SAN DIEGO (CBS 8) – Starting in 2017, the City of San Diego will have one of the highest minimum wages in the country as workers are set to receive a raise of a dollar per hour with an increase from $10.50 to $11.50.
Part of this increased labor cost could be passed on to customers, especially in local restaurants where a slight bump in prices could be seen. But economic experts see this wage increase as having a net positive impact with that extra money in workers' pockets being directly deposited into the local economy.
“That's $260 more per month in the paychecks of workers who will spend that money on safe housing, transportation, healthy food for their families and other basic necessities,” said former city council member and now assembly member Todd Gloria. "Overall, I think it will have a positive impact.”
Gloria championed the wage increase during his time on the city council.
University of San Diego economics professor Alan Gin said this extra money in the pockets of those on the lowest end of the income spectrum should have a stimulating effect on the economy.
"When you're not making a lot of money and you get some extra, you tend to spend all of it,” said Gin. “And that is helpful in that it gets that money into the local economy."
Gin also said this added income will boost worker productivity and decrease the rate of employee turnover, which would be a positive for local businesses.
"I see it as a net positive though not everybody is going to benefit from this. Some are going to be adversely affected,” Gin continued.
Especially restaurants, which often rely on a labor force that primarily earns the minimum wage. Gin said those businesses may pass on this increased cost to customers, meaning a small hike in menu prices.
"We've got a 15 percent increase in the minimum wage, but labor is just a small fraction of the overall cost. It is not like prices are going to go up 15 percent,” said Gin.
Speaking at an earlier time to CBS News 8, small business owner Camille Bsaibes, who owns three local restaurants, including Aladdin in Hillcrest, voiced his concerns with this mandated wage hike:
"If you just increase the minimum wage and you don’t fix the economy, we as small business owners suffer,” explained Bsaibes.
This change impacts more than just the City of San Diego. On January 1, 19 states will increase their minimum wage and that includes California, which will raise its minimum wage to $10.50 per hour for companies with more than 26 employees and eventually increasing to $15 per hour by 2022.