Minimum Wage Hike Passes Legislature, Awaits Governor’s Signature

Senator Mark Leno and other sponsors celebrate the passage of SB 3/ Courtesy Photo
Senator Mark Leno and other sponsors celebrate the passage of SB 3/ Courtesy Photo

It was a different scene this week.  The last two legislative sessions saw minimum wage efforts attempting to reach $13 by 2021 stall.  Now, in less than a week’s time, both houses of the legislature passed minimum wage hikes along essentially party-line votes and now await the expected signature by Governor Brown on Monday.

SEIU (Service Employees International Union) Local 2015, which qualified a measure for the November ballot, has vowed to pull back on the ballot initiative once the bill passes.

President Laphonza Butler said, “The credit for making history today belongs to the workers who spoke out and risked it all, the labor unions and community organizations who supported them, and elected leaders here in California who listened.  As a result, millions of Californians are on the path out of poverty.”

Under the bill, wage hikes would begin in 2017 at $10.50 for those businesses with 26 or more employees, with it increasing to $11 in 2018 and another dollar each year thereafter.

Once the wage hits $15, the wages will rise annually with inflation, with smaller businesses being given an additional year to implement each annual bump.

But the measure doesn’t come without its critics.  The Department of Finance believes the hike would cost California about $4 billion a year.

“The Department of Finance is opposed to this bill because it results in significant, unbudgeted costs to the General Fund,” said a report issued for a legislative hearing held last summer. “Further, Finance notes the net impact of an increased minimum wage on California’s economy and state budget is likely to be negative.”

Governor Brown has been guarded on the minimum wage hike. He argued that it must be done carefully, noting the huge potential costs to employers and the state, but once the measure qualified for the ballot with strong public support, he negotiated with unions and other advocates to protect the state in case of a downturn in the economy.

The legislation was jointly authored by Senators Mark Leno, Kevin de León and Connie M. Leyva.

“No one who is working full time in California should live in poverty due to a low wage,” said Senator Leno, D-San Francisco. “SB 3 respects and rewards work, reduces turnover, and increases productivity and consumer spending, thereby stimulating economic growth while helping low-wage workers end their dependence on public assistance. The bill takes a thoughtful approach to raising the minimum wage by giving small businesses more time to adjust to higher wages and policy makers the flexibility to respond to economic uncertainties in our future.”

“California’s minimum wage must also be a living wage,” said Senate President pro Tempore Kevin de León. “Anyone who thinks $15 an hour is too much should try living on it.”

California has the highest poverty rate in the nation. The U.S. Census Bureau reports that nearly a quarter of the state’s 38 million residents live in poverty. An employee working full time earning $10 an hour brings home just over $20,000 annually before taxes, which is just 86 percent of the federal poverty line for a family of four. As a result, many cities have taken the matter into their own hands, raising local minimum wages either by government action or at the ballot box.

“As a lifelong advocate for workers, I have always believed that everyone deserves to make a living wage that allows them to pay their bills, put food on the table and a roof over their head,” said Senator Leyva, D-Chino. “By increasing the state’s minimum wage through SB 3, California now stands poised to lead the nation in finally putting a serious dent in poverty wages that hurt workers, families and communities.”

Women are especially impacted by the minimum wage. About six in 10 minimum wage workers in California are women, according to the National Women’s Law Center.

“SB 3, which raises the minimum wage to $15 per hour, is the most important anti-poverty measure in at least 40 years,” said Michael Herald, legislative advocate with the Western Center on Law & Poverty.

SB 3 is co-sponsored by the Western Center on Law & Poverty, United Food and Commercial Workers (UFCW) and the SEIU California State Council. The bill is also supported by a long list of organizations and government leaders, including the Women’s Foundation of California, California Teachers Association, Children’s Defense Fund of California, California Association of Food Banks and California Catholic Conference of Bishops.

“UFCW is proud to stand with working families across the state struggling to make ends meet on the current minimum wage,” said Jim Araby, executive director of UFCW Western States Council. “We join many who are fighting to end income inequality and put the working poor on a pathway to livable wages.”

The large majority of employees who would be impacted by SB 3 are adults, not teens, according to the UC-Berkeley Labor Center. Just 4 percent of the workers who would benefit from the minimum wage increase are under 20 years old, and 37 percent have children.

The question is now what the impact will be. Republicans who opposed the legislation, such as Assemblymember Jay Obernolte, said during the hearing of the Assembly Appropriations Committee, “Almost invariably, the effect (of raising the minimum wage) is a rise in unemployment.”

