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 69 The labor share of operating costs by industry For each industry, we estimate labor costs as the sum of the annual wage costs, payroll taxes and employer paid insurance premiums (except health insurance), and other benefits (other than contributions to pension plans). The labor share is estimated using 2012 Census Bureau surveys—the most recent year available. We use these surveys only for select individual industries: retail trade; food services; wholesale trade; manufacturing; administrative and waste management services; health care and social assistance (including ambulatory care, hospitals, and long-term care); and other services. We document here our sources and methods for these individual industries as well as for our estimates of the labor share of operating costs in the overall economy. • Retail trade (including grocery stores): The 2012 U.S. Census Annual Retail Trade Reports provides data on retail sales, payroll costs, merchandise purchased for resale, and detailed operating expenses. We add operating expenses and purchases together to determine total operating costs. We add the costs of payroll taxes, employer paid insurance premiums, and employer benefits (excluding health insurance and retirement benefits) to annual payroll to estimate total labor costs. Health and retirement benefits are excluded since, unlike payroll taxes and Workers’ Compensation insurance, the costs of the benefits will not change if wages are increased. Dividing labor costs by operating costs gives us the labor share in retail trade. • Food services industry: Industry data on gross operating surplus are available from the Bureau of Economic Analysis Input-Output Account Data, before Redefinitions, Producer Value. We subtract gross operating surplus from sales to obtain total restaurant operating costs, and then proceed as we did for retail to obtain labor cost data. • Wholesale trade: Data are from the U.S. Census Annual Wholesale Trade Report. We follow the same methods as with retail trade. • Manufacturing: Data are from the 2012 Economic Census (Table EC1231I1). To determine operating expenses we add together payroll costs and benefits, total cost of materials, total capital expenditures, depreciation, rental or lease payments, and all other operating expenses. To determine labor costs we add together payroll costs and payroll taxes, employer paid insurance premiums, and employer benefits (excluding health insurance and retirement benefits). • Administrative and waste management services, health care and social assistance (including ambulatory care, hospitals, and long-term care), and other services: Data are from the U.S. Census Annual Services Report, which provides data on payroll and operating expenses. Total operating expenses are reported directly in the data. To determine labor costs we add together payroll costs and payroll taxes, employer paid insurance premiums, and employer benefits (excluding health insurance and retirement benefits). 8.A. - Page 83