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Saturday, November 26, 2016

Minimum Wage Study Shows Little Effect on Emeryville's Business Climate

Emeryville's Landmark Minimum Wage Ordinance: 
Tempest in a Teapot

The long awaited City Council commissioned Minimum Wage Ordinance Business Study, ordered after passage of Emeryville's landmark living wage law and released this month shows an Emeryville business community remarkably unfazed by the increase in employee labor costs brought on by the 2015 ordinance.  Upon presentation of the study and in summery, Emeryville's Economic Development Manager Chadrick Smalley told the Council members at their November 15th meeting, "The picture is good. Emeryville is still a good place to do business".

The staff presentation of the plenary study conducted by students at the Lorry I. Lokey Graduate School of Business at Mills College revealed an Emeryville business climate that is healthy and growing after passage of the ordinance and an improved quality of life for minimum wage workers, a significant contrast to dark prophecy loudly expressed by several business owners in the run-up to the ordinance.  Alarms raised by the business community before the passage of the MWO included warnings of wholesale business closings and businesses fleeing to other cities with lower labor costs but have been proven to be unfounded the study clearly reveals.

The increased minimum wage has barely registered a blip with Emeryville businesses.  A survey associated with the Mills Collage MWO Study completed by business respondents shows the biggest problems facing Emeryville's businesses is not increased labor costs but rather finding skilled and experienced employees, rising rents and the general cost of living.  Further, the survey shows fully 60% of businesses had a positive reaction to the MWO while 21% reacted negatively but that number is tempered by what Mr Smalley said is a combined negative reaction to any government regulation some business owners display.
"After implementation of the 
Minimum Wage Ordinance, 
Emeryville lost 188 businesses
but gained 238 new businesses"

Further, the study shows 82% of businesses have no intention to leave Emeryville after the MWO while 16% said they could or would but again Mr Smalley told the Council members the 16% number is misleading, "If you ask businesses without passing such an ordinance, you would get comparable results" adding, "There is no increase due to this ordinance".

The staff warned the Council not to put too much stock in businesses openings and closings tabulated before and after the implementation of the Minimum Wage Ordinance because those numbers don't necessarily correspond to the MWO but the Business Study does show an increase in new businesses and more than 1,100 new Emeryville jobs created in the year after MWO implementation; a 6% increase over the previous year before the MWO.  That number, even though it beats Oakland job increases represents "no significant difference between pre and post MWO" the Economic Development Manager said.  Berkeley it was noted actually lost jobs in the same time period while it also had the lowest rise in its minimum wage.

The Business Community Was Alarmed
They predicted massive business failures.
Although the Business Study, more than a year in the making, was formulated primarily to show the effects the Minimum Wage ordinance would have on Emeryville's businesses, part of the study was undertaken to show the effects the ordinance has had on minimum wage workers in town.  Those are revealed to be mostly positive effects as one would expect including improved cognitive and behavioral outcomes for the children of workers as well as improved stability for families and improved mental health owing to reduced stress levels of these workers.

The staff additionally cautioned the City Council that the Study, while complete is not necessarily definitive for all time.  As yet unknown effects could make themselves evident given more time.  "The Business Study should be revisited in a year or two", Mr Smalley said.

MWO Business Survey HERE

Emeryville's Business Climate Since MWO 
ratio of closed to opened businesses
Red = closed businesses
Green = newly opened businesses

Month by month tabulation of Emeryville's new businesses vs closed businesses
since the MWO took effect

In the 16 months of study, more business openings are shown than business closings
in all but three of those months.  However the City staff cautioned making 

too much from these numbers.

Emeryville's Minimum Wage Ordinance took effect in July 2015
More business openings means more jobs: 1,100 from the implementation of the MWO
up to the end of 2015 alone.  During the study period (July 2015 up

to November 2016) 238 businesses opened while 188 closed. 


  1. Studies can show anything you want. You want to show how this has been good and that's what you see.

    1. Academic studies are no good, right? The scientific method is no good, right? Truth can only be gleaned by intuition, is that it?

  2. This is the most one sided story I've ever read. Even for the Tattler this is over the top. Anything to help your union friends and homeless people, right Tattler?


    1. If by "one sided" you mean accepting and giving weight to the independent study commissioned by the City of Emeryville over the random opinions of people who don't like the Minimum Wage Ordinance, then we'll have to say YES to that charge.
      And to answer your question, it's true we don't demonize unions and/or homeless people here but we wouldn't do anything for them; we wouldn't post false information about the independent study of the Minimum Wage Ordinance commissioned by the City of Emeryville for instance.

    2. No by one sided I mean exactly that. You never even bothered to ask the business community before you wrote this trash. You are only presenting what you want and leaving out the other side. And you are forgetting its the business community that provides the jobs and the money to run the government you love so much.

