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.