However, an analysis by the Sacramento Bee found, “There is no clear evidence that raising the wage ‘almost invariably’ drives up unemployment. The record is mixed.”

Assemblymember Obernolte’s office, like many critics, pointed to a 2006 paper by two economists for the National Bureau of Economic Research.  They concluded that there is “a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages,” though they acknowledged “a lack of consensus” about a potential link.

The Bee, wading through the voluminous body of research, concluded that “other researchers have drawn different conclusions, including a number finding little or no effect of wage increases on employment rates.”

They write, “An oft-cited study of fast food restaurants in New Jersey and Pennsylvania, conducted by two Princeton University economists – one subsequently was elected to the American Academy of Arts and Sciences and the other later chaired President Barack Obama’s Council of Economic Advisers – found no employment decrease when New Jersey raised its wage in 1992.”

The Legislative Analyst’s Office last year analyzed the measure and concluded, “The nature and magnitude of this measure’s economic effects are highly uncertain. These effects would depend on how households and businesses respond to the higher minimum wage.”

Their analysis finds, “The higher minimum wage likely would (1) encourage more people to enter the labor force, (2) affect workers’ decisions to change jobs, and (3) allow workers to spend more money.”

On the downside it would lead some businesses to move away from low-wage workers, passing on added costs to their customers.  They find, “Overall, the price increases resulting from the measure likely would lead to a cumulative increase in the level of the CA CPI [Consumer Price Index] ranging from a few tenths of a percent to roughly 1 percent.”

They find that “likely would reduce the number of jobs in the California economy. The magnitude of this effect is highly uncertain. The net effect on employment could be close to neutral, or it could be as large as several percent of total statewide employment.”

The question is what the cumulative effect is, and that’s not clear. They write, “Change in annual state and local tax revenues potentially ranging from a loss of hundreds of millions of dollars to a gain of more than $1 billion. Changes in state revenues would affect required state budget reserves, debt payments, and funding for schools and community colleges.”

The Bee notes, “Since Seattle first started raising its minimum wage en route to $15 an hour, the unemployment rate in the Seattle area has fluctuated. It sat at 4.3 percent in April 2015, when the first pay raise kicked in, dropped to 3.6 percent in September, and rose to 5 percent in February 2016. While Obernolte cited the Seattle example as a cautionary tale, some economists say it is too early to draw firm conclusions.

Moreover, they add, “California has lifted its minimum wage twice since 2014, from $8 an hour to its current level of $10 an hour, as the state and national economies have strengthened. When the California rate rose to $9 in July 2014, the state unemployment rate was 7.4 percent. It dropped in each subsequent month of that year, finishing the year at 6.9 percent. When the minimum wage ascended to $10 in January 2016, 5.7 percent of Californians were unemployed; in February, that rate fell to 5.5 percent.”

What does that mean for the current measure?  It is hard to know.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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35 thoughts on “Minimum Wage Hike Passes Legislature, Awaits Governor’s Signature”

    1. The Pugilist

      By the time they implement the $15 an hour in 2022, the value of that salary will be just over $13 per hour in present value.  That value will then be locked into place.  Employers will look at ways to increase efficiency and cut staff, especially in the short term.  Automation has been around for a long time, I think companies have found it a double-edged sword with customers.  The self-check line is far quicker at Safeway, but most people prefer to interface with a human checker.

      1. Barack Palin

        Well, I guess we’ll just have to wait and see.  I predict much higher prices and a net loss of California jobs and companies being much less open to locating here.

  1. Frankly

    I provide financing to small business throughout California.   Most of the projects are in Southern California.  And a lot of them are warehouse and distribution centers owned by Chinese immigrants… typically a relative of someone in China that owns a manufacturing business.

    They make the products over there, and with warehouse and distribution over here, they have a nice conduit to move their goods to American consumers that have developed an expectation that they will be able to acquire reasonable quality products at the lowest possible price.

    These Chinese business people love the fact that California is raising the minimum wage by 75% between 2010 and 2022.  It will help them keep those manufacturing jobs in China, and will also allow their US warehouse and distribution business to justify more robotics and software automation instead of hiring Californians… one of the most problematically-entitled employee animals in the nation… that have just grown more so.

    When you consider the institutional forces that keep a low-wage worker locked into a low-wage life, and also those that make it harder and harder for that person to survive,  liberals own them all.

