Low-wage workers benefit as San Jose minimum wage increases to $15 an hour

The holiday treat hot off the grill in San Jose is a boost in pay for low-wage workers. Starting Tuesday, January 1, 2019, the city raised its minimum wage to $15 per hour.

“This is the right time to raise it. We know that thousands of families are struggling to afford to live here. And we’ve got hundreds of people here in the city of San Jose who go and work hard every day, and then sleep in their car at night. We can’t continue to be that kind of community,” said Mayor Sam Liccardo – (D) San Jose.

San Jose joins other Bay Area cities mandating a minimum wage of at least $15 an hour. That list includes Mountain View, Sunnyvale, Richmond, Berkeley, El Cerrito, San Jose, Palo Alto, Los Altos, Cupertino, Santa Clara and San Francisco. 

Last year, the city of Sunnyvale wrestled with the same business calculus, raising the minimum wage up to $15 an hour. There were fears back then, that doing so would make it much more difficult for businesses to survive.

“One good thing I found out about human beings is that we can weather anything. That’s what I learned,” said Amit Rajgarhia, the district manager for Dish Dash restaurants.

In 2018, he saw increasing hardship managing five properties as that city bumped it’s minimum wage to $15 per hour. A year later, he says the “Double-D” has survived the growing pains associated with a hit to its bottom line.

“Rethink your business plan. Maybe instead of 20 employees, you have to run with 15 or 14, 12. You know, cross train people,” said Rajgariah, while sitting in the company’s flagship restaurant in Sunnyvale.

Economists warn of an ugly truth -- to survive, most businesses will lower payroll costs, or pass the increased costs on to the consumer.

“It reduces opportunity especially for those who are seeking their first job who are not already employed. And it can reduce wages,” said Prof. Fred Foldvary, a San Jose State University economics lecturer.

The mayor says he’s aware of the negatives, but says some business discomfort will pay dividends with a financially viable workforce. 

“The reality is that we’ve got a lot of folks who are working multiple jobs to be able to afford to pay rent. We’ve to students who are working to be able to stay in school. It’s critically important for them to have that extra dollar and a half an hour, to be able to pay their bills,” said Liccardo.

Going forward, San Jose’s next increase to the minimum wage will be inflationary adjustments each year -- as both businesses and the people employed learn the new normal of life in one of the most expensive places to live and work.