AgdaPkt 2017-09-25 Closed and Joint SA PFA

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The Effects of a $15 Minimum Wage by 2019 in Santa Clara County and San Jose 45 5.5 Model calculations and net effects on employment for scenario B: a $15 minimum wage increase in Santa Clara County We conduct a similar analysis as in section 5.3 for a $15 minimum wage increase in Santa Clara County. In Table 11 we present our results for Santa Clara County in column 1 and for Santa Clara County and nine nearby counties. We estimate that 84 percent of Santa Clara County affected workers are also living in Santa Clara County and therefore spend their additional income in this county. We also estimate that 99 percent of Santa Clara County affected workers live in Santa Clara County and nine surrounding counties. Panel A: Reduction in employment due to capital-labor substitution and productivity gains Panel A in Table 11 shows our estimates for the reduction in the number of jobs due to both capital-labor substitution effects and productivity gains. With an assumed capital-labor substitution elasticity of 0.2 and a productivity effect of 0.005, we find a negative employment effect of about 2,700 jobs. Panel B: Scale effects due to reduced consumer spending Panel B in Table 11 presents our estimates of the reductions in consumer spending from the higher payroll costs that are generated by the proposed minimum wage law in 2019. We estimate that scenario B would lead to a $214 million cumulative reduction in consumer spending by 2019. We then use IMPLAN to estimate the total reduction in consumer demand, including multiplier effects. Row 6 then translates these results into numbers of jobs. Panel C: Income effect--cumulative increases in wages from proposed minimum wage increase Panel C of Table 11 presents the estimated income effect: increases in consumer demand deriving from increased incomes of low-paid workers. We estimate that scenario B could trigger a net income increase of $602 million by 2019 in Santa Clara County, and $706 million in Santa Clara County and nine nearby counties (column 3), i.e. an additional $104 million (column 2). We then use IMPLAN to estimate the increase in employment for Santa Clara County resulting from the increased household spending triggered by the income increase, accounting for multiplier effects and spending leakage outside the city (respectively outside Santa Clara County and nine nearby counties).25 Row 9 shows the employment change associated with this increase in income in Santa Clara County (column 1), and in Santa Clara County and nine nearby counties (column 3). Panel D: Net effect Panel D of Table 11 presents our estimate of the net change in employment in scenario B. • For Santa Clara County only (column 1), we estimate a cumulative net loss in employment, due to the policy, of 1,350 jobs by 2019, or -0.1 percent of total employment. 8.A. - Page 59