule
Business with more
than 25 employees
Businesses with 25 or
fewer employees
2017 $10.50 $10.00
2018 $11.00 $10.50
2019 $12.00 $11.00
2020 $13.00 $12.00
2021 $14.00 $13.00
2022 $15.00 $14.00
2023 $15.00 $15.00
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The new statewide law increases minimum wages to $15 an
hour by 2022 for large businesses and 2023 for small
businesses. Starting in 2024, the minimum wage will be indexed
to the cost of living.
New California minimum wage
Scenario
schedule
$12.00
$13.50
$15.00
$15.33*
$15.68*
$16.03*
$16.38*
* The scenario schedule after 2019 is indexed using the average annual increase in the U.S. All Cities CPI-W over the past 10 years, which is 2.2%.
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•Increase earnings for 250,000 workers
•Raise average annual earnings of affected
workers by 19.4 percent, or $3,200
(in 2014 dollars)
•Increase average prices in Santa Clara
County by 0.2 percent over three years
•Have a net effect on employment that is
slightly negative at the county level
(1,450 jobs) and close to zero at a 10
county regional level
Key Finding for Santa Clara County
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96% of Santa Clara County workers receiving increases are over
the age of 20, and 57% are over 30Age
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Workers receiving pay increases are much more likely to live in
families with incomes below the Federal Poverty Level (FPL).
Family poverty level
Scenario B: Santa Clara County
Industry Percent of affected
workforce
Percent of workers in the
industry receiving an
increase
Restaurants 20.2%71.0%
Retail 16.1%44.4%
Administrative &
waste management*11.9%47.6%
The three industries shown below account for nearly
half of all workers receiving increases in Scenario B.
Industry
impacts
* Includes office administrative services, facilities support services, employment services, business support services, and waste
management.7
Increase in
payroll
costs
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Total payroll impact estimated at 1.0% for Santa Clara County
employers
Increase in
payroll
costs
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The net effect on jobs reflects the balance among factors impacting
workers and employers
Source: UC Berkeley IRLE Minimum Wage Research Group.
Santa Clara County
Minimum Wage
Employer Survey
A Study Conducted by BW Research Partnership
In Collaboration with City of San Jose and Institute for Research on Labor and Employment (IRLE)
April 2016
The majority of surveyed employers report that they
will likely have to increase prices for customers, but
that their employees will be more satisfied and
productive given a minimum wage increase.
8.3%
12.5%
18.0%
17.8%
21.2%
22.0%
42.1%
40.9%
12.7%
14.1%
21.2%
22.2%
20.7%
23.2%
20.7%
24.7%
58.5%
57.5%
45.0%
46.7%
43.4%
34.9%
20.7%
22.0%
10.4%
8.5%
9.5%
7.9%
7.9%
11.4%
9.7%
6.8%
You will have to close the business
You will move the business to a community that
has a lower minimum wage
You will reduce the hours for your minimum
wage employees
You will reduce the total number of workers
that you employ
You will invest in technologies that reduces the
need for workers and lowers labor costs
Your costs of employee turnover will decrease
because employees will be less likely to quit
Your employees at the minimum wage will be
more satisfied and more productive
You will need to increase prices to your
customers to pay for the increased wages
Very likely
Somewhat likely
Though the majority agree it will positively
impact the community, most also feel
increasing the minimum wage will make it
harder to start new businesses.
37.8%
41.9%
55.2%
58.3%
22.8%
23.4%
19.5%
17.8%
11.2%
10.0%
11.0%
9.5%
7.3%
5.4%
4.4%
3.5%
18.1%
15.8%
7.3%
9.1%
If the minimum wage increases, it will make it
harder to start and grow businesses in our
community
An increase in the minimum wage will help
reduce income inequality in our community
It would be better to increase the minimum
wage the same for all cities in the County,
rather than having different rates for…
An increase in the minimum wage makes
sense for our community, given our high cost
of living
Agree Somewhat agree Neither agree nor disagree
Somewhat disagree Disagree Don't know/ Refused
California minimum wage exemptions
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Policy Issues: State Exemptions
•Learners (regardless of age)
–May be paid not less than 85% of the minimum wage rounded to the nearest nickel during their first 160 hours of employment in occupations in which they have no previous similar or related experience.
•Allows the governor to postpone a wage increase during an economic downturn.
–Negative economic conditions, including negative job growth or retail sales.
–Governor may act by Sept. 1 of each year to pause the next year's wage increase if a budget deficit is forecasted of more than 1% of annual revenue.
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Policy Issues: City Learner Exemptions
•Most incorporate the state’s learner exemption.
•4 exempt youth training programs operated by a
non-profit corporation or government agency
(Sacramento, Richmond, Berkeley, San Diego).
•1 exempts publicly subsidized job-training and
apprenticeship programs for teens (San Francisco)
•2 extend the state learner provision to 480 hours or
6 months (Santa Monica, Long Beach)
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Policy Issues: Local Exemptions
•Mountain View and Sunnyvale included no
exemptions in their ordinance.
•San Jose has a collective bargaining waiver
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Policy Issues: Transitional Job Programs
•Transitional jobs programs provide short-term, subsidized
employment and supportive services through a non-profit
organization to help participants overcome barriers to
employment.
•Most minimum wage laws treat transitional jobs programs
the same as other non-profit organizations.
•In Los Angeles and Santa Monica, participants in transitional
jobs programs that meet specified criteria are exempted
from the higher minimum wage for a maximum of 18
months.
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Policy Issues: Small Businesses
•The new California minimum wage law
(SB 3) and a number of the local laws
provide an additional phase-in year for
small businesses.
•“Small business” is commonly defined in
these laws as 25 employees or fewer.
Conclusions
•Higher wage costs would be absorbed through
improved productivity, reduced worker turnover,
and modest price increases.
•Net effects on employment would be very slightly
negative at the city and county levels and close to
zero at the regional level.
•The resulting improvement in living standards
would outweigh the small effects on
employment.
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Next Steps
•Detailed Economic Analysis –June 2016
•Cities Association meeting –June 9, 2016
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The Institute for Research on Labor and Employment (IRLE)is a research
organization at UC Berkeley.Created in 1945,IRLE brings together
faculty from multiple academic departments and supports
interdisciplinary research about labor and employment relations.IRLE
sponsors several community service programs and research centers.
This is a presentation from the Center on Wage and Employment
Dynamics at IRLE.The Center on Wage and Employment Dynamics was
established in June 2007 to provide a focus for academic and policy
research on wage and employment dynamics in contemporary labor
markets.
BW Research is a full-service applied research firm that is focused on
supporting our clients with economic &workforce research,customer &
community research,as well as strategic planning and evaluation
services.
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