What Happened to Fast-Food Workers When San Jose Raised the Minimum Wage?

By:  Eric Morath


A 25% minimum-wage increase in San Jose, Calif., didn’t cause the region’s fast-food franchises to stop hiring. But it might have caused some heartburn.

A 2012 ballot initiative, started by San Jose State University students, resulted in a $2 increase to the city’s minimum wage. Opponents of the increase said it would lead to job losses. Initial data suggests that isn’t the case.

The pace of hiring at fast-food joints and other quick-service restaurants in the metro San Jose area slowed in December 2012 and January 2013. That was after San Jose voters approved the measure in November 2012 but before the increase took effect in March 2013.

Fast-food hiring in the region accelerated once the higher wage was in place. By early this year, the pace of employment gains in the San Jose area beat the improvement in the entire state of California. Nearly half of all minimum-wage workers are employed in food service.

The city of San Jose accounts for about half the population in the metro area, which also includes Santa Clara and Sunnyvale. The minimum wage in those neighboring cities is $8 an hour, matching the state level. (San Jose’s minimum wage rose in January to $10.15 an hour from $10 due to an automatic inflation adjustment.)

The results are far from conclusive. Still, they seems to fit with studies that found minimum-wage increases at a local level haven’t led to significant job losses at fast-food restaurants.

Those local findings stand in contrast to a recent study by the nonpartisan Congressional Budget Office. In a February report, the CBO estimated raising the federal minimum wage to $10.10 an hour from $7.25 would reduce U.S. employment by 500,000 while pulling 900,000 people out of poverty.