The San Francisco solution: To improve the economy, pay workers more
Did you catch the latest bit of insanity out of San Francisco? Effective Jan. 1, Baghdad by the Bay's minimum wage will climb to $10.24 an hour.
So long, San Francisco. That little earthquake in 1906 was nothing compared with what this will do to your city. Might as well shut down those cute cable cars. Maybe you can find someone to buy that nice bridge. Too bad, too: Just when the 49ers are starting to win again, and the Giants are better than the Dodgers.
What's that you say? It's not the end? From The Times' story Tuesday:
San Francisco's minimum wage has climbed steadily since voters in 2003 approved a local initiative mandating an annual increase in the minimum wage using a formula tied to inflation. In recent years, the city has also required many employers to provide their workers with health benefits and all employers to offer paid sick time.
Critics have derided the mandates as anti-business job killers. But San Francisco's economy has proved resilient. The city's unemployment rate was 7.8% in November, well below the 11.3% statewide rate. Over the last year, the San Francisco metropolitan area, which includes parts of neighboring San Mateo and Marin counties, created 3,900 new jobs, mostly in bars and restaurants within the city of San Francisco, according to the California Employment Development Department.
We've been told lately that the only way to get the economy back on track is to cut, cut, cut -- workers and their pay and their benefits. Oh, and cut, cut, cut -- taxes for the wealthy, the so-called job creators.
But maybe there's something in the water in San Francisco: Better wages, better benefits -- and new jobs?
Of course, not everyone is happy:
"It makes these jobs so high-paying that they disappear," said Daniel Scherotter, executive chef and owner of Palio D'Asti, an Italian restaurant in the downtown financial district. "It's hurting the people it's trying to help."
As a result, Scherotter said he cut his kitchen staff by eight people in the last five years and shifted pastry production outside the city limits.
I understand what Scherotter is saying. He's got a business to run.
But he's wrong, and here's why.
Call it America's dilemma: Consumers complain that everything costs too much, and they've seen their wages stagnate or their jobs disappear. With unemployment high and consumers not spending as much, businesses look to reduce costs -- usually labor costs.
But that formula just doesn't cut it.
For this country to work, people have to work. And that work has to pay enough for people to live on. Even at $10.24 an hour, that's $21,299.20 a year annually for a full-time worker. (Provided they don't take any time off, of course.)
If, as Scherotter says, the economics of running a restaurant require that workers be paid less than $10.24 an hour, then perhaps it's the business model that's broken.
Well-paid workers become free-spending consumers. Free-spending consumers fuel the economy. A better economy breeds more jobs.
Who knows, maybe San Francisco is on to something. And it might just work better than cutting the taxes of all those job creators.
-- Paul Whitefield
Photo: San Francisco's Palio D'Asti restaurant. Credit: Eric Risberg / Associated Press