California's minimum wage hike may be a harbinger

Known for trendsetting legislation, the Golden State is slated to become the first to guarantee $10 an hour as the baseline rate.

By Aimee Picchi Sep 16, 2013 11:41AM

A McDonald's employee prepares an order at a McDonald's restaurant on April 19, 2011 in San Francisco, Calif. (© Justin Sullivan/Getty Images)In the political battle over the minimum wage, California is striking out on its own and planting its flag squarely in progressive territory. 


That's because the state's lawmakers are moving forward with a $10 hourly rate, while a fierce national debate rages over the federal baseline wage. Across the country, fast-food workers are organizing walkouts to protest for higher pay, while conservatives and business leaders caution that raising the minimum wage would hurt the economy and stall job growth. 


The question is whether California is a trendsetter or a lonely outlier when it comes to the minimum wage. While President Barack Obama is pushing for a $9 federally mandated wage, others are calling for even higher increases, citing the difficulties of trying to live on the current federal minimum of $7.25 an hour, or about $15,000 per year. 


California's groundbreaking bill was passed by the legislature on Thursday, and Gov. Jerry Brown is pledging support for the measure, which would bump up California's current $8 base wage to $9 an hour by next July and $10 by early 2016.


That would make California the first state to set its wage at $10 an hour, although several could be near that rate by 2016 because 10 states index their minimum wage to the consumer -price index, The Journal notes. 


While California is known for being a political trendsetter, there's significant opposition to the measure within the state. 


"California businesses are already struggling with significant cost increases over the next three years," Jennifer Barrera of the California Chamber of Commerce wrote in a letter to lawmakers. "Unemployment rates in various California counties are still as high as 26%. Such a significant increase in the minimum wage may jeopardize any economic recovery California is enjoying."


But a recent poll found that most American adults want the minimum wage boosted to $10.10 an hour. Even a majority of Republicans are pushing for the hike.


Fast-food workers from McDonald's (MCD) and other restaurants staged walkouts last month in protesting for a higher minimum wage. And some critics say low wages paid by Wal-Mart (WMT) end up taxing other Americans, because minimum-wage workers are forced to rely on food stamps and other government aid to make ends meet. 


Follow Aimee Picchi on Twitter at @aimeepicchi


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403Comments
Sep 16, 2013 12:30PM
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As if California hasn't done enough to chase businesses out of the state...
Sep 16, 2013 12:23PM
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All that does is raise the prices of their goods and put people out of work. These are entry level jobs or secondary jobs. They aren't meant to be the staple of somebodies main source of income. Jerry Brown doesn't have the common sense to blow his own nose. Only him and fellow democrats could allow illegals to get drivers licenses. And I am sure it will be illegal for cops to ask for proof of insurance because of racial profiling. And I am pretty sure they will somehow  be allowed to vote on all our elections as well.
Sep 16, 2013 12:29PM
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A $10 minimum wage will make a lot of liberals FEEL good, and that's a good thing, but it's not economically sustainable.  It will lead to job losses, price increases and inflation - all factors that CONTRIBUTE to poverty instead of LESSENING it.

 

Such a legislation will turn out to be an excellent example of what happens when you FEEL before you THINK.  One of the U.S.'s biggest problems is that we have too many hysterical people who allow themselves to be controlled by their emotions.

Sep 16, 2013 12:43PM
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If $10 is good isn't $20 better.  Might as well make it $50 to ensure fairness.  If something other than supply and demand drives labor wages what should determine what wages should be and who they should apply to.  Doesn't raising the minimum wage just increase the cost of goods and services across the board? 
Sep 16, 2013 12:17PM
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They aren't "forced to rely on food stamps and other government aid to make ends meet," they make that choice.  I support a slightly higher min. wage.  But min. wage shouldn't need to support a family.  Flipping burgers and bagging groceries weren't meant to be lifelong careers.  They are temporary jobs for students, teens, and people starting out and trying to get a little extra for a down-payment on a home.
Sep 16, 2013 2:08PM
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BTW - last time I checked, employment at these horrible, low wage places is VOLUNTARY.  So when these employees submitted their application, went throught the hiring process and were offered jobs, they KNEW how much they were getting paid and knew what the earnings potential was for their job description.  Now they expect their employers to change the wage because these workers feel they are ENTITLED to more?  Go, apply for other, better paying jobs.  Not qualified?  Go to school at nights to get the education to get ahead. Schools loan money to those who wish to further themselves.  I understand that most of us have families and other obligations but I also understand that only I can take the intitive to get ahead. It is not everyone else's responsibility (ie. my employer, the goverment, my parents) to pay for my debts. 
Sep 16, 2013 12:53PM
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Be careful what you wish for...
If the wage is raised to $10.00 the majority of the current "whining" employees at fast food restaurants will be replaced with a "better", more educated and responsible employees...

Sep 16, 2013 12:11PM
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I predict all the McDonalds in South Central, Oakland and other finer areas of California will close after the prices go up and customers can no longer afford the prices.  Then the people that need these jobs will not have them.  THe water fall of economic collapse in poorer areas of the state will hurt those that this tries to help the most.
Sep 16, 2013 12:47PM
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So many factors to consider:  Interesting that this bill would increase the wage to $10 in 2016, instead of immediately or at the beginning of next year.  If wage increases are so necessary, why wait? 

