Last week, the Task Force on Income Inequality held its third public meeting, and several presenters amplified the concerns voiced by our members.
Our Keep Sacramento Working coalition brought in founding partner of Beacon Economics, Dr. Chris Thornberg, an economist who serves on the Council of Economic Advisors for our state treasurer. Dr. Thornberg argued that raising the minimum wage is an ineffective way to remedy income inequality because it causes job loss for those most in need and drives higher consumer costs for all while only directing $1 of every $5 dollars in higher wages to the working poor.
Dr. Thornberg’s finding was supported by Sacramento State Professor Min Li, who testified that 80% of County workers making minimum wage live in households with income above 150% of the federal poverty level, and 68% live in households above 200%. Dr. Thornberg also argued that Sacramento would be put at a competitive disadvantage and would lose businesses to surrounding jurisdictions with a lower minimum wage.
The Task Force reviewed reports from case studies that showed an increase to $11.50 would raise restaurant costs 25% and a jump to $13.50 would result in a 47% increase. A second case study demonstrated that even a business that looks profitable on paper could fail with a minimum wage increase when cash flow is tied to restocking inventory.
Finally, the City’s independent budget analyst reported that each dollar jump in the minimum wage would add an additional $1 million to the City budget. This doesn’t include any additional costs the City will pay to increase payscales, increased costs to City contracts and contributions from the City to our public libraries.
Moving forward, the task force will meet privately for the next two weeks with the goal of crafting a recommendation to provide to the Mayor and Council for consideration. We thank you for sharing your thoughts on this important issue the past few weeks and encourage you to continue to keep us informed or get involved as this process continues.