By Marinee Zavala
The minimum wage increase in San Diego was received with joy by thousands of local workers on June 8 of this year.
Today, just over a month after paying each worker $10.50 an hour as a minimum became mandatory, the impact is already being felt by the business community, according to economy and finance pundits.
Inflation and price increases are happening throughout the city, and small retail business owners have been the first to get hit hard by the unintended financial consequences.
“The government tries to do things for people, but they don’t think of the repercussions, or they do it deliberately without looking at the consequences,” stated Bertha Alicia Gonzalez, a San Diego tax management professional.
San Diego Mayor Kevin Faulconer had said earlier that the arrival of this measure would also reduce opportunities for those currently looking for work.
“We need to make sure we give our businesses and entrepreneurs opportunities, and they need to be able to hire new employees and provide opportunities to people,” said Faulconer. “I recall being concerned that by increasing these wages it would significantly hinder our ability to give people options to enter the market and do good things.”
Although Proposition I has benefitted thousands of workers, experts believe it will initially affect businesses now facing higher prices from their suppliers and a higher cost to keep their employees. Experts also believe that in the long run it will be the employees currently benefitting from the hike that will be most affected.
San Ysidro area businesses say they are in shock as to the repercussions of the minimum wage increase – which together with the devaluation of the Mexican peso – have forced more than 50 businesses to close their doors in just the first mile from the Tijuana border.
After the losses of the small businesses already struggling to keep their doors open, Gonzalez assures will come impact on residents, the working class, the marginalized.
“What worries me the most is the people those who earn minimum wage. Those people are still in for a surprise when they do their taxes, because their taxes are going to go up,” said Gonzalez.
Government projections indicate that the increase would be just fifty cents for millions of people. Based on that increase, the projections forecast collecting millions more in tax revenue.
“So then, the people who needed this increase the most will have it vanish. They did not actually increase their earnings, it’s just an illusion,” Gonzalez pointed out.
In spite of these forecasts, 63 percent of the people who voted in favor of Prop I are still optimistic about the measure and hope the wage increase together with the additional paid sick leave will improve their quality of life.
There is still some work to be done in ensuring the thousands of San Diego workers who are still to this day working for less than minimum wage aware of the increase.
“We need to tell workers that the increase in minimum wage and paid sick days is in effect. We still need to raise awareness, to speak to businesses, to promote the law so that people get paid what they should,” stated Jessica Cordova, Communications Specialist at San Diego’s Center on Policy Initiatives.
Business owners are now hoping to come together, measure results, losses, and look for better deals with suppliers and for positive strategies to adapt and evolve with the economy. They also hope that the business community will be able to cope with the inflation that will end up leaving them just as strapped, even when the minimum wage increases to $15 an hour in 2022.