Today California’s minimum wage rises from $8 to $9 per hour, but workers and advocates say it is not enough. This is the first time California has seen an increase in six years and the wages are scheduled to rise another dollar by January 1, 2016.
However, critics argue that, even with the 12.5 percent increase today, minimum wage workers still will not earn a living wage. Last week, Assembly Democrats ended up bringing down a minimum wage proposal that would have raised costs up to $13 an hour.
As the Sacramento Business Journal reported on Thursday, “Business groups were amazed — and delighted — to watch a proposed minimum wage hike to $13 an hour die in an Assembly labor committee, a chamber long considered union territory.”
They quoted Salinas area Democrat Luis Alejo, who authored the bill that is taking effect today and who was one of two Democrats to abstain from the vote, killing the bill, where he said “in an interview that raising minimum wage was his top priority upon entering the Assembly in 2010. His bill, which raises the state’s wage floor to $9 next week and will increase it again to $10 in 2016, took three years to push through the Legislature. It was a product of negotiations between the governor, business groups and organized labor.”
He told the Business Journal that this year’s bill would have “violated” the deal struck a year ago. “When you’re trying to negotiate a deal and reach consensus, you have to keep your word,” he said.
Senate Bill 935, authored by Senator Mark Leno, would have raised the minimum wage in three steps, starting at $11 an hour in 2015 and increasing an additional $1 per hour in both 2016 and 2017. Beginning in 2018, the minimum wage would be adjusted annually to the rate of inflation. SB 935 was co-sponsored by the Women’s Foundation of California and SEIU California State Council.
“Increasing the minimum wage is critically important to millions of hard-working Californians and their families who live in poverty and are forced to rely on the state’s social safety net programs despite being employed full time,” said Senator Leno, D-San Francisco. “By giving low-income workers the pay and respect they deserve, we will also address the growing inequality within our communities, which is a roadblock to economic recovery and a drain on already limited taxpayer resources.”
According to a release from Senator Leno’s office, “The Census Bureau reports that nearly a quarter of California’s 38 million residents, or 24 percent, live in poverty. An employee working full time earning $8 an hour brings home just $15,360 annually before taxes. The federal poverty level for a family of four with a single-wage earner is $23,850. San Francisco already has a higher minimum wage than the state and is considering raising it even higher. Los Angeles is also considering raising its minimum wage for hotel workers to $15.37 per hour.”
It adds, “Women are disproportionately impacted by the minimum wage. About six in 10 minimum wage workers in California are women, according to the National Women’s Law Center.”
“Not only will the proposed increase stabilize women, it will stabilize families and stimulate the economy,” said Judy Patrick, President and CEO of the Women’s Foundation of California. “Because women are disproportionately minimum wage workers, raising the minimum wage would help close the gender wage gap. In addition, six out of 10 of the women earning minimum wage are breadwinners. Yet, despite working hard, because of the high cost of living in California, these women and their families are living in poverty. The long-term impact of this poverty is very costly to the state and to these families.”
Earlier this year, President Barack Obama raised the minimum wage for federal contract workers to $10.10 per hour, while Congress weighed a proposal by Rep. George Miller (D-CA) and Sen. Tom Harkin (D-IA) setting the federal minimum wage to the same amount. In addition, prominent conservatives across the country, including Mitt Romney, Bill O’Reilly, Patrick Buchanan and Ron Unz, have recently expressed support for raising the minimum wage.
The release continues, “Importantly, Gov. Jerry Brown took a necessary first step of signing legislation that brings the state’s lowest wage up to $9 per hour later this year and $10 per hour in 2016. It would, though, still fall short of both the federal and give Californians less purchasing power than the state’s minimum wage did in 1968. That year’s minimum wage, if adjusted for inflation, would be worth $10.77 per hour today. Last year’s action also did not include the critical step of requiring automatic increases in the minimum wage to protect future earnings against inflation.”
The release notes, “New analysis from Human Impact Partners finds that raising the state’s current minimum wage to $13 by 2017 would significantly benefit the health and well-being of low-income Californians and their families.”
