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California’s Minimum Wage Hike

Fight for 15

Several cities have significantly raised the minimum wage in recent years around the $15 per hour range but California is the first state in the nation to do it. On Monday, Governor Jerry Brown and California state legislators reached a deal to raise the minimum wage to $15 per hour by 2022. The deal raises the minimum wage from the current $10 per hour by 50 cents per year for 2 years, and then by one dollar for four years.

New York Governor, Andrew Cuomo, is similarly working to raise the minimum wage for New York, beginning with the city by 2019 and the state by 2021.

The changes in these two states “clearly would create national momentum for other states to follow their lead.” – Paul Sonn, NELP’s general counsel.

Activists must work state by state on their project to raise the minimum wage since proposals to increase the federal minimum wage from $7.25 per hour to around $10 per hour have been blocked by Republicans in Congress.

Unintended Consequences?

California just raised the minimum wage to $10 per hour on January 1st, 2016. Now they will be raising it every year for the next six years. The wage hike will bring California, the world’s 8th largest economy, to the highest minimum wage in the world. This kind of thing makes plenty of sense for cities like San Francisco, Oakland, and San Jose, which are very expensive places to live, but what about small towns like Modesto and it’s even smaller neighbor, Turlock? Where living expenses are lower, so are wages, generally.

In small, inland towns in California, $15 per hour is a higher wage. It’s a wage for skilled office workers, supervisors, machine shop employees, construction workers, etc. The minimum wage is usually the wage paid to unskilled workers like low level fast food employees and cashiers. What will happen when the wage increase levels the playing field for skilled workers and unskilled workers? Will workers who had hard jobs move into the easier jobs since they would pay the same? Or will the wages of skilled workers also have to rise to beat the minimum? I imagine the latter would be inevitable but there still may be changes to the gap between unskilled and skilled workers.

The wage hikes could have other consequences too. Business owners may cut shifts or lay off employees, or they may shut down entirely if the company can’t meet payroll. Employees may get replaced by machines. Workers who once commuted for a higher wage might quit their jobs in the big cities and stay put near home.

No matter what the outcome, businesses and individuals will be affected by the change, many for the good, some for the bad. In the end, we can only hope that it balances out.

If the wage increase in California has negative consequences, the legislation can delay the schedule of wage increases by one year for businesses with 25 or fewer workers. The governor can also pause the increase for one year if it negatively affects the economy. However, the purpose of the increase is to improve the community. Businesses aren’t the only cog in the wheel. Workers are part of the community and need support too. As governor Jerry Brown said on Monday, “If you took the wages down and cut them in half, it would make it easier for certain businesses. But you can’t function that way, because we’re a community.”

3 Comments

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