Minimum Wage Deal Would Avoid Ballot Fight

Local Supports in June 2015 at City Hall lobby for minimum wage hike
Local supporters in June 2015 at City Hall lobby for minimum wage hike

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

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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  1. Frankly

    Sure… avoid a state ballot where it would likely be defeated.  Instead, Democrats and unions collude to just force it all down our throats.

    We are governed by idiots and crooks.  California is heading toward a Greek tragedy ending.

      1. Sam

        It would most likely win in California anyway. It is hard to run a campaign against “Poor people deserve a raise” or “The working poor deserve a living wage”. It is difficult to show examples of when labor prices were increased significantly causing companies to produce in other countries and close their factories in the US, in a 30 second TV ad. I guess you could show people who lost good paying jobs in Flint and Detroit from the auto industry, people that worked for Hostess and those being laid off now because Oreos are going to be made in Mexico using labor that is a fraction of the cost. But, I don’t believe that people in general will understand the actual economic impacts that they are voting into law.


    1. Don Shor

      Sixty-eight percent of California voters said they support the idea of a $15 minimum wage, according to a Field Poll released Thursday….
      The Field Poll found that 47 percent of voters strongly favored raising wages to $15 and 21 percent somewhat supported the idea.
      Among the 1,555 registered voters polled by phone, 19 percent said they strongly opposed the idea, and 11 percent somewhat opposed it. Only 2 percent of respondents did not offer an opinion.
      It’s telling that so few voters are undecided on the issue and that support leads by a two-one margin, said poll director Mark DiCamillo.

      1. Miwok

        The time has come for robot drones to deliver packages, flip burgers and probably mop floors. So the only $15 an hour people will be the Robot Service people.

        When the people protesting say on camera they have been flipping burgers for 23 years, without ever advancing in their field, I really wonder what that says..

    2. wdf1

      Frankly:  California is heading toward a Greek tragedy ending.

      You’ve been saying the equivalent for several years now.  Do you think it’s really going to happen this time?

  2. Tia Will

    to just force it all down our throats.”

    It is hard for me to interpret this as “just forcing it all down our throats” when polls suggest that 68% of us actually favor the idea. As Sam pointed out on a previous thread, there will be winners and losers. I think that the real issue here as that some of those who object see themselves as the “losers”. Some are honest about this…..others not so much so.

    1. Sam

      I don’t oppose raising the minimum wage because I think that I am going to be a “loser” from the unintended consequences. Quite the opposite. I’m not on any Federal assistance tied to Federal income requirements (EIC, SNAP, WIC…), I do not have a low skilled job that can be exported to a different state, I do not live off of fixed savings that will be eroded with inflation, I do not live off a pension that has annual cost of living increased capped at a certain percentage, I do not rent property that is subject to increase as prices rise. I oppose it because it is going to hurt the low skilled and retired in this state.

      1. hpierce

        Sam…  I don’t feel at all like I’ll be a winner or loser on this measure… at this point, don’t know how I’ll vote… I do believe that the minimum wage should have been indexed in the early-late 70’s… particularly the early 70’s when inflation was running in double-digits…  I wait to be persuaded, but neither the pro nor con arguments are resonating with me… all of us employed in this family are making more or far more than the minimum wage.  Some are unemployed… some their own choice, some not…

  3. Tia Will

    Sorry Sam,

    I did not mean to imply this about you even though I referenced your comment about winners and losers. As I said at that time, all changes in economic policy benefit some and have potential harms for others. That is as true of a minimum wage increase as it is of any other policy. As I have stated, this would not be my preferred approach, but find it preferable to having people working full time and still unable to support themselves and their dependents. This is occurring to low skilled workers right now. I do not believe that we have to wait for some hypothetical injury to them in the future from rising prices.

        1. Sam

          Raising the minimum wage is not going to increase the buying power of low skilled workers that have jobs because…

          “There is no doubt that restaurateurs face higher expenses as a result of minimum wage increases, but if restaurants are raising prices to compensate…”.

          So as prices for things like rent, utilities and food rise to compensate for the higher wages then the actual buying power of a minimum wage worker will not increase.

          You also have the problem of them losing Federal benefits that are tied to Federal income levels like the Earned Income Credit from the IRS and the discounted healthcare through the Affordable Care Act thus increasing their monthly expenses.

          Raising the California EIC will increase the buying power of low skilled workers because it just gives them additional cash depending on their living situation.

