San Jose's minimum wage officially rose to $10 an hour Monday and business people who once opposed it now see it as a way to boost worker productivity and profits, a business leader said.

"It's the classic making lemonade out of lemons," said Scott Knies, executive director of the San Jose Downtown Association at a news conference in downtown San Jose to announce a new promotion campaign in light of the wage hike.

The association last year joined other business groups speaking out against Measure D, a ballot proposition to raise the hourly minimum wage in the city from $8 to $10.

Measure D passed in November with almost 60 percent voter support and took effect today, giving full-time minimum wage workers about $250 extra income a month.

San Jose businesses now want to raise awareness with customers to spend their money in San Jose for ethical reasons and support a local economy that pays low-wage employees more, Knies said.

"Businesses are a pragmatic sort," Knies said. "The law is in effect today. Whether or not you are for or against it you have to make the best of it."

After the election, Knies said the association worked with the South Bay AFL-CIO Labor Council, a worker group that campaigned in favor of Measure D, to launch a local business promotion called "Earn 'n Spend in San Jose."

The promotion, which starts today, involves installing signs in city businesses urging both minimum wage earners and business customers to spend their money within San Jose versus other towns without a $10 minimum wage, he said.

Knies added, however, that retail, food service, hotel and movie theater owners have told him they will have to either increase prices or simply absorb the cost of the higher wages.

Some business people say they can't raise prices in order to compete so they will have to work more hours themselves to cut expenses, Knies said.

Other owners are reducing benefits for temporary workers and the hours employees work per shift, he said.

Ben Field, executive officer of the labor council, said that the higher minimum wage would give affected employees $70 million more per year in their pockets.

"Low-wage workers will be spending that money right here in San Jose," Field said. "It's like an economic stimulus package for the region."

Nick Taptelis, owner of Philz Coffee, a cafe that employs 25 minimum wage earners in downtown San Jose, said higher employee morale resulting from the wage hike will raise his profit margins.

"I honestly believe that with the $10 increase everyone is going to have happier workers, more productive workers and I believe it's actually going to increase business in downtown San Jose," Taptelis said.

Cindy Chavez, a former San Jose City Council member and vice mayor who campaigned for Measure D, said at the conference that the higher wage would help workers meet San Jose's high housing costs.

"Living in California and Silicon Valley in particular is very expensive," Chavez said. "We believe that by pumping more money into employees' pockets they are going to spend more and this will continue to be a vibrant place."

Chavez has been mentioned as a possible election candidate for District 2 of the Santa Clara County Board of Supervisors to fill the seat of George Shirakawa who resigned March 1.

She said she wants to hold off a decision to run at least until Tuesday when the Board of Supervisors intends to nail down a date for a special election in District 2 after voting tentatively last week to schedule one for June 4.

"My family is in the process of talking it through," Chavez said. "It is a short window."