When Mandates Work: Press Release

FOR IMMEDIATE RELEASE: JAN. 21, 2014
CONTACT: DANIEL MASSEY Daniel@berlinrosen.com 646-200-5323
EMMA STIEGLITZ EmmaS@berlinrosen.com 646-200-5307

CONFRONTING THE LOW-WAGE CRISIS: LESSONS FOR THE NATION FROM A BOLD, 15-YEAR EXPERIMENT IN SAN FRANCISCO

New book examines series of laws that successfully raised wages and improved benefits for tens of thousands of workers, without hurting employment

BERKELEY, CALIF—As President Obama prepares to make inequality a centerpiece of next week's State of the Union Address, a new book from the University of California Press shows that lawmakers might want to turn to San Francisco as they look to tackle one of the country's most serious problems.

The book examines a bold experiment over the last 15 years to raise low-wage workers' pay and improve benefits in San Francisco, one of America's largest cities. Beginning in the late 1990s the City by the Bay enacted nearly a dozen laws to raise pay, improve benefits, expand health care access and extend paid sick leave for low-wage city residents and workers. Despite warnings about negative effects, these new policies significantly improved pay and benefits for tens of thousands of people—without negatively affecting employment, the book shows.

"In the face of growing income inequality, these laws have appreciably helped a large number of people hit hardest by the changing economy—raising real wages and expanding benefits for those at the bottom in opposition to national trends," said Ken Jacobs, chair of the UC Berkeley Labor Center and an editor of the book.

The book, When Mandates Work: Raising Labor Standards at the Local Level, is edited by Mr. Jacobs, Michael Reich and Miranda Dietz. It shows that more than one in five San Francisco workers, including most of the low-paid workers in the city, now receive higher pay and increased benefits as a result of the laws.

  • 77,500 low-wage workers are receiving higher pay; the minimum wage law alone put $1.2 billion in the pockets of workers
  • 59,000 workers can stay home from work when they or a loved one is sick without risk of losing a job or a paycheck
  • More people have access to health care—three-quarters of city employers have invested more in health care

San Francisco's new labor standards have brought substantial improvements in compensation and access to health care to tens of thousands of low-wage workers and their families. In 2013, workers in San Francisco were eligible to receive a minimum wage of $10.55, up from $6.75 at the end of 2003; up to $2.33 in mandated health compensation; and one hour of paid sick leave for every 30 hours worked. The total of $13 an hour in mandated compensation for workers in large firms is 80 percent more than the federal minimum wage.

Real wages at the bottom of the economy have been growing in San Francisco, while declining in surrounding counties. But employment in low-wage industries, such as food services, has gone up despite the wage increases, showing that improving standards for workers does not harm businesses.

From 2004 to 2011, when the minimum wage ordinance went into effect, overall private employment grew by 5.6 percent in San Francisco and 3.0 percent in Santa Clara County and fell by 4.4 percent overall in other counties of the Bay Area. Among food service workers, who are more likely to be affected by minimum wage laws, employment grew by 17.7 percent in San Francisco, faster than either the other counties of the Bay Area (13.2 percent growth) or Santa Clara County (13.1 percent growth)And turnover has gone down, decreasing, for example, by 60 percent for low-wage occupations at San Francisco International Airport.

"Every time one of these laws was debated some people said this policy would hurt the economy and kill jobs -- and every time they were wrong," said Miranda Dietz, a research data analyst at the Labor Center. "The sky-will-fall admonitions from opponents never materialized, as the laws did not hurt employment at all."

The studies in the book use data to analyze the real world economic impact of the laws. They put economic theory to the test – and find that the oversimplified theories of Econ 101 do not capture the ground-level reality of how these laws are positively affecting San Francisco's economy and the workforce in the real world. While wages have stagnated for a majority of Americans and decreased for many, San Francisco has bucked the national trend of declining wages over the last decade for workers at the bottom of the pay scale.

San Francisco's experiment is catching on in a growing number of cities. City-wide minimum wage laws were recently passed in San Jose, CA, the Seattle suburb of SeaTac, and Washington DC and its surrounding suburbs—areas with similar patterns of economic growth with increased inequality and a loss of middle-paying jobs as San Francisco. And other cities, including Chicago, Seattle and New York, are now looking to do the same. A proposal in Los Angeles would set the minimum wage for large hotels to $15 an hour. 

"Washington's inaction and the decrease in workers covered by a union contract have made cities' role in raising labor standards more important than ever," said Michael Reich, director of the Institute for Research on Labor and Employment at Berkeley. "More work needs to be done, but San Francisco has created a viable model for other cities, states and the federal government to combat the growing spread of low-wage work, economic insecurity and income inequality that threatens America's economic future."

Read more about the book here and here

ABOUT THE EDITORS

Miranda Dietz is a researcher at the UC Berkeley Center for Labor Research and Education working on employment and health care issues in California. She has written on temporary and subcontracted work in California as well as the implementation of the Affordable Care Act.

Ken Jacobs is chair of the Center for Labor Research and Education at the University of California, Berkeley. His areas of specialization include health care coverage, the California budget, low-wage work, the retail industry, and public policy.

Michael Reich is professor of economics and director of the Institute for Research on Labor and Employment at UC Berkeley. His current research focuses on dynamic models of low-wage labor markets and on the economics of living wages and minimum wages. 

ABOUT THE UNIVERSITY OF CALIFORNIA PRESS

Founded in 1893, University of California Press is one of the largest and most adventurous scholarly publishers in the nation. Among its university press peers, it is the only one associated with a multi-campus public university and the largest university press west of the Mississippi.

The nonprofit publishing arm of the University of California system, UC Press attracts manuscripts from the world's foremost scholars, writers, artists, and public intellectuals. About one-fourth of its authors are affiliated with the University of California. Each year it publishes approximately 200 new books and 40 multi-issue journals in the humanities, social sciences, and natural sciences.