One year ago San Jose, Calif., raised its minimum wage to $10 an hour. From the moment such an increase was first discussed, opponents quickly painted a grim scenario. San Jose Mayor Chuck Reed (D) said that a higher minimum posed "the biggest threat" of any issue to the city’s economic development.
Specifically, raising the minimum wage, a chamber of commerce-backed memo warned, would:
1) Cost at least $600,000 in costs just to enforce the law and cover the increased bureaucracy.
2) Force businesses to slash working hours.
3) Force 30% of employers and 43% of those in charge of hiring minimum-wage workers to lay off employees.
3) Prevent new businesses from opening.
4) Lead to aggressive government overreach, claiming that the city would “investigate financial records of private businesses and individuals” and allow “‘private enforcement’ lawsuits.”
5) Kill jobs left and right and cause hiring freezes.
"Our opponents said it was going to destroy Silicon Valley," said Prof. Scott Myers-Lipton of San Jose State University. But with a 60% majority in favor, Measure D was passed in 2012 and the new wage went into effect on March 11, 2013.
And guess what happened? None of the above.
1) The $600,000 annual enforcement cost evaporated; so far, the city has racked up just $5,000. No new bureaucrats were added, with the compliance department merely shuffling staff to handle the small amount of extra work.
2) Workers have averaged the same number of hours as they did before.
3) San Jose businesses grew by 3%, as reported by the San Jose Downtown Association.
4) Just a dozen or so noncompliance complaints were investigated through mid-2013 in the 10th largest city in the United States, with a metro population of 1.975 million people and 84,000 businesses.
5) Unemployment in 2013 fell from 7.6% in February to 5.8% in December during the holiday season, and has since evened out at 6.3%.