An new analysis of the $5/hour extra pay grocery mandate by the San Francisco Controllers Office found the ordinance would increase labor costs by $14.6 million for affected employers and that “most of the cost increase will be passed on to local consumers.”
It also found the extra pay ordinance would lead to a reduction of 164 jobs and a reduction in city GDP of $26 million.
“The Controller’s report echoes what we’ve been saying all along: extra pay mandates will have severe unintended consequences including higher grocery bills and job losses,” said Ron Fong, president & CEO, California Grocers Association. “Stores have already closed. Job losses have already happened. These mandates don’t make workers any safer especially now that vaccine rates among grocery workers and the general public is climbing. It is unfortunate city elected officials have ignored these consequences and moved forward with this costly proposal that will cost consumers and cost jobs.”
Excerpts from the report:
- “In terms of the cost to local businesses, the estimated 11,284 affected workers receiving an average of $1,317 in hazard pay would lead to an increase in labor costs for affected retailers of $14.6 million.”
- “Since 67% of the affected workers live in San Francisco, 67% x $14.6 million or $10.0 million of the income would be spent in the city. Income received by residents of other cities is assumed to create no economic benefits for San Francisco.”
- “According to the REMI model, the combination of a $14.6 million cost increase to retailers and a $10 million increase in consumer spending would lead to a reduction in city GDP of $26 million, and a decline in employment of 164 jobs, compared to a baseline scenario in which the legislation was not adopted.”
- “Overall, averaged across the city’s entire retail sector and all of 2021, the hazard pay represents a 0.13% increase to the cost of production and will lead to a 0.12% increase in overall retail prices. This suggests most of the cost increase will be passed on to local consumers.”
The Office of Economic Analysis (OEA) prepared the report even though the Board of Supervisors approved the extra pay mandate at its March 19 meeting. An analysis by the City of Los Angeles made similar findings that higher costs could be borne by consumers.