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San Diego Low Wage Workforce Analysis (May 2014)

Thursday, May 22, 2014

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SAN DIEGO – Low wage earners in the City of San Diego are not a monolithic group, and in fact have many important socio-economic differences that should be acknowledged in the public debate over raising the minimum wage. That is the conclusion of a new report published by the National University System Institute for Policy Research (NUSIPR), a regional economic think tank based in San Diego.

One of the major policy issues currently being debated in San Diego is increasing the city-wide minimum wage. Unfortunately, this significant economic policy change has been discussed under limited local economic data and analysis. Using recently released microdata files from the American Community Survey, NUSIPR conducted a broader analysis of San Diego’s low wage workforce, and developed a clearer profile of the wage earners that would be impacted by the policy change.

Overall, we found that:

• San Diego low wage earners are mostly young, single, and early in their careers. Based on demographic factors and school enrollment figures, NUSIPR concludes that many low income workers are in a transitory period of their careers.

• Latinos make a disproportionate share of the low wage workforce. Latinos make a greater percentage of the low wage workforce than their share of the overall workforce or citywide population.

• Low wage earners have less formal education than wage earners citywide. Low wage earners make up the majority of workers citywide that have not earned a high school diploma, or whose high school diploma is their highest attained education level.

• Restaurant, hospitality and sales positions are the most common low wage occupations. Potential changes to the local minimum wage rate would have broad implications for San Diego’s visitor industry, retail businesses and restaurants.

• There are a significant number of minimum wage workers that are part of high-income households. While most low income workers are members of low income households, many are not. NUSPIR found that 29% of low wage workers are members of households making more than 70,000 a year and more than 40,000 low wage workers belong to households making in excess of $100,000.

"A large increase in the minimum wage is not a very targeted policy instrument for alleviating poverty,” remarked Vince Vasquez, NUSIPR Senior Policy Analyst and the author of the report. “Policy makers should understand the unintended consequences of raising local minimum wage compared to other policy choices, such as matching the earned income tax credit (EITC) or strengthening economic development strategies have a more targeted impact on residents struggling to make ends meet."