        2. Miwok

          What really funny is the people who think Davis gave a raise to City employees that they do not earn, yet want to approve a raise for other workers they think deserve it.

          If the low wage people were so destitute, why do many of them raise families, buy cars, and buy houses? Because they can pretend to be injured on the job and get Disability, while keeping the other enterprises they do on the side.

          1. Don Shor

            Wow. Um, birth control isn’t foolproof. I don’t know anyone on minimum wage who is buying a house, and I don’t think they’re buying fancy cars. Pretending to be injured to collect disability is fraud; we’re all aware it happens, but I seriously doubt it is common among low-wage workers.
            Seems like quite a catch-all of dubious characterizations, to be charitable about your comments.

      1. hpierce

        Don… have heard of (close hand) of several who played the “disability/work injury game”… some were definitely legit… the ones that were not, were pretty universally in the mid/upper income brackets… no explanation, no remedy, here.  Your point was well taken, here…

  4. Justice4All

    Well, there are a few problems with your underlying argument Sam. For starters, while restaurants may raise prices to adapt to the higher labor costs, but its hardly a net negative for low wage workers. Notoriously Temple Coffee and Tea raised their prices nearly 20 percent citing the cost of the minimum wage increase in January. While they certainly incurred higher labor costs, basic math debunks their reasoning behind the price hike. If we were assume that 100% of their prices were reflective of the cost of labor, and we assumed (excluding even profit) a 12% hike in labor costs (going from 9 to 10 an hour) the prices would have risen 12% not 20. Basic math trumps the apocalyptic hyperbole that comes out of industries with elastic products.

    With this concept in mind, consider that if you make 10 an hour, and you saw your wages rise by 50% to 15 an hour, and you saw an increase of your costs rise by 8% or so, that would be an amazing deal for you, the low wage worker. The price rise is somewhat arbitrary, but even so the premise of the argument remains.

    The federal EITC and other similar programs tied to the federal poverty level are certainly flawed programs, if only that they do not account for the cost of living in the area where the individual lives. It is already a flawed system, and our broken Congress will not actually do anything of substance to address the issue. That is why power has devolved to the states and municipalities to try and address these issues the best we can. A minimum wage hike will not solve all of the problems facing low wage workers, but it will help, and its a step in the right direction.

    1. Frankly

      A minimum wage hike will not solve all of the problems facing low wage workers, but it will help, and its a step in the right direction.

      Excuse me, but you are making claims that prove you don’t have a good enough grasp of the economic factors here.  No big deal though because you are in great company.

      “I think there’s going to be job loss everywhere,” said David Neumark, an economist at the University of California, Irvine. “You get out of the big cities and California is not a rich place at all.”


      But the biggest point of ignorance of California’s liberals pushing a $15 and even a $22 minimum wage is labor automation.

      Most of the minimum wage workers are in food service.  Raise the minimum wage and suddenly the  technology to replace more workers becomes feasible.

    2. Sam

      Justice – Not sure of your point on the tea shop. Please elaborate.

      Flawed or not, and they are, the working poor are going to lose those Federal programs aimed to help them as minimum wages rise in California and that won’t be a good thing.

  5. oopsididitagain

    Having worked in the Non profit field for the past 20 years I have a question Which I am hoping someone might be able to answer. My current program in a federally funded program. When the minimum wage rose to 10 dollars an hour. In January We ended up having to let go of one of our fully time therapeutic employees. Due to the fact that for ALL STAFF are based upon our federal contracts. So our support staff went to 10 an hr. By law any Salary employee must make a min of 2 times minimum wage . Since this amount was not in out federal contract Someone loss a job and Clients lost services. Does anyone know if they took this into consideration? Our Federal grants will not increase in fact they have never increased in the past 6 years instead we were cut along with all other HOPWA service providers 25%. One thing I know is that this is going to kill a lot of non profit service providers that rely on Federal funding. I hope Im wrong but the simple raise to 10 dollars an hour cost us and our clients dramatically

      1. oopsididitagain

        Exactly so i foresee some non profits having to shut down as a result of state moving faster than the Feds. So due to California law Salaried employees would have to bump up to 30 an hour min. correct?


        1. Sam

          They would go to $24.25 when the Federal law is passed later this year. Congress would have to vote to reject the change and Obama can veto the rejection making it law. Then as the California minimum wage increased above $12.12 it would increase salaried wages eventually to $30 per hour.

          Another unintended consequence of increasing the cost of labor above demand.

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