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Tuesday, Jul 23, 2024
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Price Hikes Just Start of Wage Increase Impacts

Debra Rosen

The debate surrounding an increased minimum wage is a longstanding one, and it’s unlikely to disappear anytime soon. In March 2016, Gov. Jerry Brown committed California to raising its minimum wage to $15 per hour by 2022. Consequently, you may have already found yourself asking the local barber, barista, or restaurant employee about a sudden hike in their prices. More often than not, their response is, “It’s because of the minimum wage increase.”

California’s new legislation is one of the most aggressive and rapidly implemented agreements of its kind, causing widespread concern that businesses and consumers may feel its impact at a similarly accelerated rate. Added to that is an even higher rate of increase for the City of San Diego, approved by voters on June 7.

The most immediately affected industries are those that depend most heavily upon low wage-earning employees, such as retail and service-oriented businesses. These businesses will struggle to absorb the cost of increased wages, and therefore must pass some or all of it on to the consumer. Perhaps your most recent car wash or haircut cost $2 or $3 more than it used to. On an individual occasion, those few dollars may not seem like much, but when applied to a larger scale and on a daily basis, the expenses add up quickly. If those price hikes are taking place after only the first mandatory wage increase ($10 in California and $10.50 in San Diego, as of Jan. 1, 2016), it brings up the question: How much higher will prices get as the additional increases are implemented?

Not a Minimal Issue

Increased wages and expenses will soon affect higher-paying jobs and industries as well. If a high-school student working part time at a coffee shop is making $15 per hour, full-time employees that are educated or trained in a particular field will inevitably begin to demand higher pay for their time and skills, once again raising costs for businesses and consumers alike. In essence, no one is immune to the impact of this wage increase, and we must be cautious with the rate at which we implement it.

In addition to the steady increase in prices that California will continue to experience, this legislation is endangering jobs and hours that our citizens depend on to support themselves and their families. As business owners are squeezed more than ever before, they will be forced to make brutal cuts just to keep their businesses alive.

Technology Take Over

In a recent economic development committee meeting at the North San Diego Business Chamber, multiple employers discussed the probability of purchasing technology like automated phone responses that would replace some of their lower-ranking employees, a trend that surely will be followed by other businesses throughout the region. Consequently, we run the risk of a severe spike in unemployment, which benefits no one.

While the chamber is sensitive to the well-being and fair treatment of all employees, we remain concerned that California’s current plan is being applied too quickly in order for it to be good for businesses and the economy as a whole. As the old adage goes, “There’s no such thing as a free lunch,” and it looks like this lunch may cost more than many California businesses can afford.

Debra Rosen is president and CEO of the North San Diego Business Chamber.

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