PAYROLL BLOG

San Jose, Calif., may become the next city to join a group of cities in Santa Clara County working together to increase the hourly minimum wage to $15 by 2019 across the Silicon Valley area.

The San Jose City Council gave preliminary approval Nov. 15 to a proposal to increase the city’s minimum wage to $15 an hour. After the ordinance is drafted, it is to return to the council for final adoption, likely by the end of November, a city spokesman told Bloomberg BNA in an e-mail Nov. 17.

San Jose could become the sixth city in a Santa Clara County cohort that came together to organize a regional increase to the hourly minimum wage to $15 by 2019. In September 2015, several Silicon Valley cities sponsored a study to examine the potential effects of increasing the minimum wage across Santa Clara County.

The study recommended an hourly minimum wage that would reach $15 Jan. 1, 2019, with increases to $12 in 2017 and $13.50 in 2018. The California statewide minimum wage is scheduled to reach $15 in 2022 for large employers and in 2023 for small employers.

This fall, Cupertino, Los Altos and Palo Alto established wage increase schedules nearly identical to the one provisionally approved in San Jose, which follow the annual increases recommended by the study. Mountain View and Sunnyvale approved wages that are to reach $15 an hour Jan. 1, 2018.

City councils in Campbell, Milpitas, Santa Clara and Saratoga were expected to consider $15 minimum wage proposals in the coming months, the San Jose spokesman said Nov. 15 in a news release.

A regional approach to increasing the minimum wage, like the one pursued in Silicon Valley, may be an attractive way for a municipality to insulate itself from the potential fall-out that may come from having a minimum wage different from its neighbors. If a city's minimum wage is lower, the city may lose out on workers who move to a jurisdiction with higher wages. If a city's minimum wage is higher, the city could lose businesses to nearby municipalities with lower labor costs.

A uniform regional wage may also mitigate payroll and employment challenges for businesses that operate in several different cities across a region. Employers should look for this approach in regions with closely clustered cities with costs of living higher than the rest of the state.

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