The Truth About California’s $15 Minimum Wage: Is it a Good Thing?
No one likes to gamble with their job, unless they’re already looking for a new one. On the flip side, people working in minimum wage positions continue to struggle to make ends meet, and are sometimes left gambling that they’ll have enough money to cover their expenses.
In early April, California took a chance on improving the lives of the lowest-paid workers in the state, with Governor Jerry Brown signing into law a policy that will raise the state’s minimum wage to $15 by 2022 for most employees. (Small business have until 2023 to reach the $15 mark.) “This is about economic justice,” Brown said. “It’s about people. It’s about creating a little, tiny balance in a system that every day becomes more unbalanced.”
$15 minimum wage enacted statewide
California is the first state to raise the minimum wage to a flat rate of $15, regardless of location. The move has been met with applause from many proponents of raising wages, but opponents of the law still have serious concerns about how the change will affect the state’s economy at large, and in several regions throughout the state. That’s why several parties have now dubbed the law as the “economic experiment” of our times. The law could bring about widespread positive growth, as people with increased incomes are able to spend more and raise their standard of living. But if too many businesses are forced to lay off employees they can no longer afford, it could also spell disaster for the same people the law was meant to help.
Presidential candidates are debating minimum wage increases, as are fast food executives and CEOs who started paying their employees $70,000. California was the first state to make the $15 headline official, though other states are enacting similar measures with different tactics.
The one thing that works in California’s favor is that several cities in the state have already moved to enact $15 minimum wages. Los Angeles, the state’s largest city, enacted a law in July 2015 that will raise the minimum wage to $15 by 2020, two years ahead of the statewide mandate. San Francisco is well ahead of the curve, with a $15 minimum wage coming by 2018.
“California liberals” and the $15 minimum wage
Meanwhile across the country, New York also signed a $15 minimum wage increase, but only for employees in New York City. The suburbs will see that same increase by 2021, but upstate regions will only increase the minimum wage to $12.50 in that same time, effectively creating a multi-tiered system. The New York Times editorial staff called it a political compromise between Governor Andrew Cuomo and legislators who represent rural areas that could be adversely affected. Among those legislators is Assemblyman Gary Finch, who represents several counties in the upstate region.
“In the coming days, you will hear a lot about California liberals raising their state minimum wage to $15 an hour,” Finch said. “Hollywood progressives have decided it is important to pay failed actors $15 an hour to flip burgers at In-N-Out. If you think this is a policy that would help make New York more affordable for seniors, farmers, nonprofit health care providers and small businesses, possibly you should move there.”
Will the wage be a success or failure?
People who are most concerned about California’s decision point to similar economic conditions in less established cities in the state. In cities like San Francisco and San Jose where pay is already high, the costs should be absorbed quickly. But as the Times points out, inland cities like Bakersfield and Fresno have a different economic climate. In those areas, a $15 minimum wage will fall in the middle of the pay scale for all employees, affecting many more employees and businesses.
“This is a big experiment,” Arindrajit Dube, an economics professor at the University of Massachusetts at Amherst, told the Times. “In areas like Fresno, a majority of workers are likely to be directly or indirectly affected.”
Hence, the multi-tiered system in New York. Oregon is trying out a similar method, but escaped some headlines because the minimum wage in the Portland area will be $14.75 by 2022, not the magic $15. Midsize counties in Oregon will raise the wage to $13.50, and rural areas will raise it to $12.50 in the same timeframe. Still, the Times posits that a two-tiered system will only bring about greater division, and that California’s method might work better in the long term.
No matter what, we can be sure other states will be watching both methods to see which one works best in the coming years. If all goes as planned, workers across California will see a slight decrease in the wage gap. But as we’ve discussed before, simply raising the minimum wage won’t be enough to fix all of the problems surrounding wage inequality — however much of a step in the right direction it might be. The silver lining is that other states who would also like to raise the minimum wage can learn from the successes and failures California and New York ultimately experience. For better or for worse, unfortunately, it will make pawns of workers while states figure out the best way forward.