77% of voters approved San Francisco’s Prop J last year – and on May 1st the San Francisco minimum wage increased to $12.25. This is the first minimum wage hike of many, as Prop J will raise the minimum wage in the city to $15 by 2018. Although raising the minimum wage seems like the socially optimal option, especially in a city with such a high cost of living, is it feasible for the smaller establishments and local shops that many San Franciscans know and love? Brian Hibbs is the owner of Comix Experience, a comic book store he has run for over 20 years. With the increase in minimum wage on the way, he would need an additional $80,000 in revenue to pay his employees. Another beloved small bookstore, Borderlands, announced its closing a few months ago in light of the higher minimum wage. Through crowdfunding it received enough funds to continue into next year. Large corporations with hundreds of chain stores across the country are often targeted for paying their employees barely enough to make a living, and people forget that every bookstore, coffee shop and boutique will also have to follow through with paying their employees more. If these smaller stores cannot stay solvent with the new minimum wage, they will close – and only the larger establishments will remain.
Being a tech and startup epicenter, as well as a bustling urban area in one of the most expensive states in America, it’s no wonder San Franciscans want to be paid more – but is it worth losing the hole-in-the-wall restaurants, comic book stores and novelty shops that makes San Francisco truly stand out? Hibbs of Comix Experience argues that letting the market solve the problem, rather than a fixed price in the form of minimum wage, is a better way to go. “My employees are well-respected and know the value of their work…why can’t two consenting people make arrangements for less than x dollars per hour?”.
The pushing out of small businesses is only exacerbated with San Franscisco’s tax breaks for large tech companies like Facebook and Twitter – an attempt to get the companies to build headquarters in SF. So in addition to a higher minimum wage forcing small companies to close their doors, high-paying corporations are opening theirs – most likely unaffected by the minimum wage hikes and benefiting from tax breaks. In the light of the increased cost of living and companies always looking to save money on the backs of their employees (e.g. the “as-needed” hours I wrote about last week), raising the minimum wage is definitely an important step. However, maybe Prop J was too earnest and the minimum wage issue is a bit more complex than we initially thought.