Major newspapers in the state are reporting that Governor Jerry Brown, labor unions and state lawmakers have reached a deal to raise California’s minimum wage to $15 an hour over time, which would avert a costly ballot fight. Twice, state lawmakers have failed to pass a more modest $13 an hour minimum wage law, however, the qualification of a state ballot measure and favorable polling probably gave supporters the leverage they needed to push the deal through.
The Sacramento Bee reports that the deal was discussed by labor groups in a teleconference and it came after “intense advocacy by labor unions and statewide polls showing strong support for increasing the state’s mandatory minimum wage beyond its current $10 an hour.” The Bee added that the deal would call for wages to reach $15 by 2022, linking further increases to inflation, while small businesses would be given an additional year.
They noted, “It also appears to include a concession to labor unions, who advocated for paid sick time for home health care workers.”
This comes after a Public Policy Institute of California poll last week showed that 81 percent of likely voters believe the gap between rich and poor is widening, and 58 percent believe that the government should do more to close that gap.
The deal lengthens the time allotted by the ballot initiative, which called for $15 an hour by 2021, and it lengthens the time for small businesses to 2023.
The sponsors note, “Many working Californians, including parents and seniors, have full-time jobs yet struggle to make ends meet. The minimum wage has not kept pace with the cost of living and is worth less today than it was 50 years ago. This loss of purchasing power means millions of Californians are unable to afford an adequate standard of living, which harms families and the State’s economy and budget.
“Almost one-quarter of California residents live in poverty? More than half of California minimum wage earners are over 30 years old and thirty percent have children? Californians cannot support a family on the current minimum wage of $10 per hour, or $20,800 per year, for people working full time,” they write. “Despite being employed full-time, Californians who are paid the current minimum wage often must rely on the State’s social safety net to meet their basic needs.”
“The purchasing power of the minimum wage will continue to erode if it is not adjusted yearly to reflect increases in the cost of living. Raising the minimum wage will increase the earnings of many Medi-Cal recipients, making them eligible for federal subsidies on California’s health benefit exchange, saving the State millions of dollars a year in Medi-Cal costs. Raising the minimum wage will boost economic activity and increase sales and income taxes.”
The statewide effort avoids the problem that some have cited in going city-by-city to impose minimum wage. A few years ago, the Davis Enterprise, in running an editorial against the local approach argued, “We oppose a city-by-city approach to the minimum wage. The state is the appropriate place for this change to occur.”
“California has led the country on environmental, health and civil rights protections and it’s only appropriate that we would become the first state to enact a minimum wage that allows millions of families to live in dignity,” Los Angeles County Supervisor Sheila Kuehl said in a statement.
But others have opposed such an effort.
The California Chamber of Commerce said earlier this month that it would oppose any state-wide ballot initiatives for a $15 minimum wage, arguing that it would create new costs for state and local governments as well as businesses.
“Under these initiatives, California small businesses will also bear the burden of facing higher costs every year with the inclusion of a CPI [Consumer Price Index] escalator,” said CalChamber President and CEO Allan Zaremberg. “Oftentimes, even in recessions, prices go up, and small businesses will be required to pay even more when they are making less. This is an unsustainable model that is bad for business and will hurt the very employees this wage increase seeks to help.”
The impact of a minimum wage hike on jobs remains controversial. However, one study released late in 2015 by Cornell University’s School of Hotel Administration focusing on restaurants found that neither the restaurants nor their employees have suffered significant losses as a result of wage hikes in the past.
“There is no doubt that restaurateurs face higher expenses as a result of minimum wage increases, but if restaurants are raising prices to compensate, those increases do not appear to decrease demand or profitability enough to sizably or reliably decrease either the number of restaurants or the number of employees,” Michael Lynn, a co-author and professor of consumer behavior and marketing, said in a press release.
A Field Poll from August 2015 showed that about seven out of 10 voters favored the measure, with nearly half saying they strongly favored it.
—David M. Greenwald reporting