San Diego will raise the minimum wage to $16.30 next year. What can businesses and workers expect?

San Diego’s minimum wage for all workers will rise from $15 to $16.30 an hour in January, the city announced Friday.

This proposed increase comes at a time when consumers are facing high housing prices and high fuel and food prices.

“With the cost of living rising, this increase couldn’t come at a time of need for workers and working families,” Mayor Todd Gloria said in a statement. “This increase means better ability to make payments, put food on the table and spend money in our local businesses.”

Businesses of all sizes in the city of San Diego must comply with this change starting January 1, 2023, for employees who work at least two hours in one or more calendar weeks of the year. The annual increase is part of the city’s Greater Sick Leave and Minimum Wage Act, which was approved in 2016.

Employees will continue to be eligible to receive sick leave – which can be timed to care for their own health or to care for the health of a family member – under the law. The policy applies to all industries in the city. Tips and gratuities do not count toward minimum wage.

The mandated wage increase helps ensure wages are paid for San Diego workers and their families, according to the law. It also states that when workers are not paid a livable wage, “surrounding taxpayer communities bear the cost through increased demand for taxpayer services, including homeless shelters.”

San Diego’s minimum wage has gradually increased by $1 since 2019 in line with last year’s cost of living increase, according to the city.

Earlier this year, San Diego’s inflation hit a 40-year high of 7.9 percent. However, its job market continues to deteriorate, with the unemployment rate reaching 3.4 percent in August.

Economist Chris Thornberg, founder of the Los Angeles-based Beacon Center for Economic Research, said the timing of this minimum wage increase makes little sense given that many places already pay more than $16.30 in luck to fight the labor market.

Thornberg also noted that this minimum wage change will be most pronounced for industries that rely on minimum wage workers such as restaurants, large establishments and the private sector. Restaurants already struggle to attract workers and labor costs account for 30 to 35 percent of typical restaurant costs, he said.

“It’s a solution looking for a problem,” Thornberg said.

From his perspective, raising the minimum wage may not move the needle for low-income families in this economy compared to other policy beneficiaries.

“If you really want to help low-income households, it’s better to provide them with child care subsidies, get income tax credits and make a real effort to expand housing stock,” he said.

Alan Gin, an economist and business professor at the University of San Diego, said every time he goes out to eat, he sees “help wanted” signs in the windows as businesses face labor shortages.

While the job market is currently in favor of job seekers, Gin said the increase could benefit low-wage workers by ensuring that wages don’t drop if the job market changes, due to higher costs. Life and inflation show no signs of slowing down. .

“A lot of people are worried about their ability to stay in San Diego. So, for those affected, they will get a little benefit from the minimum wage,” he said, while also explaining the additional support. that comes from the state like money to fight inflation and gas prices.

Due to the tight labor market, he doesn’t think this minimum wage increase will lead to more complaints or higher prices for consumers – two arguments often used against minimum wage increases.

The current job market has already resulted in inflation and wage increases, so the impact of the increase given to San Diego will not be large, he said.

Next year in California, the minimum wage is set to $15.50 per hour for all businesses regardless of the number of employees they employ.