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San Francisco, USA

 

Minimum Wage Raise and Gentrification

A poll has shown that there is a strong support for raising the minimum wage in San Francisco by 40% to $15 per hour. I feel mixed about this proposal. On the one hand I like to see most people making more money. They need it to survive in this expensive city. On the other hand, these kind of direct intervention of economic often causes unintended consequences like lower employment, or business exiting to lower cost locations. Strangely in this case I side with conservative Ron Unz's idea that higher minimum wage is a preferred alternative to the reliance on public assistance. Although it is remain to be seem how public assistance can be reduced.

I have some additional concern that a big raise in minimum wage will further intensify gentrification. It is not that the raise will help many people to become middle class, which will be a very good outcome. My concern is that it will heavily impact low end family business. The high cost structure means it will no longer make sense to serve the low end market. The only viable business is to move up market. These days Whole Foods becomes main stream. Philz coffee is bustling selling $4 coffee. On the other hand low end market diminish more and more, to the point that an unassuming dive like Tasty Restaurant actual caught my eyes. My concern is higher minimum wage will just be the final nail in the coffin for low end business.

2014.03.16 comments

 

 

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