RELEASE: The Impact of Oakland’s Proposed City Minimum Wage Law: A Prospective Study

Report outlines benefits of proposed minimum wage hike in Oakland

By Kathleen Maclay, Media relations| June 13, 2014

A boost in Oakland’s minimum wage to $12.25 an hour that voters will decide on in November would mean a pay raise for 25 to 30 percent of workers in the city and would boost their yearly earnings by about $2,700, according to a new study by UC Berkeley’s Institute for Research on Labor and Employment.

In research released today (Friday, June 13), the institute estimates the impact of the minimum-wage legislation proposed by the Lift Up Oakland Coalition, an alliance of community, labor, small business and faith organizations:

  • 40,000 to 48,000 Oakland workers would receive pay increases
  • 96.5 percent of affected workers are in their twenties or older, and over half of the workers receiving raises are in their thirties or older
  • Workers of color make up between 62 percent of the city’s workforce, but comprise 79 percent of those who would benefit from the pay increase
  • 43 percent of the workers who would be affected are Latino
  • Half of all affected workers are in retail (17 percent), restaurants (18 percent), and education, health and social services (16 percent)
  • Operating costs for retail businesses would go up 0.3 percent
  • Restaurants would see operating costs increase by 2.8 percent
  • Restaurant prices would increase by 2.5 percent, meaning a $10 meal would cost another 25 cents
  • The increase would have no significant impact on jobs

The study is authored by Michael Reich, a UC Berkeley economist and director of the Institute for Research on Labor and Employment; Ken Jacobs, chair of the UC Berkeley Labor Center; Annette Bernhardt, visiting professor of sociology and visiting scholar at the Institute; and Ian Perry, a Labor Center researcher.

They report that Oakland’s median rents increased by 20 percent between 2005 and 2012, while income inequality in the East Bay city has gone up by 2.56 percent since 2008, a faster spike than in neighboring San Francisco.

The report says that along with better pay, employers can see improved productivity, better employee performance and less employee turnover.

The Oakland proposal, if passed, would take effect in March 2015 and would provide additional increases tied to inflation. The increase would follow on the heels of other measures passed in cities across the country, including a national high of $15 an hour in the high-tech center of Seattle. Locally, the cities of Berkeley and Richmond also are considering minimum wage hikes that would exceed that in Oakland. San Francisco is expected to have a ballot measure in November increasing its minimum wage to $15.

The Oakland increase would bump up the city’s minimum wage by 36.1 percent. The ten previous minimum-wage laws passed around the country have increased hourly wages by an average of 43 percent. Research on these laws found no negative impact on employment or economic growth.