California’s minimum wage victory: More to Come?

In March, California announced something truly unprecedented: A deal on minimum wage that would push the state’s minimum wage to the highest in the country. No matter where Californians work, they’re supposed to earn $15/hour by the end of the incrementally increased wage programme, with some caveats. The governor can step wages back down ‘if the economy falters,’ and of course some Californians are subject to subminimum wage, specifically disabled people. Is California setting an example for the rest of the country to follow?

California already has one of the highest minimum wages in the country — Washington DC beats us out by $0.50. This reflects the fact that the cost of living in California is extremely high, and the state also hosts a lot of progressive agitators who push on better wages and benefits for residents. Cities like San Francisco and Oakland have pushed even harder, developing more comprehensive health plan requirements, better minimum wages, and other protections for workers in a climate where it’s extremely expensive to get by.

Still, minimum wage is not keeping place with inflation. Someone earning $10 hourly and working 40 hours a week will not be able to survive in most parts of California. Many people work multiple jobs in an attempt to keep up, and debt is a perennial issue — many people have limited savings and definitely don’t have things like disability insurance and other means to protect themselves if they suddenly lose their jobs or are unable to work. A perilous existence is wildly unhealthy for everyone.

One approach to this problem is to raise the minimum wage to reflect real world inflationary costs. Some regions of Califoria don’t necessarily need a $15 minimum, but it’s not going to hurt workers. Others, arguably, need an even higher wage. But $15 across the board is an excellent starting point and a powerful message. As more and more cities buy into the fight for $15, a state taking it on will create a framework that other states have to follow, if they want to be seen as progressive.

Opponents  trot out a lot of the same arguments: It’s too expensive to implement, they’ll go out of business, they’ll have to fire workers, the cost of goods and services will go up, etc etc. I’m really tired of hearing these arguments — especially from ostensibly progressive businesses that like to whine about minimum wage increases, like, what, seriously, what are you paying your workers now, Oh Wise and Progressive Berkeley Store That Totally Cares About Its Staff?

Here’s the thing: Economically speaking, a higher minimum wage benefits everyone. Lifting people out of poverty is a net social good, but from a utilitarian perspective, it’s also a net economic good. People with more money like to spend it, and those wages will be flowing back into the communities they came from as people apply their earnings to products and services they need or want but couldn’t afford before. That in turn fuels the ability to meet minimum wage requirements in addition to payroll taxes, insurance, and other overhead costs that people generally don’t see unless they’re self-employed and dealing with them firsthand.

Moreover, the increase being proposed is incremental. Leaping from $10 to $15 overnight would present a hardship and no one should argue otherwise. But adding a dollar a year, or even less, creates a slow, steady, stepped minimum wage increase that allows businesses to adjust — and allows workers to get used to a new economic structure where they have more spending power. In the first few years, spending patterns might not change significantly because they’re still adjusting to a living wage. However, once the wage increase is fully implemented and stabilised, workers will be spending that money, growing the economy, participating more actively in their communities.

I’m excited about all of this — living wages are a net good and an important thing, California’s economy could certainly use the help, and many small communities are struggling due to an outflow of cash that makes it hard for local business to survive. Keeping money in small communities is critical and this is one facet of addressing the problem, which is why employers should be excited about wage increases. And some are, illustration that they can think behind limited, knee-jerk reactions to policy changes that, yes, affect their bottom line.

When it comes to other states, there are going to be major challenges. Larger companies will be launching huge campaigns against the measure, as will organizations like the Chamber of Commerce (not to be confused with smaller regional Chambers of Commerce, most of which are perfectly nice organisations focused on improving local businesses and helping people establish their own companies). Similarly, many Republicans are going to be weighing in with their own opinions, threatening people with the terror of job losses, businesses moving out of state, and other horrors that haven’t actually been borne out when cities have implemented stepped minimum wage increases to adjust wage parity concerns.

Everyone deserves to be paid well, and I am glad the state’s officials made the right decision, one rooted in a respect for their fellow humans and a desire to improve the state’s economy. Yes, there will be some short-term consequences, some of which will be detrimental to some individuals and companies, but in the long term, the net benefits are huge — and sometimes, it’s necessary to make short-term sacrifices with the goal of addressing systemic injustice. This will make California better, from the self-worth of janitors to the bank accounts of family businesses.

Image: OFL Communications Department, Flickr