California Gets $15 Minimum Wage

Economists Predict Effects of Gradual Increase

Both of Santa Barbara’s representatives in Sacramento signed legislation that would increase California’s minimum wage to $15 by the year 2023. Although they were members of the first legislative bodies to do so, New York’s governor Andrew Cuomo proved a few hours quicker with the pen than his California counterpart, Governor Jerry Brown. Given the disproportionately large number of low-wage workers in Santa Barbara County ​— ​where agriculture, retail, and service industries play such a dominant role ​— ​the legislation will have significant impact. The current minimum wage is $10.50 and that, under the law signed by Brown, will increase to $11 an hour in 2018 for companies with more than 26 employees, and in 2019 for companies with fewer. By a staggered series of incremental steps, it will increase to $15 by 2023 for companies with 25 employees or fewer. Brown inserted language into the bill, however, to slow down that rate of increase in the face of serious economic downturn.

Economists have long argued about the wisdom of minimum-wage laws and their impacts, and that’s not changing. Peter Rupert with UCSB’s Economic Forecast Project contended the new wage is “almost immoral” in its discriminatory impacts on under-educated, under-employed low-wage workers. He suggested employers will replace entry-level workers with automation rather than pay such high labor costs. Nelson Lichtenstein, a labor historian with UCSB, countered that the real minimum wage ​— ​when adjusted for inflation ​— ​is what it was in the 1960s and ’70s. Lichtenstein said any job losses will be compensated for by the increased earning power of those employed. “With our vast low-wage workforce, we need to shake things up,” he said. “We need to be disruptive.” He added that low-wage workers will not be the only beneficiaries. Other employees should see pay increases as employers seek to maintain existing wage ladders within their workplaces.

“Anyone who tells you they know exactly what will happen with this minimum-wage increase is living in a world of theory, not reality,” said Lucas Zucker, an organizer with CAUSE (Central Coast Alliance United for a Sustainable Economy) and a proponent of the ballot initiative that would have increased Santa Barbara’s minimum wage to $15 an hour. That initiative was withdrawn after the governor and Legislature ​— ​almost entirely along party lines ​— ​worked out a deal to raise it statewide. While economists have been at a loss to explain the abiding persistence of wage stagnation, both sides acknowledge it remains a measurable reality nationally. In fact, Rupert cited a report released by the Federal Reserve showing that today’s minimum wage buys the same amount as it did in 1950, 1986, and 2008. In Santa Barbara, wage stagnation has been even more mystifying with real wages holding steady or declining over the past 30 years, even now in the face of full employment and significant job creation.

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