Councilmember Debi Davis had it right in 2015 when she voted against an increase in the minimum wage.
Her voice was lost to the madding crowd on Council who for the most part never had to make a payroll. Santa Clara’s minimum wage jumped from $9 an hour to $11.10 on January 1, 2016. It is scheduled to go up again.
Most of us would love to have a 25% increase in our paychecks for doing nothing more than what we have been doing. However, that money isn’t created magically. It doesn’t just appear in our businesses’ cash registers. What business is now experiencing is less cash.
What our politicians don’t discuss is the hidden costs of the minimum wage increase.
While most employees have no idea, every businessperson is fully aware, businesses must pay an employer matching social security tax of 6.2% on payroll. In addition, employers pay a matching Medicare tax of 1.2%.
This two dollar minimum wage increase now becomes a 32.4% increase.
Oh, did we mention the increase cost of Workers Compensation? This is a required “tax” which is based on payroll. Employers can add another 32.4% to their WC premium costs.
Where does the Council think this money is coming from?
Right. They don’t know! They never had to make payroll and don’t seem to have a clue.
They look at what they are giving to our safety officers and City employees and think every business can tax their customers like the City does their businesses.
Of course, business can’t. Businesses must raise prices to stay in business. So, why does a dollar cup of coffee now cost $3.00? Connect the dots.
Minimum wage was the beginning of a trend to move statewide and Federal decisions to local jurisdictions. A movement motivated by major unions to maximize membership.
Labor strongly supported a minimum wage increase and several of our elected politicians are supported by labor, providing a political punch producing powerful proponents.
While this decision has been celebrated by local union members, there is a growing group of grumblers giving this a thumbs-down conclusion.
There was no vetting on this decision. Businesses were not polled for their input. The Chamber of Commerce, representing hundreds of businesses, gave a marginal and unprepared defense that had minimal impact with our Council.
Somehow, there is just something wrong with this process. While every business is required to pay for a business license, conform to City Code, pay permit fees, application fees and annual taxes, there is no documentation required from the City Council to make an arbitrary decision like increasing the minimum wage without proper vetting.
What’s the future of minimum wage? It is going up, which will in turn drive prices north and make our high cost of living even higher. No wonder 40% of our kids want to leave the area.