PowerPoint Presentation

Estimated impacts of a proposed minimum wage law for SacramentoProfessor Michael ReichAugust 5, 2015

Center on Wage and Employment DynamicsInstitute for Research on Labor and EmploymentUniversity of California, Berkeley

OutlineProposal and comparisons to other citiesEconomic contextEffects on workersEffects on businesses and overall regional economy

Proposal of the Raise the Wage CoalitionYearMinimum WagePercentage Increase from Previous Year2017$11.5015.02018$12.508.72019$13.508.0Wage Schedule for the Proposed Minimum Wage PolicyProposed minimum wage similar to SF and to LA-- after cost-of-living adjustment Sacramento ProposalSan FranciscoLos AngelesNominal DollarsCost-Adjusted DollarsNominal DollarsCost-Adjusted Dollars2015$9.00$12.25$10.45$9.00$7.852016$10.00$13.00$11.09$10.50$9.152017$11.50$14.00$11.94$12.00$10.462018$12.50$15.00$12.79$13.25$11.552019$13.50 $15.37*$13.11$14.25$12.422020$13.80** $15.74*$13.43$15.00$13.08Proposed Sacramento, SF and LA Minimum Wage Levels , Adjusted to Lower Sacramento Cost-of-LivingSource: Authors analysis of BEA Regional Price Parities* The 2019 and 2020 San Francisco minimum wage is projected assuming a 2.45 percent cost-of-living adjustment.** The 2020 Sacramento minimum wage is projected assuming a 2.23 percent cost-of-living adjustment.

4Proposed increase compared to other cities increasesProposal would raise minimum wage 26.4 percent, adjusting for inflation.

By comparison the average inflation-adjusted increase of for 24 existing local minimum wage laws: 34.1 percent.

By 2019, minimum wage will equal 52.8 percent of the median full-time wage, well within the historical range of the federal minimum wages ratio.Sacramento unemployment is falling at same rate as in the stateUnemployment Rates, 2008-2015Source: California Employment Development Department, Labor Market Information. Data are not seasonally adjusted.Sacramento workers earnings fell 7 percent between 2007 and 2013Median Annual Earnings by Place of Work (2013 Dollars), 2007-2013Source: U.S. Census Bureau, American Community Survey, Table B08521, 2007 & 2013 1-Year Estimates92,000 Sacramento workers would get a raiseYearNumber of Workers Affected (cumulative)Number of Directly Affected Workers(cumulative)Number of Indirectly Affected Workers(cumulative)*Percent of Covered Workforce (cumulative)201779,00064,00016,00032.8201885,00069,00015,00034.4201992,00078,00014,00036.7Cumulative Number of Workers Affected by Proposed Minimum Wage PolicySource: Authors analysis of ACS, OES, and QCEW data. See Data and Methods Brief for details.Note: The proposed minimum wage proposal will not cover self-employed workers, state, and federal workers.* The ripple effect goes up to $15.01 in 2019.Average workers raise: $3,200Average Cumulative Annual Earnings Increase$3,200Average Cumulative Annual Earnings Percent Increase22.7%Total Aggregate Cumulative Increase in Earnings (in millions)$291Cumulative Pay Increases for Workers Affected by the Proposed Minimum Wage Policy by 2019 (in 2014 dollars)Source: Authors analysis of ACS, OES, and QCEW dataDemographics of affected workers5.5 percent of affected workers are teensWorkers of color represent 59 percent of workers receiving raises55 percent of affected workers have attended at least some collegeMedian annual earnings of affected workers are only 44 percent of that of overall workforceAffected workers on average earn over half of their familys incomeAbout three-fifths of affected workers are employed in four industriesFood services 19.5 percentRetail trade 14.9 percentAdministrative & waste management 13.3 percent (e.g., janitorial and security services, temp agencies)Other services 11.3 percentProjected price increases: modest for restaurants, negligible for retail and wider economy201720182019Food ServicesYear over Year Price Increase1.61.11.3Cumulative Price Increase1.62.84.1Retail TradeYear over Year Price Increase0.20.10.2Cumulative Price Increase0.20.30.5Overall EconomyYear over Year Price Increase0.20.10.1Cumulative Price Increase0.20.30.5Cumulative Impact of the Proposed Minimum Wage Policy on Prices forSelect Industries and the Overall EconomySource: Authors analysis of ACS, OES, QCEW, Economic Census, U.S. Census Annual Retail Trade, Wholesale Trade, and Services Reports, and BEA data.Impacts on businesses and overall economyMultiple adjustment channels Regional economic effectsSacramento City versus Sacramento County City accounts for 52 percent of all county employment About half(rough estimate) of employees who work in the city do not live in the city (in-commuters)

EffectsIn-commuters will spend increased wages outside the cityWages will be pulled up in surrounding areasFew businesses likely to relocate outside of cityIn other cities, some surrounding areas raise their minimum wage