This is part 3 in a 4 part blog series.
The proposed San Francisco November ballot measure to raise the minimum wage from $10.72 to $15 will have an effect on virtually everyone who's current wages are under $100,000 as indicated in the last blog. So who are these people and how many are there? How many businesses are going to be affected?
There are roughly 500,000 workers in San Francisco, about half commute into the city. 85,000 of these are self employed and will not be impacted by the rise in minimum wage. 26,000 are city employees and also will not be affected. The remaining 389,000 work for the 31,000 businesses in the city. Roughly 30 percent of these employees, 120,000 have a high school diploma or less. They will be dramatically affected by this new minimum wage. Either they will get an increase in their wage until they can be replaced by a machine or changes in the business operation or they will be let go fairly soon after the wage increase has an effect.
Let's look specifically at who these people are. 20,000 workers are in the food service business and another 15,000 are retail workers. That is 35,000 people who are already in low paying jobs and subject to dismissal.
Let us go to the specific businesses. Food workers are employed by roughly 1,600 full service restaurants, 60 fast food outlets such as KFC and McDonalds. There are an additional 80 Starbucks in the city, another 120 similar coffee shops, and 65 sandwich shops like Subway.
What will happen to these roughly 2,000 businesses?
I believe they will be faced with a 40% increase in labor costs that cannot be offset by increases in their retail sales price of 40%. Each of these types of business will be forced to reduce the number of stores operating in San Francisco. Where they are part of a national chain, the reduction will be from 10 stores to the 2 most profitable stores.
In all the other cases, including large unionized supermarkets, they will reduce their hours to the minimum number that can be serviced by management doing the stocking of the shelves and unloading of the merchandise from the delivery trucks.
All businesses, such as delivery services, that can move their operation out of the city, will do so.
Virtually every retail business in San Francisco will dramatically reduce the hours they are open. I estimate that over 1,000 retail businesses will close. This will all happened in a relatively short time, less than 2 years. In less than 2 years San Francisco retail streets will begin to look like Detroit.
This is what we have to look forward to.