Author: Lucy Feickert
The minimum wage in California is now the highest in the nation at $10 an hour. While many argue this increase will hurt jobs and the economy, raising the minimum wage will improve standards of living for many workers and set a precedent for other governments, both state and federal, to follow. And while the new $10 per hour wage seems high compared to the former state minimum of $8 per hour, in the scheme of inflation and worker productivity, it should still be significantly higher.
California state legislature passed Assembly Bill (AB) 10 on Sept. 12 and Gov. Jerry Brown signed the bill into law on Sept. 25. While AB 10 raises the minimum wage by $2 per hour, the increase will not be immediate and will rise gradually reaching $10 per hour in 2016, according to The Los Angeles Times.
California’s 25 percent increase in minimum wage is a progressive move that will hopefully spark more change. While California is now significantly ahead of other states in minimum wage, hopefully other states will soon follow with sizable increases in their own minimum wages.
In his 2013 State of the Union Address, President Barack Obama urged Congress to raise the federal minimum wage from from $7.25 per hour to $9 per hour, an increase proportional to what is occurring in California. No legislation was passed on the issue, and many opposed Obama’s proposal. Because California will implement such an increase, the nation will be able to see how it affects the economy and poverty level. Potentially, California will be an example that convinces doubters and opponents of the benefits of a minimum wage increase.
Opponents to an increased minimum wage argue that it will simply put more spending money into the pockets of teenagers who do not truly need the work. However, according to the Department of Labor, many minimum wage workers are adults supporting their families, often as the sole bread winner of their family. When the minimum wage increases, it gives these families a greater chance of rising above the poverty line, helping the economy and society overall.
When the minimum wage increases, workers have more income to spend, and according to a study by the Federal Bank Reserve of Chicago, they spend more money on cars and other durable goods, bolstering the economy. Increasing wages paid to workers will expand the money supply, which in turn will stimulate demand and production in various economic areas, in particular the production of durable goods.
Not only does the minimum wage not meet the productivity increases of workers, but it also fails to keep pace with economic growth over the years. The highest minimum wage in recent history was in 1968 at an inflation adjusted wage of $10.55 per hour, according to an article from the Program on Inequality and the Common Good, a subset of multi-issue think tank Institute for Policy Studies. The current minimum wage is below that amount, and even if it were at $10.55 per hour, this wage is suitable only for a 1968 standard of living, not a 21st century one. If the 1968 minimum wage had kept pace with economic growth, the current wage would be around $20.
While raising the minimum wage to $10 per hour is a place to start, it is by no means an end to wage issues. A study from the Center For Economic and Policy Research examines the relationship between worker productivity and wages. According to the study, the current minimum wage should be more than doubled, at about $22 per hour, if it were to mirror worker productivity.
Ultimately, it’s unlikely that any minimum wage will get close to $20 anytime soon, but it’s important to retain the perspective of where wages could be, and should be when looking at California’s imminent increase. For now, $10 per hour is an improvement and can raise the standard of living of minimum wage workers, but improvement is not the ultimate goal in this debate by any means.
Lucy Feickert is an undeclared sophomore. She can be reached at firstname.lastname@example.org or on Twitter at @WklyLFeickert.
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