“A person’s income not only directly affects the ability to meet material needs, but it also impacts health through access to health care, quality and affordable neighborhoods, child health and development, chronic stress and interpersonal relationships,” said Bruce Pomer, executive director of the Health Officers Association of California. “As a result, the 7.5 million lower-income Californians who could expect an increase in family income as a result of this legislation would also experience fewer chronic diseases and disabilities, less hunger, and lower rates of smoking, obesity and depression.”
It adds, “SB 935 is supported by a broad coalition of groups, including consumer advocacy, human rights, labor, government, health care and social worker organizations. It will be heard next in Assembly policy committees.”
In Davis, the push to put a $15/hour minimum wage ordinance on the ballot stalled after it generated a lot of controversy and concern.
But if the state minimum wage would go up to $13 an hour and Davis has a higher cost of living than other areas, does that put it back on the map?
Proponents argue, “It’s time to bring a $15/hr minimum wage to Davis. We can change things. Right now, the minimum wage is just $8 per hour. This translates to less than $17,000 per year. We’re trying to put an initiative on ballot for a $15 minimum wage in Davis. This ensures that nobody who works full time should have to live in poverty.”
But opponents are quick to cite data that many minimum wage earners are not the primary wage earners in their family. And that most minimum wage earners are young.
Another issue is whether a city should be the one making minimum wage laws.
However, as one report indicates, cities around the state are moving to set their own minimum wages because the state’s law falls short of providing workers with a living wage.
One report notes that a living wage, the ability to pay for needed food, housing, health care, transportation and other basic necessities of life and other resources, is still outside of the reach of many workers.
“Oakland’s estimated living wage for a single worker is $11.51 an hour and San Jose’s is $12.01, according to a calculator developed by poverty researchers at the Massachusetts Institute of Technology,” the Bay Area News Group reported. “By another measure, an average of 20.3 percent of Oakland residents lived below the poverty line from 2008 to 2012, the Census Bureau reports; in San Jose, it was 11.7 percent.”
The business community on the whole has opposed such increases, arguing they drive up costs and could cost jobs in an economic environment many still consider fragile.
—David M. Greenwald reporting
My son works full time making minimum wage in Davis. He has two roommates and is careful with his paycheck. He is barely scraping by. He works for a non-profit and I’m very proud of him, but it would be nice if he made a living wage.
“It would be nice”
What is your son doing for a career path? What is he doing to gain more skills for higher-paying work.
It would be nice if we just paid everyone out of high school $25 per hour to start.
The point is consequences. There are consequences. You folks that think in “it would be nice” patterns tend to ignore, or you don’t understand, the consequences.
Talk to people that own the businesses and pay the wages to understand the consequences. Think about how your son might fare not having a job at all because there are not enough of them, and then compare that to what he gets now.
i think the consequences are overplayed over time.
That is the expectation of the liberal progressive with respect to the economy and collectivists with respect to their ideological goals… take advantage of that human tendency to reset to a new normal.
But then we have to take a step back and look at the new normal from a historical and macro view. And when we do this we can see that the consequences are in fact significantly underplayed by those pushing for so many social and environmental justice extremes.
New normal from the looter left means fewer people working. Those that are working thank the looter eft for forcing business to pay them more. Those that are not working become moochers dependent on the looter left.
Basically it is a new normal that spirals downward in economic conditions in a brilliant scheme from and for a minority of leftist elites to gain power and wealth by looting instead of producing.
The reason we have a high unemployment participation rate, one that has risen consistently over the last three decades if you remove the distortion of the tech stock and real estate bubbles, is that the cost of starting and growing business has been driven up to the point that capital flows to other investments.
You either don’t understand this, or you chose to ignore it.
The consequence of government meddling in the free labor market pushing minimum wages higher is that there are fewer jobs for everyone and a spiral downward in general economic health.
The right way to increase wages is to grow the economy and the number of jobs so that there is more competition for workers and employers have to pay a greater wage to attract and retain them. Not only that, but the employers have to treat the employees better to attract and retain them.
And also to reform our crappy education system to a new model that produces the most capable workers in the world so that companies flock to the US to leverage that higher-value labor.
“social and environmental justice extremes.”
Please explain to me how “justice” can ever be seen as an extreme.
Career path, that’s a good question. He also has a second job. He didn’t like school.
I’m hoping he’ll give it another chance. Any suggestions?
