Researchers Report $115-126 Million in Increased Earnings from Measure
New data released this week by leading economists from the University of California Berkeley Institute for Research on Labor and Employment and by policy experts from the Institute for Women’s Policy Research detail the significant benefits for Oakland if the minimum wage is raised. The data marks the first independent research on a ballot measure expected to appear on the November, 2014 election that will raise the minimum wage to $12.25 and guarantee paid sick days for Oakland workers.
More than one-quarter of all Oakland workers—up to 48,000 people—would directly or indirectly receive a wage increase if the measure passes, and roughly 56,700 would win paid sick days. The research finds that between $115 million and $126 million in additional wages would be generated by the measure. The research also showed that passing such a measure would minimally increase operating costs by an estimated 0.2 to 0.3 percent for retail and 2.7 to 2.9% increase for restaurants.
“A citywide minimum wage can help make the economy more equitable without harming economic growth,” said Michael Reich, Director UC Berkeley Institute for Research on Labor and Employment. “That’s more money in low-wage workers’ pockets for a healthier city and a healthier economy.”
The research for the University of California was conducted by Michael Reich, Director of the UC Berkeley Institute for Research on Labor and Employment, Ken Jacobs, Chair of the UC Berkeley Labor Center, Annette Bernhardt, UC Berkeley Visiting Professor and UC Berkeley Labor Center researcher Ian Perry. The research found that raising the minimum wage to $12.25 is likely to have the following impacts:
Between 25-30 percent of Oakland workers will receive a pay raise. This translates to 40,000 and 48,000 workers.
- Between 31,000-34,000 would be directly impacted by a minimum wage increase
- Between 9,000-14,000 would be indirectly impacted by a conservative ripple effect
Workers hourly wages and annual incomes will rise, resulting in increased worker earnings of between $115 and $126 million.
- Hourly wages of affected workers will rise by an average of between $1.63-$1.76/hr.
- Average annual earnings will increase by $2,618- $2,832 per year.
- The total increase in earnings will be between $115 and $126 million.
An increase to $12.25 will significantly impact Oakland’s workers of color.
- Workers of color (Black, Hispanic, and Asian) make up between 57.8 to 66.4% of the total workforce in Oakland—but they represent between 74.7 and 82.6% of workers impacted by a minimum wage increase to $12.25.
- 41.2 to 44.8% of workers impacted are Hispanic/Latino
Increasing the minimum wage will not have significant impact on business.
- UC estimates that operating costs will increase by 0.2 to 0.3 percent for retail and 2.7 to 2.9 percent for restaurants.
- UC predicts a one-time increase of 2.0 to 2.9% in restaurant prices. Using the midpoint of this range, 2.4%, a $10 meal would increase by 24 cents to a total of $10.24. For the local economy as a whole, this increase is negligible.
- Research evidence indicates that employers adjust to min wage increases in many ways, and benefit from increased worker productivity and reduced turnover. UC references a 2013 study that shows that a 10% increase in minimum wage results in a 2.1% reduction of turnover and that min wage increases do not have statistically significant negative effects on employment or hours.
Other studies show minimum wage increases have little negative impact on employment and prices; have positive impact on turnover.
- There are three rigorous studies of the employment impacts of existing local minimum wage laws, all finding no significant impact on employment.
- Allegretto, Dube, Reich and Zipperer (2013) looked at every state and federal minimum wage increase in the U.S. between 1990 and 2012. This study finds no statistically significant effects of minimum wage increases on either employment or hours in restaurants and other low-wage industries, controlling for a range of regional and local differences that previous research did not include.
The Institute for Women’s Policy Research specifically found that:
56,721 have no access to paid sick days (37%)
- 38% of men and 35% of women do not have access to paid sick days
Workers of color have less access to paid sick days than white workers.
- 52% of Hispanic workers do not have access to paid sick days
- 33% of Black workers and 33% of Asian workers do not have access to paid sick days
Low-wage workers have significantly less access to paid sick days.
- 68% of workers earning under $12.25/hr lack access to paid sick days.
- Workers in accommodation and food service have significantly less access than all workers.
“This research shows what Oaklanders already know: raising the minimum wage is going to lift up thousands of people,” said John Jones, Burger King Security Officer who currently makes $10 an hour. “It’s also going to lift our entire community because when poor low-income people make money, they spend it. They spend it on food and in local stores which gets our whole economy going.”
The LiftUp Oakland submitted 33,682 signatures from Oakland voters to put our measure for a minimum wage of $12.25, paid sick days and wage theft protection on the ballot. The coalition called on 1,000 hours of work by more than 253 volunteers and the support of 45 organizations to gather the signatures, a reflection of overwhelming community support. The Oakland Chamber of Commerce continues to push opposition to the measure.
On May 30, the Oakland Clerk’s office announced that it had completed the first count of our signatures and were sending the petitions to the Alameda County Registrar of Voters for validation. Final verification that the ballot measure qualifies for the ballot is expected in late June.