The new minimum wage law, Measure D, will take effect March 11, 2013. The increase in pay to $10 per hour represents a 38 percent increase, when including employer matching payroll taxes.
Back in November, the voters overwhelmingly supported Measure D. Many business owners I have spoken with plan to cover the increase in payroll costs by raising prices, reducing the hours of current employees and, in some case, simply eliminating positions altogether.
Given these circumstances, my suggestion to business owners is that they should consider adding a surcharge to each customer’s bill. This line item should be clearly spelled out, and appropriately called “San Jose Minimum Wage 2012.” This is similar to what is being done today in San Francisco, where a “Healthy San Francisco Surcharge” is added to restaurant bills. This fee goes towards the cost of providing health care to employees as mandated by San Francisco County. When city specific fees—such as Measure D—are clearly stipulated on an invoice, it removes any ambiguity as to why prices are higher in San Jose than in neighboring cities.
It is possible that some voters may have underestimated the negative impact that the passage of Measure D will have on the service industry, and in some cases, on these same voter’s personal pocketbooks. It is my hope that when business owners DO raise their prices, all those that voted for Measure D will continue to support these businesses without a second thought, despite the higher prices attributable to the wage increase. After all, voters should take pride in their affirmative vote, and paying the surcharge allows them to show the strength of their conviction.
It has often been said that there is no better barometer to how people feel than their wallet. If paying 10 cents for a paper bag caused a stir, then a substantially higher surcharge for a minimum wage increase will most certainly create a vigorous debate. As a result of this debate, residents and business owners may decide to repeal Measure D due to the previously unforeseen impact on consumer prices, employment and tax revenues lost to other cities.
Alternatively, we may find ourselves more unified in the belief that increasing the minimum wage was the right thing to do. Either way, my hope is that all business that are impacted will add the minimum wage surcharge to all receipts next month, in the form of a clearly defined line item.