Our recent Wall Street Journal op-ed showcases the difficulties for small businesses in Oakland and San Francisco as a result of those cities raising (or about to raise) their minimum wages to $12.25 and $15 an hour, respectively. We argue that such consequences should serve as warnings to other cities like Los Angeles and New York contemplating similar minimum wage hikes:
The San Francisco retailer Borderlands Books made national news in February when the owner announced that the city’s $15 minimum wage would put him out of business, in part because the prices of his products were already printed on the covers. (A unique customer fundraiser gave Borderlands a stay of execution until at least March of 2016.) …
These aren’t isolated anecdotes. In the city’s popular SoMa neighborhood, a vegetarian diner called The Source closed in January, again citing the higher minimum wage as a factor. Back across the Bay in Oakland, the Chronicle reported that some of the city’s businesses have been similarly affected. According to a board member of the Oakland Chinatown Chamber of Commerce, 10 restaurants or grocery stores opted to permanently close this year alone as a partial consequence of the wage hike. Even the Salvation Army’s child-care facility is “scrambling to find ways to keep the doors open” in response to labor cost increases, according to the organization’s county coordinator.
EPI research director Michael Saltsman then appeared in studio on CNBC’s Squawk on the Street to discuss these minimum consequences further:
When you have a place like San Francisco that says, ‘We’re going to go to $15 on a really aggressive schedule’ or Oakland raises its minimum wage by 36 percent overnight, well then you have businesses that say, ‘OK, I’ve got to raise my prices by either up to 20 percent, or if I can’t do that, I’ve got to close entirely’… We’re seeing a new paradigm of the minimum wage debate.