Will California minimum wage boost benefit lower income workers? - New York News

Will California minimum wage boost benefit lower income workers?

Updated:

By: Eric Schulzke, Deseret News

California Gov. Jerry Brown has pushed his state into uncharted territory, signing a bill last week to hike the state's minimum wage from $8 an hour to $10 an hour over the next three years. California thus becomes the first state to target a $10 minimum, edging ahead of 10 states that have their minimum wage indexed to inflation.

The highest minimum wage at the moment is Washington state, at $9.19 an hour, followed by Oregon at $8.95 an hour. The current federal minimum, established in 2009, is $7.25.

"We have created a system where we pay workers less but need them to spend more," said the bill's sponsor, state assemblyman Luis Alejo, in a statement. "That causes middle-class families to fall down the economic ladder. It's the reason our middle class is shrinking and the reason we are facing the largest gap between upper- and lower-income Californians in at least 30 years."

Strong public support

The move comes in the midst of a nationwide protest movement aimed largely at fast food institutions, including strikes in 60 cities in August. It also comes against a backdrop of strong public support.

The law's supporters hope it will boost income on the lower rungs, which will both attack poverty and stimulate the economy as low-income workers consume more goods. Opponents of the wage hike argue it will reduce employment opportunities for entry-level workers.

A recent Gallup poll found that 71 percent of Americans favored increasing the federal minimum to $9 an hour, including strong majorities in nearly every demographic. Republicans were almost evenly divided, while 91 percent of Democrats and 68 percent of independents favored the hike.

Opposition to raising the minimum wage is a "philosophical view that isn't shared by most people," said Gary Burtless, a senior fellow at the Brookings Institution.

Undercutting employment?

Opposition also came from small businesses that employ low-wage workers, including the restaurant industry.

“The state mandating a 25 percent pay increase over an 18-month period is a back breaker for many in our industry,” California Restaurant Association president Jot Condie said in a statement. “Contrast that to the state negotiating with its largest union a 4.5 percent increase over three years that the governor called ‘a fair proposal.' The private sector is no different. Given the economics in our industry, where restaurants operate at very thin profit margins, a 25 percent increase in labor costs will result in fewer job opportunities for Californians looking to get back on their feet.”

Small business fears are exaggerated and perhaps in error, argues Burtless, pointing to a study comparing employment in restaurants along the Delaware river between New Jersey and Pennsylvania, shortly after New Jersey jacked its minimum wage from $0.80 to $5.05 in 1992.

The researchers found that what little effect there was actually played out in favor of New Jersey businesses with the higher minimum wage, Burtless noted. "A simple explanation is that by paying the young people who work in fast food a higher wage, there is a little less turnover and so employers have fewer vacancies on average.

"The New Jersey fast food industry went out and argued, 'This is going to be a disaster for us,'" Burtless said, "but in fact (the state's) employment stayed higher that it did right across the Delaware River."

Poor targeting?

"One in six fast-food workers is a single parent supporting children," said Michael Saltsman, a research fellow at the Employment Policies Institute, arguing that minimum-wage increases are poorly targeted as a means to help the poor.

According to Saltsman, 60 percent of those living in poverty would see no benefit from a minimum-wage increase, and the majority of those working at minimum wage do not live in poor households. About 50 percent of minimum wage workers are between 16 and 24, Saltsman said, and many of those are not supporting families.

"This is not the most effective way to get benefits to the people you are trying to help," Saltsman said, arguing that an expanded earned income tax credit would be better policy.

"This is a common argument against the minimum wage," said Tsedeye Gebreselassie, a staff attorney is the National Employment Law Project. "You need both," she said. "You need a strong wage floor to pay these workers, and you need a strong EITC that incentivizes work. It's not an either or."


Original Post

Copyright 2013 Deseret Digital Media, Inc.

  • Local NewsLocal NewsMore>>

  • Record stores survive and thrive in Brooklyn

    Record stores survive and thrive in Brooklyn

    Friday, April 18 2014 10:59 PM EDT2014-04-19 02:59:51 GMT
    When you hear about a place that still sells records, located in a hip neighborhood in the borough of Brooklyn, you enter that store with certain expectations. One of them being: you hope the guy behind the counter talks about music the way Cory Fierman does."I think it's just like the most important thing to you," he says. "I don't know how to describe it. It's the most important thing to me. It's like another language."Cory manages Greenpoint's Academy Records Annex, where they want you ...
    When you hear about a place that still sells records, located in a hip neighborhood in the borough of Brooklyn, you enter that store with certain expectations. One of them being: you hope the guy behind the counter talks about music the way Cory Fierman does."I think it's just like the most important thing to you," he says. "I don't know how to describe it. It's the most important thing to me. It's like another language."Cory manages Greenpoint's Academy Records Annex, where they want you ...
  • Queens Beer Week kicks off

    Queens Beer Week kicks off

    Friday, April 18 2014 10:19 PM EDT2014-04-19 02:19:20 GMT
    Queens wants to be known as New York City's beer capital. Queens Beer Week kicked off on Friday to celebrate the borough's crafty breweries and the more than 60 venues that serve their beer. Dan Bronson of Crescent and Vine in Astoria is the bearded brains behind the inaugural Queens Beer Week. He organized it all. The nine-day celebration of beers brewed in Queens.
    Queens wants to be known as New York City's beer capital. Queens Beer Week kicked off on Friday to celebrate the borough's crafty breweries and the more than 60 venues that serve their beer. Dan Bronson of Crescent and Vine in Astoria is the bearded brains behind the inaugural Queens Beer Week. He organized it all. The nine-day celebration of beers brewed in Queens.
  • Woman wanted for baby snatch attempt in custody

    Woman wanted for baby snatch attempt in custody

    Friday, April 18 2014 9:57 PM EDT2014-04-19 01:57:17 GMT
    Police have taken into custody the woman believed to have tried to push a stroller with a baby inside away from a nanny in Chelsea. Tara Anne McDonald, 46, was being evaluated at a hospital Friday night. The attempted kidnapping occurred on 8th Ave. and 17th St. at about 3:45 p.m. on Thursday, police said.
    Police have taken into custody the woman believed to have tried to push a stroller with a baby inside away from a nanny in Chelsea. Tara Anne McDonald, 46, was being evaluated at a hospital Friday night. The attempted kidnapping occurred on 8th Ave. and 17th St. at about 3:45 p.m. on Thursday, police said.
Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices