Bay Area: Businesses Fight San Jose Wage Proposal
SAN JOSE -- A voter initiative to raise this city's minimum wage, set for the November ballot, has spurred a fight with small-business owners who say it could drive up costs and force layoffs.</br></br>The proposition, created by a group of San Jose State University students, would raise the city's hourly minimum wage to $10 from the current $8 state requirement, and include yearly inflation adjustments. It is modeled on San Francisco's 2003 minimum-wage ordinance, which is tied to the Consumer Price Index that since 2003 has raised the minimum wage by $3.49 to $10.24 an hour.</br></br>San Jose business leaders say the increase would drive businesses from the city.</br></br>"I don't think the measure's proponents understand the economic impact this will have on small and medium-sized businesses," says Matt Mahood, president of the San Jose Chamber of Commerce. "Most of these guys are already struggling with the down economy and now this will compound their problems."</br></br>Mr. Mahood says business owners won't only have to pay more to their workers but also will see a 15% to 17% increase in their payroll taxes, since they are tied to the wage rate.