Silicon Valley minimum wage bump doesn’t cover costs

The minimum wage is going up across Silicon Valley in January, but it won’t be high enough to cover the rising expenses of daily living.

Although minimum wage is going up as high as $18.55 in Sunnyvale, workers and business owners say the increases aren’t enough to make a dent in the region’s expensive rent and other expenditures.

Victor Manzo, an employee at Sweet Sicily in Sunnyvale, said the city’s 60 cent increase won’t have a large impact. He said he struggles to support his family of five with his full-time job, as rent and groceries sap most of his income.

“Even if you increase the minimum, it doesn’t help if everything goes up again,” Manzo told San José Spotlight.

The price of basic necessities have increased dramatically over the last few years. A study by doxoinsights ranked San Jose first in how much residents pay on common household bills in the nation’s 50 largest cities—beating out Boston, New York and San Francisco for the second year in a row.

Housing is another steep cost for residents in the region. A report by Apartments.com listed San Jose as one of the nation’s most expensive cities to rent apartments, with an average of $3.34 per square foot—significantly higher than the national average.

“It’s a chain reaction,” Roberto Cervantes, owner of Roberto’s Cantina in Sunnyvale, told San José Spotlight. “You increase minimum wage, you have to increase prices on whatever you offer.”

Cervantes said he wants to pay his workers more, but the increase will make it difficult for his business to stay afloat, as his biggest expenditure is payroll. To meet payments, he said most businesses will have to increase prices, which cycles back to those who won’t be able to afford them.

“If (legislators) don’t put a cap on the rent, then it’s not helping,” Cervantes said.

Once a trailblazer in increasing minimum wage, San Jose now lags behind five cities in Santa Clara County with an increase from $17 to $17.55 an hour. The county’s highest minimum wage is in Mountain View, which will jump to $18.75 in January. Despite having the county’s highest minimum wage, the city’s lowest-income earners still struggle to pay for necessities like food and rent, leading city officials to launch a guaranteed basic income program. 

In Palo Alto, the minimum wage will go up to $17.80. Santa Clara, Cupertino and Los Altos will have a slightly higher minimum than San Jose, increasing to $17.75. Milpitas will increase to $17.20 next year on July 1.

Seven cities—Campbell, Gilroy, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill and Saratoga—do not set their own minimum wages and will rely on the state’s increase to $16 next year.

Ruth Silver Taube, a worker’s rights attorney and San José Spotlight columnist, said there should be a standardized minimum wage across all cities in the county because the cost of living is high countywide.

“We are in the most or one of the most expensive areas, so we should have a higher minimum wage,” Silver Taube told San José Spotlight. “Even the highest in Mountain View isn’t high enough to afford rent and … what you need to sustain yourself.”

She pointed toward the Massachusetts Institute of Technology’s Living Wage Calculator, which provides estimates for the hourly wage that a full-time worker would need to support their family’s basic needs. In the San Jose metropolitan area, as of earlier this year, that’s about $26.20 for a single adult with no children, or about $54,500 annually. For one adult working in a household of four, that’s $58.87 hourly or about $122,500 annually.

Fast-food workers will also get a pay bump to $20 per hour by April, and some franchises have been adjusting, such as Pizza Hut, which is laying off all its delivery drivers in California. Health care workers will also see their minimum wages rise to $25 over the next few years, and Silver Taube said these industry increases could help advocates push for higher wages across the board.

“We need to do a realistic assessment of what a living wage is in the Bay Area,” Silver Taube said.

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.

Editor’s Note: A previous version of this story included an incorrect minimum wage increase for Santa Clara.