San Francisco Becomes First in Nation with $10 Minimum Wage (and the Sky Isn't Going to Fall)
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If higher wages lower costs, why don't employers just go ahead and raise wages on their own? The key issue here is that in most industries, especially low-wage industries, employers have more than one way to turn a profit. Some will do just fine paying low wages and treating higher turnover and lower employee morale as a cost of doing business. Others will prosper offering higher wages paid for by lower training and recruitment costs and more motivated employees.
From a business stand point, both the "low road" and the "high road" approaches work. From a social point of view, however, the "high road" is the far better option. The minimum wage, like the one that will raise the city wage floor in San Francisco on January 1, steers all low-wage employers onto the high road.
Based on the city's own recent experience, the employment impact of Sunday's 32-cent increase will be imperceptible. That same incremental increase, however, will ensure that the city's already low-wage workers don't fall any further behind the rest of that prosperous city.
John Schmitt is a senior economist at the Center for Economic and Policy Research. He tweets as @jschmittwdc.