    Liberals are the ones that generally exploit even the most obscure environmental issues to block development that would otherwise help create jobs and lower the cost of housing.

    Liberals are the ones that generally demand higher taxes on business both because liberals tend to be government-class people and they don’t produce anything of value unless someone else that does produce something of value pays their (often bloated) pay and benefits through taxation… and also liberals want excess tax money to redistribute so that they, liberals, can make their world seem fairer and to satiate their obsession to save people from themselves using other people’s money.

    Liberals are the ones that demand ever-increasing business regulations in the name of the environment, safety and fairness in pursuit of some utopian perfection that does not exist and never will exist.

    Liberals protect the giant adult jobs program known as public education over the welfare of the students.   The crappy state of education results in these kids unable to secure careers in the information economy… one that liberals, conveniently, tend to dominate.

    Liberals reject competition in the health care industry and instead incrementally move to try and cooped it into a mega-entitlement program for the nation that costs many, many times more than any other industrialized nation.  They push more of these costs on business that just say “buh-bye”.

    Liberals support government-employee unions that cause government to be bloated and too expensive, thereby causing a demand for higher taxes… that chase away business and business investors from the state.

    Liberals own the higher education business, and in their business ineptitude drive the costs much higher than the rate of inflation and reduce access to people that would otherwise gain the ability to work in higher-skilled jobs.

    Low wage workers are primarily caused by liberals.  And liberals with their medial pals have done a great job deflecting the truth and shifting blame to business for outsourcing and automating labor and for moving operations overseas where labor is cheaper.  And then liberals and their media pals work to brainwash the masses to support increasing the minimum wage… so that liberals get to show the masses that they really care.

    The low-wage American worker should be livid at liberals for what they have done.

    Alas, the plan is too iron-clad.  The crappy education system ensures that these people don’t know enough to understand.  They are the ignorant masses for liberals to manipulate and then exploit the democratic system to ensure they, liberals, get to continue their great and repeated path to economic chaos.

    1. wdf1

      Frankly:  Liberals blah, blah, blah…

      Unfortunately many of the key politicians claiming a conservative identity aren’t providing a more coherent and compelling narrative, if there is one.  Hence the current Republican primary.

       

      1. Frankly

        Sure they are, but your liberal wiring, just like our President governor and state legislature wiring, either causes you to not understand it, or you reject it because it advantages others over your own selfish pursuits.

        Liberals are disadvantaged in the regular economy for some reason (I wonder how many people with liberal wiring competed in highly competitive athletics growing up?).  And so with and economic downturn liberals seize the moment to exploit the temporary misery of others to push their socialist and Marxist agenda… which if implemented shifts the economy to what is more advantageous to a liberal.

        It is an incremental march until liberals, like in this state, gain enough power to make bold moves toward their ultimate socialist, Marxist agenda.

        Most of what a liberal has and takes for granted in this life is the result of previous success of the regular economy, and other things like effective national defense and law enforcement.  But liberals cannot register a perspective for any of this.  They are overwhelmed by their sense of unfairness at each more granular level and it drives them to want to destruct what is really the good in pursuit of some unattainable and undefined utopia of perfection.

        1. wdf1

          Frankly:  Sure they are, but your liberal wiring, just like our President governor and state legislature wiring, either causes you to not understand it, or you reject it because it advantages others over your own selfish pursuits.

          I see what you’re doing there.  Rather than actually present and debate your favorable alternative and respect that other readers might be able to think for themselves, your stance is to label the skeptics, attached generalized and unfavorable characteristics, and then basically say, “you’re too ignorant to know what’s right.”  If you wouldn’t do that in your business (or would you?) why would you do that in the free market of ideas?

          Are you actually capable of a grownup, intelligent discussion?

          I used to identify personally as being conservative until I ran into folks like you.

        2. Frankly

          Wdf1 – The gloves come off over this $15 per hour minimum wage hike.  There is not any reason to debate ideas around it… it is a stupid and destructive leftist move.  I’m just calling out this BS.   It is a union-pushed thing and the damn state Democrats are doing their bidding again.

          There is no way you could have called yourself a conservative and support this.  You had mislabeled yourself.

        3. wdf1

          Frankly:   There is no way you could have called yourself a conservative and support this.  You had mislabeled yourself.

          If you are supposed to be a model conservative, I definitely wouldn’t want to be one.

          My argument is not over minimum wage.  I have said nothing one way or another about it.  My issue is over your pathetic rants.   I know you to have more brains than a rock, but it’s hard to tell sometimes.  This is how conservatives lose political arguments.  They lose their head and forget to make any positive case for their side.

