Minimum wage hikes in several Bay Area cities — will it make a difference?

Many of the Bay Area’s lowest paid workers are getting pay increases this month as several cities raise their regional minimum wages.

Labor advocates, who say low-income workers are being pushed to breaking point, welcomed the wage hike, but added it would not be enough to deal with the region’s price crisis.

Fremont, population 223,000, raised its minimum wage from $16 to $16.80 on July 1, a 5% cut to cover rising prices for rent, food and other goods and services. was a raise. Berkeley has raised the minimum wage from $16.99 to $18.07.

Isaiah Tony, deputy campaign director for the East Bay Alliance for a Sustainable Economy, an organization that addresses economic equity issues and advocates for low-wage workers and communities of color, said: “A bigger raise. I just hope,” he said. “Not only are wages failing to keep up with rising costs of living and inflation, but we see other costs, such as housing, accelerating.”

In the San Francisco, Oakland and Hayward areas, Median asking price for May was $2,844according to report By Realtor.com. This corresponds to a 4% decrease compared to May last year. However, in the San Jose-Sunnyvale-Santa Clara area, the asking price rose 1% over the same period, from $3,314 to $3,347.

“I worry about some kind of collapse moment, where there are a lot of low-wage workers whose housing costs are suddenly 40% to 50% or more of their income,” Tony said. “And it means we have an even bigger rent-payment crisis than the current one.”

Milpitas also raised the minimum wage from $16.40 to $17.20 on July 1. Alameda increased from $15.75 to $16.52, Emeryville from $17.68 to $18.67, and San Francisco from $16.99 to $18.07.

Wages continue to rise Similar price increases effective January 1 across the Bay Area Also included are San Jose ($17) and Oakland ($15.97), where local governments have policies and ordinances governing minimum wages higher than state tax rates.

California’s minimum wage is $15.50 an hour, also increased by 50 cents starting January 1st. The federal minimum wage is $7.25 an hour.

Jonathan Carrillo, 19, lives in Milpitas and divides his time between his role as an assistant manager at Anjan Feed and Pet Supply and his work as a real estate agent. Although he earns more than minimum wage, he says he is happy with the people he works for and hopes that the wages of the workers around him will go up. He lamented his high cost of living, but suggested making ends meet in Milpitas is not as difficult as in other Bay Area cities.

“If I were in San Francisco, I would probably cry every night,” Carrillo said.

Filippo Revessi, an assistant professor and interim economics dean at California State University East Bay, said modest increases in regional minimum wages are unlikely to trigger a wave of layoffs and cuts to working hours.

“Should we expect some kind of revolution?” Levessi said in an interview. “Probably not.”

But he said there could be localized instances of employers tightening the grip. Businesses such as coffee shops and restaurants with low profit margins may cut hours, lay off workers, or reduce shifts.

Rising labor costs could reach 50% to 60% of spending at some companies, Levessi said, which could dampen demand for workers.

For some small business owners, the pain is real.

Santosh Giri and his business partner opened Kathmandu Cuisine, a Nepali restaurant in Milpitas, at the beginning of the lockdown era due to the COVID-19 pandemic. Since then, he said, it has navigated an unpredictable supply chain with rising costs for key raw materials while trying to keep prices acceptable to customers. For companies operating at profit margins of about 2% to 3%, raising the local minimum wage would give them tough choices, such as shortening working hours or laying off workers, he said.

“All of this sounds very unsympathetic when it comes to making decisions,” said Giri, who runs a restaurant with 13 employees.

He added that the restaurant changed its hours to stay open after 9pm when other restaurants close. And last month it raised the prices of many products.

Frances Eikeberg, who runs Niles Ice Cream, Sweets & Eats, said Fremont’s minimum wage hike this month will be hard to swallow.

“It’s tough,” Eikeberg said as he greeted a group of customers as they entered the store on a recent hot afternoon.

The owner said he pays minimum wage to 11 employees, many of whom are teenage part-time workers. For most of them, the ice cream shop was their first job. Some work only one or two days a week.