    3. Talk about one only listen to YOUR side. You didn't even bother to read the story. If you had you would have not made the absurd charge you have. The Tattler is reporting on the INDEPENDENT Business Survey about the MWO. That's a document sent out to 663 Emeryville BUSINESSES. Got that? If you wanted to make a more credible charge of one sidedness you might have complained the City of Emeryville didn't find out more about the workers side in this. This study was biased on the side of how the MWO impacts business. Why aren't you making that charge?

      Oh, and love the government? Well, we're not anarchists here so in that respect maybe you could say we love the government as a general thing but if you want to posit the Emeryville Tattler is in bed with City Hall then again I charge you with an absurd postulate. Not only did you obviously not read the story, you haven't read the rest of the Tattler's offerings. Yours is not a charge that any serious person could make.

    4. Uhhh, private blog? Who says Brian has to be fair? He can be as one sided as he likes, it his blog. If you don't like it, start your own...

    5. "One sided"? What's the other side have to say about this? The study commissioned by City Hall is 'fake news'? It's all fake, is that what you're saying (on this inauguration day of Trump)?

  3. Brian, your cherry picker must be completely over-heated at this point. There's no way a serious person can read that report and not see a major problem for Emeryville and its small businesses, particularly its locally serving restaurants.

    READERS: please go skim the report for yourselves, particularly the unfiltered comments from local businesses at the back, well almost unfiltered if you ignore the "[EXPLETIVE REDACTED]" part.

    While doing so, remember that the vast majority of businesses in Emeryville (think biotech firms, accountants, software developers, single person businesses) have virtually no minimum wage employees. You can run EVERY SINGLE restaurant out of town, 100% of them, and someone can still say "90% of businesses were unaffected"...because the law doesn't impact 90% of businesses.

    To understand the effect, you have to look specifically at the businesses that ARE affected, the ones who actually hire minimum wage workers. These are referenced throughout the report, and the report keeps coming back to the problems those businesses are facing.

    The vast majority of affected businesses are reporting that costs are rising faster than revenues, a very bad sign in a boom period. A large percentage of businesses are considering leaving Emeryville. Most businesses are raising prices and expect to raise them again.

    And, despite a booming economy, business and employment in Emeryville are stagnant. If we are seeing large numbers of businesses closing when the regional economy is about as good as it will ever be (which we are), we are seeing the death of Emeryville as a place for small business. Actually, we've already seen it.

    Don't forget that the report didn't survey any of the businesses which have left in the last 18 months. By any reasonable count, we've witnessed over 1000 jobs lost in just 18 months, most from long-standing businesses that have been in the city for many, many years.

    It's fine to support a high minimum wage, but people need to acknowledge that there are many people who lose out and lose their jobs, typically the young and the poor. Those people and all the small business owners who have lost or are in the process of losing their life savings do not consider Emeryville's MWO a 'tempest in a teapot'.

    Please read the report for yourself and take a minute on behalf of the small business owners of Emeryville to get a sense of how bad things have become for them.

    1. There's always glass half full naysayers stalking Emeryville. It's been the naysayers in control of this town for 28 of the last 30 years (the last two years being the exception). Your rant Mr Naysayer Anonymous, relies on two tactics: a smothering of misrepresentations of the Study and a general right wing negative view of the world overlaying it. We'll give you your right wing dark vision but the misreading of the Study will be countered.
      Job losses: Sorry, but you can't use that. Emeryville added jobs...more than 1,100 in the first year alone after MWO. And Emeryville beat Oakland in job growth and beat the pants off Berkeley (both of whom have lower minimum wage laws). Of all the local cities, Emeryville did the best in job creation.
      Business closings- The Study is clear...Emeryville added more businesses than it lost. When compared with business closings vs openings before the MWO, there's virtually NO CHANGE. That means your claims are erroneous.

      All you have are kvetching business owners who don't like government regulation and a little rising costs to consumers...and that has been as predicted. Who likes to pay more, even a little more for stuff? Nobody of course. But that doesn't mean we're going to use our government to drive a race to the bottom here in Emeryville. Sorry Mr Anon, Republicans are in the tiny minority in our town...your values are not Emeryville values. We're going to pay a little more for our pizza here because we realize a civilization isn't something you can build for nothing on the backs of the least fortunate among us.

      If you think this Business Study is such a slam dunk against the MWO you should ask yourself why the right wing pro-business blog in town has been totally silent about it. Normally this is something Mr Arias would be crowing about if there were anything there to crow about. Instead of crows, it's crickets.
      So we have the take by the professional Economic Development Manager Chadrick Smalley and his scientific method and then there's Mr Naysayer Anonymous with his angry opinions. Who ya gunna believe?

    2. I forgot to add the following lifted directly from the Business Study to refute your claim about the food service sector:

      "While many argue that a minimum wage increase costs jobs, we found that most companies did not change in size over the last year. More than half of businesses maintained the same number of full time employees (FTE), and those that experienced changes were split between FTE increases and decreases. The food service sector saw the greatest increase in full-time employees".