           

        4. TrueBlueDevil

          There are typically straw men like “Who can live on $15 an hour?” Not many. Many can’t live on $20 or $30 an hour. The minimum wage is merely a training wage or entry level wage for lower-skilled workers. This will kill some (not all) jobs, and it will cause prices to rise further.

          The whole construct is so screwy. There are many illegal immigrants who make far more than the current minimum wage, so while they are supposed to be vulnerable, the free market actually works on the low end.

          Governor Moonbeam was supposed to be against this but quickly flip flopped.

          Any chance an initiative will be put on the ballot to reduce or kill this?

          1. David Greenwald Post author

            Depending on what “many” means, he’s probably accurate. What’s less clear is why that’s a relevant point.

    2. wdf1

      Frankly:  The crappy education system ensures that these people don’t know enough to understand.  They are the ignorant masses for liberals to manipulate and then exploit the democratic system to ensure they, liberals, get to continue their great and repeated path to economic chaos.

      That’s like a businessman blaming the failure of his venture because he claimed that potential customers were too dumb and ignorant to buy his product.  I don’t see how that justification cuts it in the business world. If that is the conservative response, then no wonder we’re in trouble.

      1. Frankly

        Very poor analogy.  Name a businessman that does that.  You can’t.  Or if you can, then that businessman was/is probably a liberal because that is the essence of victim mentality.  The real conservative business man uses every tool available to win at competition for customers.  That is the constant upward spiral of greater value.  Something that you and other public-sector experienced folks don’t have near enough understanding and consideration of.

    3. Tia Will

      Frankly

      Liberals reject competition in the health care industry and instead incrementally move to try and cooped it into a mega-entitlement program for the nation that costs many, many times more than any other industrialized nation.  They push more of these costs on business that just say “buh-bye”.”

      So much so wrong here. Competition for the most part means lack of collaboration. It means patenting and keeping others from producing medicines and products more cheaply so that they can be more affordable to more people. I have no problem with this when it is done in the service of designer shoes. I have a great deal of difficulty with it when it is used to price life saving medications, many of which have been around for decades but can now be “purchased” and the prices driven up astronomically for profit at the cost of lives. It is the antithesis of the real time sharing that truly expedites breakthroughs in medicine as has been recently seen in Zika infection research. Competition for a profit motive is the antithesis of what medicine should be about which is the promotion of health and alleviation of disease. What a shame that your ideology of competition above all else blinds you to the fact that many countries have less, not more competitive medical systems and that their populations are far ahead of ours in achieving measurably improved outcomes for their populations.

      1. Frankly

        More lives are saved… many, many, many, many more… as a result of this “ideology of competition” (your words).  Thanks for reinforcing my points.  ALL countries benefit from the drug and medical equipment discoveries and inventions that originate primarily from the US.  As I have pointed out many times, there is plenty of room for collaboration within a free market system… in fact, most major breakthroughs don’t happen without multi-entity collaboration.  It takes $1 billion… that’s right… $1 billion… to bring a new drug to market.  How would that get done in your socialist/Marxist utopia model?

        1. TrueBlueDevil

          Sounds like a Mark Levine fan. I agree, there have to be countless collaborations between doctors, scientists, researchers, etc. And the profit motive – evil evil profits – provide motivation and incentive for risk taking and countless hours of work.

          How many breakthrough inventions or drugs come from Cuba, North Korea, Spain, or France?

          I know a doctor-inventor-entrepreneur who has patents on a breakthrough procedure. He has patents in something like 24 countries, passed testing with animals, and was ready to go to clinical trials with humans. It is a far safer, considerably less invasive procedure than what is the current practice.

          When ObamaCare passed, the new taxes and regulations killed it. Venture capital disappeared. Part of the problem was that the new taxes start from day 1, even before a profit is ever realized, and it scared the money men away. It no longer penciled out.

          I started asking him about taking his invention to other countries, but they either don’t have the capital or have socialized health care, so there is no incentive to take this kind of risk on their part.

          When Tia writes “Competition for the most part means lack of collaboration.”, she shows her lack of business experience. Yes, smaller ventures may be handled by one small company. But larger ventures are often joint projects. I’ve known projects where elite consultants from one company manage the day-to-day consultants from a second, who manage engineers of the client. Large multi-billion construction projects will have program managers, project managers, and multiple partners and subs who are often hired because of their specialty and expertise and proven track record.

