San Francisco made headlines and national newscasts this week as the first city in the nation to raise the minimum wage above $10 an hour. Effective January 1, the city’s hourly minimum wage rate will increase from $9.92 per hour to $10.24 per hour in accordance with the local Minimum Wage Ordinance.
For most businesses, the 32 cent increase will not make the difference between staying open for business and closing up shop. Nor is it likely to result in many layoffs. But the cumulative – and increasing – cost of doing business in San Francisco is cause for concern and can no longer be ignored.
San Francisco’s minimum wage is just one piece of the puzzle. The city also requires mandatory paid sick leave under the Paid Sick Leave Ordinance. Specifically, local employers must provide 9 days of paid leave for all employees. Businesses with fewer than 10 employees must provide 5 days of paid leave. The law applies to all full-time, part-time and temporary workers who perform work in San Francisco.
San Francisco employers are also required to provide health care for their employers under the Health Care Security Ordinance. Enacted in 2006, the ordinance requires an annual minimum expenditure for all covered employees working eight or more hours per week. The law applies to all local employers with 20 or more employees, as well as city contractors.
Not only are these mandates unique to San Francisco, they are steadily increasing. Since the city’s minimum wage ordinance was passed in 2003, the wage rate has increased by nearly 20 percent. The mandated health care expenditure has increased by 25 percent. Taken together, these increases amount to a nearly 50 percent increase in labor costs for most employers in just over seven years time.
What’s more, San Francisco’s employer mandates come on top of the city’s 1.5 percent payroll tax, competitive commercial rents and generally high cost-of-living. As we compete with neighboring cities and states to attract and retain employers – and jobs – in our city, we must look at the complete puzzle of business taxes, fees and regulations imposed on our local job creators.
Next year, the city will begin a process of reviewing and re-making the business tax system with the goal of placing a reform measure on the November 2012 Presidential Election Ballot. The Chamber will work collaboratively with our members, partner business organizations and representatives of city government to help shape the pending changes and ensure that new policies are developed with the larger business climate in mind.
Make no mistake. San Francisco is a great place to live, work and do business. Our city boasts one of the most talented workforces in the world. Our tourism industry remains strong. And our unique quality of life is unlike any other. However, we can no longer rest on our laurels when it comes to business and job retention. Now is the time to think about the big picture when it comes to the business environment and the policies that can best help grow jobs and the economy in the years ahead.