P.S. Frankly, i’s frankly a little arrogant of you to assume I know nothing about small business. My husband was self employed, I actually owned a very small business for a while, and one of my family members started a business that grew to a 20 million dollar company. Anyone who lives in Davis should understand nine dollars an hour is not really a living wage.
then have your son get behind the $15 an hour minimum wage push in davis.
I would be interested to know what you do for a living… or did for a living if you are retired.
i work in the attorney general’s office. a few years away from retirement if i can get my kids to graduate from college.
Boy… I hear you on that last point. Just heard from my youngest that he is going to need another semester… and then there is graduate school. It is currently about a $2500 per month burn rate. Won’t I feel rich when that ends?
But then there are not enough jobs and he might very well end up back home after school.
You are a government employee. And most of my closest friends are also employed by the government (comes with the territory)… or they own their own business. There is a tremendous disconnect in understand with my government employee friends with respect to dealing with the ups and downs of business and the impacts for things like minimum wage hikes. I guess maybe you cannot really understand it unless you live it.
From your perspective it seems virtuous. From a business owner’s perspective it can be significantly depressing… because you know you are going to have to cut to accommodate the expense.
And note that it is not just the expense of the wage increase. Payroll taxes also increase… and don’t kid yourself that government isn’t considering this point.
Here is another thing that happens with minimum wage hikes… employees grow more entitled and employers stop caring so much about their employees, and frankly, about creating jobs that employ people. Here is the thinking by some managers about their employees: “you are overpaid, and I am more stressed dealing with much tighter margins, and there are hundreds of people that would take your job in a heartbeat, so quit if you don’t like how you are being treated.”
That is a subtle but profound thing that happens when we mandate so much about the employee-employer relationship. It destroys the human connection and makes employees less seen as an asset, and more as a liability.
i haven’t always been a government employee. in my previous life, i worked in a law firm. needed a bit more certainty when my kids hit college and i was fortunate enough to land a job with the ag’s office.
Unless a big law firm, you probably did not encounter any minimum wage employees.
Interesting that you pursued job security over other benefits that might have been available to you in private practice.
I think we are all wired differently and some of us more value job security and some of us more value job dynamism. I put myself in that later box. In fact, I get restless doing the same things for more than a couple of years and constantly seek to reinvent what I am doing. I think it is more of a left-brain thing… I cannot be as productive unless I can be creative. I also see the benefits of dynamism with respect to inventions and progress… things we largely take for granted unless we force ourselves to dig deep and envision with live would really be like with them.
But I do have to consider this stasis vs. dynamism difference when I opine about jobs and careers. Certainly there are a percentage of people that just want a job and just want to do it and just want to make enough to survive well enough.
But I think part of the challenge here is to teach career/life planning and help people overcome some of their natural wiring to seek a more static circumstance. Because what I see in many people with this tendency to seek a more comfortable, reliable, consistent and static job… is that they also accept a certain level of abuse from their employer. Not all, but some. They also accept a less than optimal career circumstance… and end up looking forward to retirement. Personally, I can’t imagine retiring… I am having too much fun working to think about retiring.
I think Davis, with its high percentage of government employees, through that filtering, has a higher percentage of people prone to desiring a stasis state. I need to remember that too since I am not wired that way. I tend to see stasism as a sign of decline. And dynamism as a sign of progress. It is not always the case… and I value certain things that remain the same. And I should also value the discussion of these things of value. Of course I expect the reciprocal… that those prone to a more stasis pursuit at least dig a bit to calculate and accept some of the values derived from dynanism.
There is a principle that doing something creates opportunities that could not have anticipated. That is the essence of dynamism.
It is empowering to be more wired toward a more dynamic view because you are better able to eliminate unhealthy situation and relationships and better optimize your time-value-money design.
But then there is also more stress in that type of mindset and pursuit because things can happen and things can change and you have to re-invent and create new normal.
And bringing this back to the minimum wage point.
Minimum wage jobs are generally crappy jobs. Nobody should be stuck in a minimum wage job. They should all be entry-level jobs. Being stuck in a minimum wage job is just a sign of other problems and opportunities. And raising the minimum wage just job-locks people into situations that are ultimately not good for them anyway.
