San Diego's Experiment With Higher Minimum Wage: 4,000 Fewer Restaurant Jobs
San Diego's restaurant recession is another data point suggesting that making it more expensive to employ people causes fewer people to be employed. Shocker.
California is hiking the statewide minimum wage to $15 per hour by 2023, and San Diego is getting a head start on the higher wage mandate—and, maybe, the consequences of it.
Rather than inch upward from $10 per hour to $10.25 per hour in January 2016, as the rest of the state was doing, San Diego jumped its minimum wage to $11.50 per hour. In the year and three months since then, the number of food service jobs in San Diego has dropped sharply, with perhaps as many as 4,000 jobs lost, or never created in the first place.
"If job growth in the restaurant sector had just kept pace with the state's performance … the industry could have created 5,200 jobs instead of the 1,300 that took place," Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University, told Dan McSwain, a columnist with the The San Diego Union-Tribune.
Economists say the restaurant industry is a good barometer for the consequences of minimum wage increases because those businesses rely heavily on low wage workers, operate on small margins, and have high rates of turnover (that is, restaurants tend to pop-up quickly in some areas and go bust just as quickly in others).
hmm coulda, woulda, shoulda .....
I have no doubt forced higher wagers would result in less overall jobs ... and more automation
San Diego's new minimum wage already may be killing jobs
Evidence has emerged of an economic dark side to San Diego’s decision last year to vault over the state minimum wage — it may have already destroyed thousands of jobs for low-wage workers even as higher pay helps tens of thousands of others.
Consider the restaurant industry, for example, which economists study because it relies on low-wage workers, yet generally faces no foreign or out-of-state competition.
Amid an abrupt slowdown in growth, nearly 4,000 food-service jobs may have been cut or not created throughout San Diego County from the beginning of 2016 through February of this year, according to an analysis of federal payroll data by Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University.
“This was at a time when both overall economies performed similarly well,” Reaser said. “If job growth in the restaurant sector had just kept pace with the state's performance … the industry could have created 5,200 jobs instead of the 1,300 that took place.” Last month growth turned negative, as the sector actually lost jobs.
I’ll hasten to add that Reaser draws no sweeping conclusions from a relatively short period of economic data. For one thing, restaurants in the region still employed 126,000 people in February, and many of them are enjoying higher wages because San Diego increased its minimum from the statewide $10 an hour in June to $11.50 inside the city as of January.