A $10 minimum wage in California is now a reality, with the State government passing the bill.
As previously reported by The Inquisitr, some wondered whether a $10 minimum wage in California could lead to a $9 Federal minimum wage as advocated by President Obama.
Multiple states besides California have been proposing a $10 minimum wage that is higher than the Federal minimum wage of $7.25. This summer, Michigan pushed for a $10 minimum wage and one Michigan restaurant already pays $12 hourly and is still profitable. Illinois already has the fourth highest state minimum wage of $8.25, but Illinois politicians want a $10 minimum in Illinois as well.
The $10 minimum wage in California was raised from the previous $8 an hour, although San Francisco has a city minimum wage of $10.50 per hour. The new bill is expected to be signed into law by the California state governor Jerry Brown and the $10 minimum wage in California will gradually be phased in over multiple years until it’s ten dollars in 2016. But the bill does not index the California minimum wage to inflation, which means there will be another fight in the future.
Democrat Luis Alejo say the $10 minimum wage will help California during the recession:
“It simply gives hardworking Californians the dignity and respect to provide for their families with their own hard-earned wages.”
The California Chamber of Commerce says the $10 minimum wage is a “jobs killer” and claims the higher minimum wage will result in a worsened unemployment rate. Businesses will supposedly respond to the $10 minimum wage by raising prices, cutting hours, and perhaps even cutting some jobs. Workers compensation payments will also go up.
Agreeing with this assessment, Republican Senator Jim Nielsen says:
“This is a classic example with how out-of-touch state leaders are. If you make something more expensive, people will buy less of it.”
But what is a fair minimum wage? An analysis by economist John Schmitt at the Center for Economic and Policy Research shows that, if the minimum wage is indexed to the official Consumer Price Index (CPI-U), then the Federal minimum wage should be $10.52 an hour. If you use the current methodology (CPI-U-RS) for calculating inflation, then the Federal minimum wage should be $9.22. Meanwhile, income inequality in the United States is growing, with 95 percent of income growth going to the rich, and the unemployment rate for the poor growing to levels that haven’t been seen since the Great Depression.
Do you think the $10 minimum wage in California is fair?