For Minimum Wage Earners in California, the Promise of a Pay Raise

Includes interactive charts

Wikimedia

Wikimedia

California’s lowest-paid workers received some much welcomed news this week when state lawmakers approved a hotly contested bill to gradually bump up the minimum wage to $10 an hour.

The legislation, which Governor Jerry Brown has already promised to sign, will hike the state’s minimum wage to $9 by next July and $10 by January 2016, an increase of 25 percent. It’s the first statewide increase in six years, and will give California the highest minimum wage in the nation. Currently, Washington State leads the way, with a minimum wage of $9.19 an hour. California also trails Vermont and Oregon.

See a full list of minimum wages by state

The pay hike is expected to directly impact roughly two million low-wage workers in California who earn less than $10 an hour, including about 1.5 million full-time employees (who earn under $20,800 a year), according to a Sacramento Bee analysis of data from the  U.S. Census Bureau’s, 2011 American Community Survey. Currently, a full-time worker in California earning the minimum wage makes $16,640 a year, just above poverty wage.

California’s imminent pay hike comes amid intense wage debates across the country, including nationwide protests by fast-food workers pushing for an industry standard of $15 an hour.

Introduced by Assemblyman Luis Alejo, D-Salinas, California’s wage bill was split sharply along party lines, as lawmakers battled into the final hours of the legislative session on Thursday night. The bill’s overwhelmingly Democratic proponents claim that a wage increase is a life-saver for struggling low-wage workers trying to support their families, and contend that there is no historical evidence to suggest that it will reduce jobs. On the contrary, they argue, a pay increase will reduce employee turnover and stimulate local economies by putting extra cash directly into the hands of low-wage workers.

“If you give people a couple more dollars an hour … to spend in their communities, spend it they will,” Sen. Marty Block, D-San Diego told the Associated Press  “Nothing will make small businesses happier. This will stimulate the economy as well as helping people’s lives.”

 

Check out California’s “living wage” rates

Republican lawmakers, joined by industry groups like the state Chamber of Commerce and the California Restaurant Association, refer to the bill as a “job killer.” They counter that a wage increase of this magnitude will deal a heavy blow to employers who will be forced to automate many low-skilled positions and ultimately drive more workers out of the market, thus killing thousands of jobs.

“Given the economics in our industry, where restaurants operate at very thin profit margins, a 25 percent increase in labor costs will result in fewer job opportunities for Californians looking to get back on their feet,” California Restaurant Association CEO Jot Condie told the San Jose Mercury News.

Although the federal minimum wage is still $7.25 an hour, most employers in California are subject to state and municipal minimum-wage laws, and are required to follow the standard that offers the highest pay. San Francisco and San Jose (as of November) are among only a handful of cities in the country that have set their own minimum wage platforms, at $10.55 and $10.00 respectively.

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