Professional and college reporters training collaboratively for the future of Bay Area journalism. Bay News Rising is a project of the Pacific Media Workers Guild made possible by the labor and contributions of its members.
Written by Cody Wright, Mary Strope, and Marlene Sanchez
From the time President Franklin D. Roosevelt signed the Fair Labor Standards Act in 1938 to recent legislation and protest movements among low-income earners, the minimum wage has stirred controversy. Currently, San Francisco is undergoing an economic shake-up and increasing levels of income inequality. Against that backdrop, Bay News Rising will explore the effects of the minimum wage and a possible hike on small businesses, the black-market economy, worker displacement, job stability and housing market regulations.
San Francisco, no stranger to earth-shattering shake-ups, today lies on an economic faultline, with a widening gap between wealth and poverty and a climate of soaring rents and exorbitant home prices.
Only in Atlanta is the disparity greater, according to a study by the Brookings Institution—but the Southern city boasts cheaper rents and a lower cost of living. San Francisco saw the largest increase in incomes of the wealthy from 2007-2012, while low-income earners’ wages dropped.
“In the 1990s, with welfare reform, Bill Clinton argued that you just have to work hard (to get by),” said UC Berkeley Labor Center Chair Ken Jacobs. “Here we are 20 years later, and we’ve seen wages decline. “
Though there is more to labor reform than the minimum wage, Jacobs stressed the significance of a proposed wage hike, saying that it would amount to a “significant increase for a number of people,” citing middle-class insecurity and a low-wage workforce largely comprised of older, more educated workers.
Wages and the cost of living
Come November 2014, San Franciscans will vote on raising the minimum wage to $15 an hour, making it the highest in the nation. Now officially on the ballot, the initiative has widespread support from city residents and a board of supervisors concerned with the escalating cost of living in San Francisco.
The minimum wage’s value rose nationally from $1.40 to $1.60 per hour in 1968 and remained steady for six years. In the 1960s, homeownership was far more feasible, and Americans largely avoided the considerable debt many people carry today.
Back then, the average cost of buying a home would be $155,300 in today’s dollars. In San Francisco, it has become increasingly difficult to buy a home for less than $1 million, and investors with cash are squeezing out anyone else who would need a loan.
A year after the Summer of Love, hippies and artists trekked to San Francisco to live side-by-side with the city’s working class in the affordable Haight and surrounding neighborhoods.
Unlike in 1968, today those receiving minimum wage are rarely able to keep up with the high cost of living, and many rely on governmental assistance to get by. According to a 2012 study by the Center for Economic and Policy Research, the 2012 minimum wage should have reached $21.72 an hour if it kept up with increases in worker productivity.
While national legislation sets a minimum wage, state and local governments often establish their own, higher wages. San Francisco was the first to top $10 in 2011. In 2002, votersapproved a proposition to increase the minimum each year based on cost of living and inflation rates.
“Someone who puts in a hard day’s work deserves a respectable wage,” Mayor Ed Lee said in a press statement after the June introduction of the wage measure. “Our city’s becoming more expensive. Working families and particularly those earning minimum wage have struggled, (working) longer hours to make ends meet.”
To afford market-rate rents in the city, many minimum-wage earners work not just longer hours, but multiple jobs. A map provided by The San Francisco Department of Public Health highlights the issue: Even in the cheapest neighborhoods, a person must work over three full-time minimum wage positions to make rent, while in pricier areas, the number leaps to an even more unsustainable seven or eight.
As in the dot-com boom of 1997-2000, lucrative jobs in the tech industry are drawing hordes of young workers, propelling housing prices and the all-around cost of living sky-high. With a proliferating economy and influx of a high-skilled workforce, wealth disparity in the city is also growing at an alarming rate.
Evictions increased by 170 percent from 2010 to 2013, San Francisco’s Budget and Legislative Analysts reported. They also found these evictions directly correlated to the current increase in property value.
In other words, President Franklin D. Roosevelt could have been describing San Francisco in 2014 when he said, just before signing the first minimum wage bill, “Do not let any calamity-howling executive with an income of $1,000 a day …tell you…that a wage of $11 a week is going to have a disastrous effect on all American industry.”
Only now, low income workers here are fighting to earn $600 a week, while an executive making $1 million a year earns almost $500 per hour.