Jerry Brown, legislators reach smart minimum wage compromise

Gov. Jerry Brown, center, hugs emotional Burger King employee Holly Diaz, 38, of Sacramento on Monday.
Gov. Jerry Brown, center, hugs emotional Burger King employee Holly Diaz, 38, of Sacramento on Monday. rbyer@sacbee.com

Gov. Jerry Brown, legislators and organized labor leaders were correct to compromise, avert an initiative fight to raise the minimum wage to $15 by 2022 and soften the impact on some businesses, somewhat.

Brown and Senate President Pro Tem Kevin de León on Monday proclaimed that the deal would help people at the lowest rungs of the workforce. It will do that, though in this high-cost state, no one will be getting rich at $15 an hour, or $31,200 annually in 2022.

United Healthcare Workers West, an arm of the Service Employees International Union, had gathered sufficient signatures to place one minimum wage measure on the November ballot to raise the wage to $15 by 2021. Other unions including the Service Employees International Union statewide council pushed a separate $15 measure. Given the favorable polling, voters probably would have approved both measures.

Assuming the Legislature approves the deal, neither measure will appear on the ballot. That will save proponents and opponents millions, if not tens of millions, in campaign costs. Don’t pity the political consultants who will forgo a payday. The compromise will provide benefits for much of the rest of the state, especially the 2.2 million people who subsist on the minimum wage.

Under the deal, the wage, which is $10 now, will rise to $10.50 on Jan. 1, 2017, for businesses that have 26 or more employees, and $1 each year after that until 2022, when it will hit $15. Businesses with fewer than 26 employees will have an extra year to comply with each step.

Importantly, the deal includes annual cost-of-living increases of as much as 3.5 percent after 2022, depending on the consumer price index. For the first time, low-wage workers will be able to count on a raise as prices rise. Brown said the proposal would permit future governors to delay the increases in economic downturns.

Compromise or not, the deal doesn’t end what has been a perennial issue. Nothing precludes local initiatives that seek to raise the wage beyond $15. And any governor who would try to deny increases in economic downturns would face withering political attacks.

On Monday, Brown said the measure would add $20 million in costs to the coming state budget, and more in years to come. The impact also will ripple through the rest of the economy, adding to upward pressure on costs for everything from child care to restaurants and hotel stays.

Some marginal businesses will be hurt as wages rise. The governor acknowledged that a higher minimum could accelerate mechanization, as larger companies invest in machines to replace humans in the workforce. “Higher wages lead to automation, and automation leads to further investment in the economy,” Brown said.

On balance, the governor, legislators and labor leaders were right to compromise, and avoid making law by the blunt instrument that is direct democracy. A higher minimum wage won’t lift people out of poverty. But it will help people who are most in need of a hand.