If the goal is for people to better take care of their financial well-being, the solution is not raising the minimum wage.
probably not, but i’ve always believed we should pay our low level workers enough to live on, even if that means we employ fewer.
“That is a subtle but profound thing that happens when we mandate so much about the employee-employer relationship”
This is an attitude that many employers have historically held towards their employees regardless of whether or not there have been many mandates regarding the employee-employer mandate. This is illustrated by the way that factory workers were treated in the days of the clothing factory that burned killing many workers unable to escape. It was seen in the fields of Central and Southern California in heat exhaustion and death because there was insufficient regulation about the provision of shade and adequate water and rest times provided. It is seen in coal mines in the south and employers who evade child labor laws.
This is a deliberate choice of employers when they know that labor is abundant and regulators are few. Private employers are like everyone else. There are some who care about their employees and others who could not care less. This is not the corrupting effect of government policy as you would like to portray it. It is a spectrum of human behavior from the callous and uncaring to the truly benevolent and everything in between, not a corrupt government causing employers to behave in bad ways.
🙂 I’m retired, and I love it.
The idea of raising the minimum wage has been discussed at length here. Once again David Greenwald has failed to understand the basic problem with a drastic increase in the local minimum wage in Davis.
If the local wage were increased, organizations will need to adjust their budgets. This can include raising prices, cutting employee hours, laying off employees and getting by with less employees. Automating things to reduce the need for employees (Automated checkout at retail stores for example). Some organizations may choose to leave Davis and others that would consider locating in Davis will choose to locate elsewhere. These aren’t difficult things to understand, but the advocates for a higher local minimum wage consistently ignore them.
The people who will be hurt the most are the least skilled and least educated. As I have discussed before, this will hurt people with mild disabilities who would like to work but have limited job skills. It will also hurt people who are just starting out in life and need that first entry level job that will give them the job skills they need for the future. And what about people with problems that make them difficult to employ such as ex-convicts who would like to get a chance to restart their lives?
What should low skilled people do if they can’t find a job? They can try to get public assistance or disability. They can go into the underground economy, perhaps dealing drugs or becoming prostitutes. They can take up panhandling or burglary or robbery. Is this really what we want?
I guess for some of our local liberals want to lower the lowest employment participation rate in the last 36 years that our country is currently enjoying. They just don’t get it.
I wish I didn’t see signs that liberals actually like a lower labor participation rate… because it is very troubling and makes it hard to respect people with those views.
Remember Nancy Pelosi responding to the OMB or CBO report that Obamacare would cause 500,000 jobs to vanish. She said that it was a good thing because people would not be “job locked”. They could quit and paint or quilt and enjoy their lives not having to work in jobs they didn’t like.
That is the mindset.
So apparently a lower job participation rate is a good thing for a good liberal.
This “good liberal” believes that people should be rewarded for their societal contributions, whether these involve volunteering, working for a non profit or working in a traditional job whether in the private or public sector. Redefining “work”
as what one does to benefit the community would vastly expand the “work force” and provide these individual who are currently not compensated for their efforts with more disposable income which would then be used throughout our community.
How would that be for expanding the number of employed ?
Tia wrote:
> How would that be for expanding the number of employed ?
Maybe we could raise taxes so the NRA could hire more people to teach kids in Davis about the Second Amendment?
i guess it depends on whether you believe that is an enduring condition or you believe it is an artifact of the recession.
The jobless recovery has been brought to us by the economic and regulatory policies of the Democrats in congress and the Obama administration. You dems blew your wad on your dreams of taking another step toward government-run healthcare, and a more pure European socialist system. It was done at a time when we should have been investing in growing the economy. It did exactly the opposite.
And now, because of the consequences, the same people responsible want to punish business even more to make up for the damage they caused.
This will not end well.
It is already not well.
The patient has curable cancer and heart decease and you are prescribing more blood-letting.
i don’t buy it. i remember in 1992 bush claiming economic growth with jobs lagging and the same happening a decade later. jobs are a lagging indicator.
Frankly wrote:
> The jobless recovery has been brought to us by the economic
> and regulatory policies of the Democrats in congress and the
> Obama administration.
