The California Assembly has just passed a hike in the state minimum wage, to $7.25 (and eventually to $7.75 in 2006) from the current minimum of $6.75. However, even if the proposal passes both houses of the California Legislature, the state’s residents shouldn’t bank on the increase any time soon, as Gov. Arnold Schwarzenegger is expected to veto the increase. California’s difficulties in passing a higher minimum wage are also now echoed on a national level, as the prognosis for passing a federal increase this year is not a strong one.
Strapped with one of the nation’s highest costs of living, and a Democratic-majority legislature, California seems like a natural place for a minimum wage increase to get widespread support, both with the public and the legislature. Moreover, California’s minimum wage is the lowest in the West, with Washington ($7.16), Oregon ($7.05), and Alaska ($7.15) all outpacing California. (See San Jose Business Journal article.) Today’s vote in the Assembly was 45-29, which sends the bill to the Senate, which is acknowledged as more liberal than the Assembly, and likely to pass the bill as well. (See Los Angeles Times article.) With it being an election year, and with the bill’s easy legislative passage, it should be a slam dunk, right?
Not exactly. While Gov. Schwarzenegger (who is not up for reelection this year, unlike many state legislators) has not yet taken a position on the bill, he has said repeatedly that there are already too many regulatory burdens on California businesses. (See San Francisco Chronicle article.) And just having successfully taken on the workers’ compensation system on the basis that rising costs discouraged California firms from expanding payrolls, “I’d be very surprised if he goes with a higher minimum wage,” said political commentator Allan Hoffenblum. (See Forbes article.)
Some of the arguments against raising the minimum wage are fairly tried and true at this point. “We in government can make [higher wages] happen by ordering people to do it,” said Assemblyman Ray Haynes (R-Murrieta). “They will either do it or go out of business. They will either do it or move out of this state.” (See Los Angeles Times article.) Said Assemblyman Tony Strickland (R-Moorpark), “The free market does work, and we do have startup jobs. Not every job in California is supposed to be able to provide for a family of four.” (See San Francisco Chronicle article.) Assembly Democrats countered with statistics showing that of the estimated 1 million Californians who make the minimum wage, more than 60% were 25 or older, and that the same percentage were working full time at those wages. Democrats also argued that raising the minimum wage would keep people off welfare programs. “When wages are kept low, taxpayers make up the difference,” said Assemblywoman Sally Lieber (D-Mountain View), author of the bill. (See Los Angeles Times article.)
Even if the minimum wage increase does not ultimately pass, however, California is still one of only eleven states and the District of Columbia which set a minimum wage above the federal minimum of $5.15 per hour. Some California cities also set minimum wages above the Assembly bill’s target: San Francisco has a minimum wage of $8.50 per hour and a number of California cities have passed “living wage” measures to boost pay for certain workers above the state minimum. (See Forbes article.) In the rest of the country, workers await action by Congress to pass an increase to the federal minimum wage, which may not happen very soon either.
Since the federal minimum wage’s creation as part of the New Deal in 1938, the minimum wage has been raised 25 times, last on Sept. 1, 1997. Only in the period between 1981 and 1990 has it taken longer to raise the minimum wage. (See Houston Chronicle article.) Since the last increase to $5.15, the value of that increase has been completely eaten away, returning the minimum wage to a historically low level in terms of purchasing power. In 2004 dollars, the 1995 minimum wage was worth $5.19, compared to the current $5.15 minimum wage. A full-time worker earning the minimum wage back in 1968, when Congress raised the minimum wage more regularly to keep pace with inflation, would have made the equivalent of $15,431 today: 44% more than today’s full-time minimum wage worker. (See EPI Briefing Paper.) More and more workers are also likely to face the consequences of a low minimum wage in the days to come, as much of the job growth in this country — in such job categories as home health aides, food preparation workers, security guards, cashiers, teachers’ assistants and nursing aides — are on the bottom rungs of the income ladder. (See Houston Chronicle article.)
Senate Republicans have thus far prevented a proposed minimum wage increase, sponsored by Sen. Edward M. Kennedy, from going forward. Even if it were to pass through Congress, it would face a president who feels similarly to California’s Gov. Schwarzenegger. “As governor of Texas, [President George W.] Bush was responsible for the lowest minimum wage in the country. His record is not somebody who’s likely to be pushing this issue,” says Josh Mason, policy director of the Working Families Party. Democratic presidential candidate John Kerry supports a minimum wage increase, however, so the November election will help determine whether workers at the bottom rung see higher wages any time soon. However, as President Franklin Roosevelt pointed out before the first minimum wage law was passed,
No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages I mean more than a bare subsistence level—I mean the wages of a decent living.
Additional Resources on the Minimum Wage:
Economic Policy Institute: No Longer Getting By:An Increase in the Minimum Wage Is Long Overdue
Working Families Party: $5.15 Is Not Enough