Help the Public Press grow — become a member today!

S.F. Lacks Data to Set Minimum Wage Policies

San Francisco Public Press
 — Apr 15 2013 - 12:24pm

Estimates of low-wage workers range from 20,000 to 55,000

With President Barack Obama proposing to increase the federal minimum wage, local policy experts say fully understanding the economic effects of the change could be a problem given the dearth of accurate statistics in the large city that has had the highest minimum wage for years: San Francisco.

No one has ever done a formal tally of minimum wage earners in San Francisco, said Ted Egan, chief economist for the city’s Office of Economic Analysis.

“There’s no city agency that tracks those numbers,” said Egan, who had to be corrected after citing the wrong minimum wage and informed of the 2003 ordinance that pegged it to inflation.

Regardless of which regulations apply, he said, employers “are required to pay minimum wage, but not required to report how many employees they pay it to.”

San Francisco’s Office of Labor Standards Enforcement, the agency most engaged in the issue and tasked with enforcing fair labor practices, confirmed that it has never had a holistic picture of the extent of low-wage work. Its mandate is to punish employers for violating the Minimum Wage Ordinance and recover back wages for employees, not to gather the primary data used to set policy.

“We enforce the law,” said Donna Levitt, manager of the division. “We don’t do any kind of analysis like that.”

The local minimum wage went into effect in 2004. Nationally, researchers have extensively documented wage theft in low-income and immigrant communities. But advocates say reliable statistics could help city, state and federal labor officials better understand and root out wage theft.

San Francisco has the highest minimum wage in the country, now $10.55 an hour, and is the only major American city with a wage enforcement agency. Ten years after passing the minimum wage boost, though, ongoing wage violations suggest that the city cannot guarantee the policy itself will actually lift every worker out of poverty.

“I think we’re not focused enough on low-wage workers,” said Conny Ford, vice president of the San Francisco Labor Council. Ford said that simply passing a minimum wage ordinance was not enough to ensure fair pay in the workplace: “We just passed legislation and expected it to happen, and it needs better support from all of us.”

Ford said the Office of Labor Standards Enforcement could not keep up with the volume of wage theft in San Francisco. That is why the office relies heavily on community groups to refer victims.

Ford said the city’s officers “need more people and funds,” adding that the city should not pass further legislation without providing the resources needed to enforce the law.

Asked for data about the number of minimum wage workers in San Francisco, the Office of Economic and Workforce Development said it did not have any.

The Public Policy Institute of California, which conducts research on a multitude of public-affairs issues, has not produced its own estimate of minimum wage workers in San Francisco.

Karl Kramer of the San Francisco Living Wage Coalition gave a rough estimate of 20,000 workers. “The number of people at the lowest income level has been pretty steady over the years,” he said.

Egan, at the controller's office, has come up with his own estimate based on Bureau of Labor Statistics numbers for workers in various occupations in San Francisco, San Mateo and Marin counties. Although the figure includes workers outside San Francisco and the methodology is approximate, he estimates that 59,700 people, or 6.2 percent of workers in those counties, earned $9.92, the 2011 San Francisco minimum wage, or less that year.

An exact head count isn’t feasible, he said, since the workforce is constantly evolving as individual incomes change and workers transition into new careers.

However, research from the Institute for Labor and Employment at the University of California, Berkeley, does provide some estimates based on very outdated studies.

In a 2003 report, “Raising Low Pay in a High Income Economy,” researchers Michael Reich and Amy Laitinen studied the effect that raising the San Francisco minimum wage would have on workers, businesses and the city economy. They were able to estimate the number of workers receiving pay increases at various minimum wage levels.

For their study, the researchers conducted an employer-based survey of 450 San Francisco establishments with at least three employees, and asked about the composition of the workforce at each location, business finances and likely behavioral responses to an increase in operating costs.

By using a calculation to determine the number of workers who could be indirectly affected by a minimum wage increase — workers making more than minimum wage, but who would receive increases because, for example, a supervisor has to make slightly more — they could deduce the number of workers who would receive increases.

Their results showed that 4.4 percent of workers in San Francisco businesses “would receive direct wage increases at a minimum wage of $8.50, 5.4 percent at a minimum of $9, and 9.6 percent at a minimum of $10.”

While no follow-up study of these numbers has been published, Reich’s office said he now estimates that after the automatic wage increase to $10.55 in January 2013, 55,000 (or 8 percent) of San Francisco workers were due increases.

But nationally, research shows that this large pool of workers can be vulnerable to exploitation if the minimum wage is not enforced robustly. An independent study sponsored by several major foundations in 2008, “Broken Laws, Unprotected Workers,” examined workplace violations in New York, Chicago and Los Angeles and called into question the strength of workplace safeguards there.

“The high rates of workplace violations that we document in this report raise an urgent, resounding warning that even existing protections are failing millions of workers in low-wage industries,” the authors concluded.

The study found the limited data on low-wage workers’ experiences in the workforce “hamper effective policy responses, whether at the federal, state or local level.”