Sure regulations have caused some job losses, but the increase in education ant technology overseas and in America have taken even more jobs. When I was in High School you had to wait in line and talk to a bank teller when you wanted $20, you had to talk to a person to get gas or a have a teller ring you up at the grocery store. Just 10 years ago a MD needed a person in the US to look at a MRI or X-Ray and a private equity firms could not sent thousands of pages of financial statements to India at 5:00pm and have them put in to Excel models by 9:00am the next day. My advice to kids earning the minimum wage is learn how to do something that can’t be done by people overseas or by a robot.
P.S. I’m glad this thing was not around when I was making minimum wage (+ tips) parking cars:
http://www.usatoday.com/story/todayinthesky/2014/06/25/newest-airport-perk-robot-valets-to-park-your-car/11349627/
“jobs are a lagging indicator”
That is funny… six years into the Obama hope and change show and we are still getting excuses like that. They have never lagged more than several months. This isn’t lagging, it is a new normal thanks to policies of the Dems that are damaging to economic growth.
And, yes, SOD I agree. It is not so much outsourcing that has displaced jobs as has technology. And raising the minimum wage will help spur more of that. When a business looks at a new technological system it has to justify the expense of that system with the benefits. When you increase the cost of labor, then suddenly more technology is feasible.
But… and I don’t know about you… but I cut my baby working teeth on service jobs, and agriculture and construction jobs that still exist but are now dominated by the flood of immigrants we allowed in over the last 25-30 years. That flood of uneducated immigrants has depressed wages from an oversupply of labor. They have pushed out young people that would have otherwise been motivated to do the work. These are the jobs that largely cannot be automated.
And the education system did not pick up the new challenge to produce more knowledge workers capable of designing, building and operating the new technology.
In fact the education system did just the opposite. At the time we were flooding the country with more uneducated immigrants needing no and low-skilled work, the education system was doing more of the same.
Obamas been in office for 6 years and the employment participation rate is still going down. I think we’re way past blaming the last recession.
it doesn’t really matter who is in office, the recession was very deep and it has taken a long time for the economy to improve even after the recession technically ended.
Nope. You are wrong. Romney and a GOP house and Senate would have had a different economic policy that would have encouraged more economic growth. Obama and Dems have piled on much more business-killing regulation… including Obamacare.
Tax increases. EPA out of control. IRS out of control. Obamacare.
You name it.
Problem is that Dems don’t want to accept the truth here because it implicates their entire platform and ideology. If they can’t blame the GOP for the crappy economy, they got nuttin’
it’s doubtful that those changes would have made a difference – even if they could have gotten them passed – in such a short period of time. i’m just not a believer that government impacts the economy other than on the margins.
The way it works… economic policy motivates business growth and expansion that then leads to more employment that leads to more consumption and leads to more business expansion. Yes, it takes some lag time to see the numbers results, but it is generally 12-18 months max. The problem is that Obama and the Dems have implemented policy that has done the exact opposite… increased business uncertainty and de-motivated capital investment in business growth and expansion.
It is not a lag problem, it is a failure problem.
You’re the one who doesn’t get it. At all.
Good post Topcat.
It is ironic that the impulse to raise the minimum wage is generally a social justice call, but it creates a lot of problems that then require a social justice call.
And the way I see this… it perpetuates the looter-moocher co-dependent relationship.
But then we have to dig down and discuss the moral arguments for this. If raising the minimum wage hurts the most vulnerable, those that demand we raise the minimum wage are guilty of hurting the most vulnerable… and that is a question about their morality.
Frankly–there are millions of american citizens actively looking for employment and are not able to find it–do you classify all these as looters and moochers?
How about the morality of allowing in 1-2 million immigrants per year when there are millions of Americans who cannot find work?
A final point about moochers and looters–I hope you don’t group all unemployed in that category, though I agree that a substantial percentage can be grouped in such a category (I would call it lazy or unmotivated). One of the basic requirements of a free-market system like ours is that there need to be a certain percentage of unemployed seeking work, otherwise the cost of labor goes to high; I think the optimum % of unemployed is set at 4-5% (currently we have a much higher rate of unemployed seeking employment, though some have given up; this higher % has social costs). I am a free market supporter, but the downsides of the free market should be acknowledged as well as the upsides.
