A battle is raging in San Diego that could have implications for small business owners across the nation. It all started when the residents voted to raise the minimum wage to $11.50 for everyone working within city limits.
This new wage law was certainly well-intentioned, meant to help the city’s working poor. But it opened a Pandora’s box of unintended consequences. For example, as businesses feel the pinch of higher wages, they’re often forced to let some of their workers go.
Also, about half of minimum wage workers are aged 16-24. Presumably, many workers in this age range are living at home with their parents. So the intended boost to the city’s struggling breadwinners may be muted.
Data suggests that the wage boost has indeed begun to hurt many of the people it was intended to help. Thousands of jobs are being lost, particularly in the food service industry.
In the midst of this, investigators are busy issuing fines to businesses for non-compliance. Many of the businesses have claimed ignorance to the law, but there are inevitably some who are aware of it and are simply struggling to meet the higher wage burden.
Complicating the matter is that fact that some business owners in La Jolla and San Ysidro don’t even know that their communities are within the borders of San Diego.
With all the uncertainty stemming from the wage boost, it’s fair to ask why they did it in the first place. It all began when the San Diego Regional Economic Development Corporation found that nearly all of San Diego’s small businesses were paying below the regional average.
Small business was identified as a crucial economic driver for the area, yet the pay disparity made officials fear that it would be harder for businesses to attract and retain quality employees.
So, again, there were good intentions. But the wage initiative has certainly yielded varied results. And business owners around the nation are paying attention because the struggles in San Diego are hardly unique to Southern California. If the minimum wage were raised to $15 nationwide (as some are pushing for), it would affect 59 million workers. That’s 40% of the total workforce.
Perhaps the folks in San Diego will ultimately find a successful way to pay their employees more, while still maintaining the health of small businesses. Either way, the lessons being learned in San Diego are relevant as politicians and activists evaluate the implications of a substantial raise to the nationwide minimum wage.