Former mayor backs “flawed” wage-rate study?

On Thursday, June 5, the San Diego Regional Chamber of Commerce, led by CEO and former mayor Jerry Sanders, released a study disputing findings from a March report prepared by the Center on Policy Initiatives. The report illustrated the challenges faced by the region's low-income workers.

Sanders and company, joined by the San Diego County Taxpayers Association, argued against a minimum-wage hike currently being considered by the city council that would raise pay rates to $13.09 hourly within city limits; that rate was cited in the Center on Policy Initiatives report as the minimum required for a full-time worker to live independently without government assistance.

The Chamber and Taxpayers’ report argues that $13.09 an hour wouldn’t be necessary if, instead of acquiring their own apartment, low-wage workers banded together as roommates and lowered housing costs. The Chamber and Taxpayers group also warn of a mass exodus of jobs from the city, as business owners would pack up and head for the suburbs rather than pay the proposed city wage.

CPI director Clare Crawford says the new report is "riddled with inconsistencies and assertions that are not backed by data.

"The report is based on the national poverty line, not the reality of living in San Diego. As CPI’s research has shown and even the flawed [Taxpayers Association] report acknowledges, there are plenty of people whose incomes are above the federal poverty line but too low to cover basic needs in this high-cost region. In fact, 25 percent of working-age households in San Diego County are above the official poverty level but below the level needed for basic self-sufficiency."

On Friday morning, June 6, the pro-increase group Raise Up San Diego gathered a host of city business owners and University of San Diego economist Alan Gin at a Clairemont business park to refute the study and voice their support for an increased minimum wage.

"Council president [Todd] Gloria's proposal is a great step forward in raising our consumer base and addressing the 'hourglass' economy that is threatening us all," opened Barbary Bry, chief operating officer at investment capital firm Blackbird Ventures. "From a business perspective, the proposal makes fiscal sense."

David Gimbel, owner of an audio and video supply rental firm, who introduced himself as an "ardent capitalist," extolled the benefits of paying employees more.

"I have never had any doubt that as an employer, I will make more money if my employees are paid fairly," said Gimbel. "Treating them as part of the team with decent pay and benefits makes for happier people, and if they feel they're being treated fairly, they will work harder, stay with me for more years, and be more productive.

"Employers who skimp on wages, illegally rob their staff of deserved overtime, and deny their staff paid sick time don't make more money, they make less. They create an unhappy atmosphere that customers can see, and they don't realize how much money they lose every day by having employees who just don't care."

Economist Gin theorized that increased pay for low-wage workers would generate a net boost for the local economy, rather than the downturn projected by the Chamber and Taxpayers group. Gin noted that only recently has overall employment in terms of the number of jobs returned to pre-recession levels, but an increase in population and the fact that middle-income jobs that disappeared have largely been replaced with low-wage work mean that the economy is still on shaky ground.

"Part of the problem in terms of slowed growth in the economy has been a drop in consumption," said Gin. "Personal consumption expenditures are about a third of what they normally contribute to gross domestic product...it's set off a vicious cycle in the sense that consumers are spending less, businesses are seeing lower sales and, as a result, they're not hiring.

"It's been shown that if you increase wages at the low end of the income distribution, almost all of that money will be spent, and that money will circulate throughout the economy and everyone — top and bottom — will benefit."

A city-council committee is expected to address the minimum-wage proposal — which would set a wage floor of $13.09 per hour and provide employees with five days' earned sick pay per year — on June 11. If approved in the council, the measure would go to a public vote in November.