There can be no debate about the nation’s anemic economic recovery and its effect on the working poor. While the stock market is soaring again, jobs and wages continue to lag.
The national minimum wage remains at $7.25 per hour. It’s slightly higher in California, $8 an hour, but has not increased in four years and has fallen behind nearby states. The minimum wage is $8.25 per hour in Nevada, $8.50 in Oregon and $8.67 in Washington.
In a deal reached in this final hectic week of the legislative session, Democratic leaders and the governor have rightly agreed to raise California’s minimum wage significantly – to $10 over two years. It would increase to $9 on July 1, 2014, and to $10 on Jan. 1, 2016.
The compromise calls for a more aggressive schedule than initially proposed in Assembly Bill 10, authored by Salinas Assemblyman Luis Alejo, which would not have raised the wage to $10 until 2018.
The California Chamber of Commerce is adamantly opposed – no surprise there. Calling AB 10 a “job killer,” the chamber argues that businesses are already struggling with tax increases imposed under Proposition 30 last year, higher energy bills and rising medical costs driven by the Affordable Care Act. The chamber predicts the state will lose 48,000 to 68,000 jobs if it raises the minimum wage.
But history doesn’t support that pessimistic view. Past minimum wage hikes have triggered small initial job losses, but the labor market soon adjusts and low-wage jobs come back very quickly. San Francisco and San Jose, which have enacted higher minimum wages than the state, have lower unemployment than the state overall.
Moreover, the extra money earned by low-wage workers is spent immediately in their communities, mostly on rent, food and clothing. Experience shows that the additional wages become a boon to local economies, not a drag.
Also, the notion that most minimum wage jobs at fast-food outlets or retail stores are filled by teenagers who live at home is outdated. According to the federal Bureau of Labor Statistics, the median age of fast-food workers nationally is 28; for women who make up more than two-thirds of that work force, the median age is 32.
If raising pay rates means that McDonald’s has to hike the price of a Big Mac by a little, is that really so bad?
On the other side of the equation, there is a public cost when wages slip below what families really need. Many minimum wage workers rely on food stamps to make ends meet. Their children qualify for subsidized school lunches and other government assistance. Some are homeless.
The bill has been the subject of intense debate over many months. In the end, legislative leaders and the governor have come out in favor of a significant wage boost that benefits those at the very bottom of the economic ladder. In an economy with a record-high income gap (the top 10 percent of earners took more than half of the nation’s total income last year), such an adjustment is justified and long overdue. AB 10 is designed to increase the value of work, a basic American value that both Democrats and Republicans should support.