Discredited Berkeley Team Again Praises Wage Hikes

Earlier this year, the Albany Times-Union explored the cozy relationship between labor unions and a research outfit at the University of California-Berkeley. The Berkeley team–which is partially funded by and works closely with organized labor–is often called upon when a favorable report is needed on the impacts of a rising minimum wage.

They don’t disappoint: Asked by the Times-Union if their research had ever delivered anything other than a favorable report, the Berkeley team couldn’t name one example.

The latest entry in their rose-colored repertoire was released on November 29th, conveniently timed to the same day as the SEIU’s latest fast food strike. The press release predictably proclaims that “minimum wage increases are a real boost for restaurant workers and don’t hurt business.” In San Jose specifically, the professors claim that the city’s 25 percent increase in the minimum wage only caused a minimal increase in restaurant prices without reducing jobs.

But the authors conclusions about the labor market impact are only based on overall restaurant employment in San Jose. This is woefully incomplete: For starters, it completely ignores the impact on younger and less-skilled job seekers, who are greatest risk of being displaced.

Their approach also masks restaurant-specific changes–say, to staffing levels or hours– that have a negative effect on employees: Our survey of 163 restaurants after the increase took effect found that 45 percent had cut employee hours and 42 percent had reduced staffing.

The stories back up the statistics: The city’s oldest restaurant, Original Joe’s, had to cut back on staff and employee hours. Co-owner Matt Rocca told USA Today that the hike cost his restaurant $90,000 a year, forcing him to lay off five of his 67 employees and shift closing time up to 11 p.m. They also had to increase prices 10 percentseveral times higher than reported by the Berkeley team.

At the present moment, the rest of California is full of stories of otherwise healthy businesses that have closed or left the state as a consequence of aggressive minimum wage hike. Just last week, a call center in San Diego reported that it was moving 75 jobs to Texas because of the change in the minimum wage. Bookstores near Sacramento have even closed because of $15. (Dozens of stories are available at FacesOf15.com.)

When considering a minimum wage increase, the rest of the country should consider California’s example and answer, “No way, San Jose.”