Why would anyone work hard at their $8/hr job now, when they automatically get a 12.5% raise come next July when the wage goes up to $9/hr, regardless of their effort or production?  If I was an employer in CA, I'd immediately freeze all wages and give no raises.  No reason to give a 50 cent per hour raise in the next couple of months if the gov is mandating a $1/hr increase next summer. 

Wonder how many businesses will close or move out of state as a direct result of this law?  Worse yet, wonder how many businesses will never even get started because of the prohibitive labor costs.  Anyone who has started a business knows, the first couple of years are brutal and pennies are stretched as it is.  Jack up labor costs by 12-20% and the effect is keeping plenty of potential businesses from even opening.

Sep 16, 2013 1:47PM
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In-N-Out Burger founded in California have 281 stores in 5 states have a starting pay of $10 per hour with benefits for part-time employees.  Their prices are low, quality are high, people flock to the stores every night and consistently voted the BEST Burger in California.  My wife, teenage  son and myself can have a filling meal for under $15.
Sep 16, 2013 1:10PM
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This is by design, the K12 system can't even teach 50% of the 50% that don't drop out to even read. It produces dem voters for life dependent on government. Add in some fatherless kids and even more.

 

Min wage is now a voter livestock career.

Sep 16, 2013 1:25PM
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I dont know how many times the minimum wage has been bumped up since its inception, but the poor have never benefited from it.  Why do people STILL think it is going to be some major victory for them this time?

Sep 16, 2013 1:56PM
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If we don't let market forces work, we will all be shafted. I go out to eat less and less because of the costs involved. Just a rough estimate of the cost of a fast food meal is between 8-10$ and maybe labor cost make up 25-30% of that??? (someone that actually is in the B can correct the numbers). Are you now willing to pay up to 13$ for a fast food meal? And we haven't even started to add in Obama care costs that will add to the price of a burger.

 

And why should we make a law that flipping burgers should provide a wage to support a family ? Is this  the American Dream now? Don't educate yourself, work at a fast food place to make a "Living Wage", get the government to back a loan that you cant afford & default on that ... but get to keep the house anyway (the American tax payers can afford it)?

 

from 7.25$ moved to 10$/hour?? Quick, someone tell my boss he has to pay me 38% more money ....hahahahaha

 

Sep 16, 2013 11:49AM
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Depending on where you live in California (Silicon Valley vs. rural areas in the east) there are huge differences in the cost of living. A $2500 a month 2 bedroom in San Jose or San Francisco would go for $500 in other parts of the state. While I think $10 an hour is reasonable for large city living it may be too high for rural areas with low costs of living. A county minimum wage would work much better.
Sep 16, 2013 12:59PM
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This will only result in an increase in the prices of services and commodities, making the purchasing power of the wage increase the same. 
Sep 16, 2013 1:51PM
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Let us NOT forget that McDonald's is a franchise. When you are a franchise owner, you are footing the cost of the entire store, working 80 - 100 hours a week and generally paying a share of the sales to the corporation (unless you were smart enough to set up your payment schedule on a sliding scale). So it is the franchise owner paying this increase, not McDonald's. The corporation also sets the guildelines that the franchise must follow as to what franchise can charge for set goods. It is usually done based on location and you must stay within parameters of the set guidelines. For instance, McDonald's may say that all restaraunts located within a tier one city can charge between $1.29 and $1.39 for a cheeseburger. So, the franchise owner is forced to pay their workers $5 more but cannot raise the price of goods more than $0.10. Please tell me the logic in which this is fair. (if your logic is that franchise owners are filthy rich, you are wrong - the big bucks are when one owns SEVERAL franchises and can share the costs across one business)
Sep 16, 2013 12:47PM
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CA, land of losers would want to raise inflation, I mean min wage...
Sep 16, 2013 12:49PM
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Yeah! Let's raise the minimum wage so we can collect more taxes. The government will need the money if they get booted out as a state.
Sep 16, 2013 1:45PM
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Here in Austin and the surrounding cities we pay 12-15 and hour for fast food workers. Signs on just about every fast food place saying help wanted. Would you really want a homeless person making your food? Oh and we never slowed down in the housing crash and not going bankrupt. Seems paying a fair wage works. These workers can afford to buy things and keep our economy strong. Places that fear paying more, yes your people will leave to go to a better place for a higher paying job and yes your city will go bankrupt because of it. Detroit ring a bell? But them poor CEO's need their multi million $ bonus right?

Sep 16, 2013 3:03PM
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I listened to one of the striking fast food industry workers being interviewed. Here are her points. She needs to make enough money to:
Have a cell phone (probably a smart phone).
Cable TV.
She is a single mom of 3 children and she need enough money to fully provide for them.
I get the wants to make money to provide for all of her kids. But, why is she single with 3 kids? Our low wage system is not set up to fully provide for a single wage earner with 3 children. Not to mention pay for cable and a cell phone. She also had tattoos and used bad grammar. So, the youth are not getting educated and now they want to be subsidize for their lack of earning power. Yes, we are being dumbed down.
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