Moochers are people that demand more than they earn. Looters are people that take from producers to give to moochers.
If you work to earn your own living, or if you support a family member that works to earn the family living or you otherwise work to contribute to the family living, you are a producer.
If you are temporarily down on your luck, or starting a working career, or you are in career transition, then you are not a moocher. If you are really disabled you are not a moocher. If you are a senior that was previously a producer you are not a moocher.
If you work but are compensated more than the market rate for the value of your labor, and you demand to retain that compensation, you are a moocher.
If you are working for market rates but demand increases, you are a moocher.
Now what about that person that does work that is valued in society – like a social worker – but is not paid very well and demands supplemental compensation.? He/she might be a producer… it depends on the orientation about the job.
Topcat–we have a high unemployment rate now–what do you think about the US policy of allowing over 1 million immigrants per year to migrate to USA legally (and there is legislation pending to double this number to over 2 million per year) and allowing humdreds of thousands to millions more to cross the border illegally, given that the unemployment rate is so high? Does flooding the country with more job-seekers improve or decrease the odds of our current and mostly long-time US citizens from finding a job?
Yes, immigration (both legal and illegal) put a bit of downward pressure on wages. The new immigrants are eager to work and earn money so they compete for the low skill jobs. Some people will argue that immigrants are taking jobs that Americans don’t want or won’t do. Examples are agricultural work and caregivers for the elderly.
It would seem that advocates for a higher minimum wage would also be in favor of lower immigration quotas and less tolerance for illegal immigration, but for some reason I never see them taking this position.
Topcat–guess I’m one of the exceptions–I support raising the minimum wage a bit (to $11-$12/hr by 2016; as I’ve outlined above) and cutting way back on immigration–specifically decrease legal immigration by 50% from the current ~1 million/yr to ~500,000/yr (there is a bill pending in co ngress to do double legal immigration to ~2 million/yr, which I’m sure they’ll try to sneak thru approval); and building more fence and otherwise enhancing southern border security to a level that only ~100,000/yr or less are able to make it thru illegally (this is doable within a few years; though of course all officials and politicians will take the stance that it is not feasible).
I’m not aligned with any political party or ideology; it is amusing to see many in the liberal camp be both pro-immigrant and pro wage increase (and will of course claim they are pro-full-employment); when these two stances are fundamentally opposed to each other.
How about setting the minimum wage at the mean rate for the 1960s and 1970s, which the USA economy somehow survived?
I remember seeing numbers that the mean minimum wage for the 1960s and 1970s comes out to about $9.50 in 2013 dollars (cpi adjusted). Given that the cpi underestimates the true increase in the cost of living by a small percentage (numerous studies have concluded this); a true 1960s-1970s minimum wage is likely in the rage ~$10-$11 in 2013 dollars. In my view this would be a good range to have now; and in the range $11-$12/hr by 2016; thereafter adjusted for inflation.
Remember; moderation! Seems to me more that ~$12/hr could cross a threshold where businesses could be substantially impacted for the worse.
But the USA did survive the 1960s and 1970s with an equivalent minimum wage of ~$10-$11/hr; the sky didn’t fall.
Allowing for inflation, $2.35/hour in 1970 would be about $16.50, today. It was inadequate then, $9.00/hr is abusive, now.
;>)/
Australia’s minimum wage:$16.37/hr
http://www.news.com.au/travel/australian-holidays/reasons-life-is-better-in-australia-well-kind-of/story-e6frfq8i-1226778772298?utm_source=outbrain&utm_medium=cpc&utm_campaign=travel
;>)/
Biddlin–wow, $16.37/hr minimum in Australia, that is news to me. Thought their government was firmly in the hands of big finance and the trans-national corpos, as in USA.
Imagine, you can work 40 hours and live decently; are businesses going under down under?
I’d like to see stats on the fraction of jobs in the USA that currently pay in the range federal minimum wage to 1.5x federal minimum wage (i.e. under ~$11/hr). I suspect its 25% to 35% of all jobs in the USA; which means that entry-level workers (age 16-24) do not fill even half of these jobs; most of such poorly paying jobs must be filled by those 25 and older. I’m pretty sure that a large fraction of the jobs in the USA pay no more than 50% over federal minimum wage.