California’s minimum wage rises to $9 an hour

Published: Monday, Jun. 30, 2014 - 9:53 pm
Last Modified: Wednesday, Jul. 2, 2014 - 7:58 am

At Krazy Mary’s Boutique in midtown Sacramento, owner Mary Kawano is already accommodating the state’s new minimum wage of $9 a hour, which goes into effect Tuesday.

To absorb the increased costs, she’s planning to improve employee performance, use stricter hiring guidelines and be more careful about ordering inventory. “I’ll just be a little more focused,” said Kawano, who’s been in business 14 years. Of her five employees, three will receive the state’s new hourly wage.

Krazy Mary’s is one of hundreds of employers statewide who will now be paying their minimum-wage employees $1 more an hour, under legislation signed into law last year by Gov. Jerry Brown. Under AB10, by state Assemblyman Luis Alejo, D-Watsonville, the state’s baseline wage will increase again – to $10 in 2016.

California’s wage hike is part of a nationwide effort in some states and communities to raise the standard of living for entry-level workers. San Francisco recently raised its hourly wage to $10.74. Seattle voted in a $15-a-hour minimum wage, effective next April.

“When consumers do not have money in their pockets, they cannot consume,” said Sen. Mark Leno, D-San Francisco, who recently introduced a bill to hike California’s minimum wage to $13 an hour in 2017. It died in committee last month. “Only when they have enough to spend does the demand for goods and services increase … (creating) a virtuous cycle upwards.”

A number of business groups, including the California Chamber of Commerce, have consistently opposed increasing the state’s minimum wage.

“Largely what minimum wage increases tend to do is make it more challenging for youth and unskilled people to find jobs,” said Roger Niello, president and CEO of the Sacramento Metro Chamber of Commerce. Entry-level jobs “that don’t require skills are the types of jobs that get people into the workforce,” he said.

Employers absorbing the new hourly wage can respond in several ways: increase prices for consumers, lay off workers or swallow the additional costs. In every instance, someone – consumer, employee or business owner – loses, Niello said.

Rather than mandating wage increases, he added, state legislatures should look to alternative regulations, such as flattening tax rates for small businesses.

As of June, 22 states and Washington, D.C., have a minimum hourly wage above the federal minimum of $7.25, according to the National Conference of State Legislatures. California’s new $9 a hour is on par with Oregon, Washington state and Washington, D.C., with the highest hourly minimum wages in the country.

The new wage increase could worsen the state’s unemployment rate, particularly among teens, said Michael Saltsman, research director of Employment Policies Institute, a Washington, D.C.-based nonprofit, which recently concluded that four of the five highest youth unemployment rates in the country are in California. According to the institute’s analysis of U.S. Census data, the Sacramento-Arden Arcade-Roseville metro region ranked as the ninth highest for unemployed teens.

Farms may switch to machines

At least one industry in California affected by the hourly wage hike says it plans to reduce its reliance on human labor.

Bryan Little, director of labor affairs at the California Farm Bureau Federation, said the state’s agricultural industry, which partly relies on minimum-wage workers, will consider switching to crops that are easier and cheaper to cultivate, as well as pursue the development of harvesting equipment and other machinery that can replace human labor where possible.

“We’ve already seen it happen,” he said, referring to more mechanized harvesting of strawberries, walnuts, tomatoes and almonds. “It’s not economically viable yet (for all crops), but there’s a lot of interest.”

Call The Bee’s Vanessa Ochavillo, (916) 326-5510.

Read more articles by Vanessa Ochavillo

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