          Last I heard, the doctor shortage in the UK is getting worse.

        2. Tia Will

          How would that get done in your socialist/Marxist utopia model?”

          Well, that about says it all doesn’t it since I have never promoted a “Marxist utopian model.

  2. Justice4All

    I wish I could say that Im surprised by the vitriolic commentary from the Vanguard commenters, but I am not. I could talk about how the most conservative states in the country are also the poorest. Or how consumer capitalism doesnt work without a consumer class, or how prop 13 has caused artificially high property values, pricing people out of the housing market and jacking up rents, but those rational arguments would be wasted. I could talk about how free trade policies, wholesale dismantling of American industry by vulture capital firms and casino capitalism have caused great suffering in the American working class. Or how white supremacy manifests itself in an inherently unfair criminal justice system or white privilege. Or how privatization of public institutions leads to problems of un accountability (like Katehi).

    In my experience, conservative minded people do not like having their orthodoxy challenged, even if its done in a polite way. They will respond with anger, as if getting angry in a discussion will somehow improve the conservative argument, or validate their point of view.

    The fight for 15 has been a huge success. It has mobilized and empowered thousands of people who felt like they had no power in a system that doesnt listen to their concerns. 3 years ago, 15$ an hour was considered to be crazy, a pie in the sky dream, an impossibility. Now 70 million people live in states where the minimum wage of 15$. There is still a long way to go, but we are going to keep fighting and we will not leave workers behind in less enlightened states. No one who works full time should live in poverty in the richest country in the history of the world.

    1. Sam

      “The fight for 15 has been a huge success.”

      I agree it has been a success in raising the minimum wage. It remains to be seen the actual effect raising the minimum wage has on moving the working poor out of poverty.

      I am interested to learn how Prop 13 has caused artificially high property values in California.

    2. Biddlin

      “In my experience, conservative minded people do not like having their orthodoxy challenged”

      https://www.psychologytoday.com/blog/the-human-beast/201104/conservatives-big-fear-brain-study-finds

      http://www.scientificamerican.com/article/calling-truce-political-wars/

      http://www.rawstory.com/2015/10/negativity-anxiety-and-resistance-to-change-a-neuroscientist-explains-conservatives-fear-driven-political-attitudes/

      “In a 2012 study, published in the prestigious journal Behavioral and Brain Sciences, liberal and conservative participants were shown collages of both negative and positive images on a computer screen while their eye movements were recorded. While liberals were quicker to look at pleasant images, like a happy child or a cute bunny rabbit, conservatives tended to behave oppositely. They’d first inspect threatening and disturbing pictures—things like car wrecks, spiders on faces, and open wounds crawling with maggots—and would also tend to dwell on them for longer. This is what psychologists call a “negativity bias”. If you think about it, this makes a lot of sense. When attention is biased toward the negative, the result is an overly threat-conscious appraisal of one’s surroundings. Essentially, to many conservatives the world looks like a much scarier place. This would seem to explain why so many major conservative viewpoints tend to be rooted in irrational fears—like fear of the president, immigrants, Muslims, vaccinations, etc.”

      Raw Story 2016

  3. Ron

    Justice4All:  “I wish I could say that I’m surprised by the vitriolic commentary from the Vanguard commenters, but I am not.”

    I recall that you’ve stated this more than once . (It seems to imply that Vanguard commenters are all quite similar.) However, I have seen a wide range of views, on the Vanguard.

    1. Justice4All

      I have, and I dont want to paint all Vanguard commenters with a broad brush. You are correct that there is a diversity of opinion. However I do see certain frequent commenters who seem to dominate the threads with these vitriolic comments. I think you know who they are.

      1. Ron

        Justice4All:

        I think it depends on the person, and the subject.  Some may be immersed in a “conservative” ideology, while some may be immersed in a “liberal/progressive” ideology.  With others, it might depend on the particular issue (and how the issue is “labeled”, for that matter).

        And, still others might consider points made by two opposing sides – again depending on the particular issue.

        1. Barack Palin

          Yes Ron, often because one side doesn’t agree with the other they will see their views as vitriolic.  It’s no more vitriolic than their own opinions.

        2. Ron

          Not in response to anyone in particular:

          “Vitriolic” comments (defined as – “filled with bitter criticism or malice”) mostly drive people apart.  I’ll try to remember that, myself. Sometimes difficult to do, when we’re passionate about something. (Especially if we don’t trust the “opposing side’s” motives, which sometimes occurs.)

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