California Minimum Wage Bill: A Disaster For Blue-Collar Workers
This past Monday, progress stalled on the California State Senate's proposal to raise the state's minimum wage from $8 an hour to $9.25 an hour. The cause of the vote's delay is the bill's cost, as any bill costing the state's general fund $50,000 or more must be voted on later in the Senate's session. In many ways the delay is a good thing, because it forces the state senators to further examine the bill's effects on the very people it is trying to protect.
While federal law dictates that all states must have a minimum wage of at least $7.25, the California minimum wage is already 75 cents higher than the federally mandated minimum wage. California legislators are not discussing if they should raise the state minimum wage, but how much they should raise it by. This is the wrong conversation entirely. Any raise in minimum wage will increase unemployment among blue-collar workers.
While it is widely accepted that the minimum wage makes it more difficult for teenage job-seekers to find employment, many point out that minimum-wage laws are not there for people seeking part-time employment, but for blue-collar workers who must live off their hourly wage. This was the sentiment expressed by President Obama in this year's State of the Union: "A family with two kids that earns the minimum wage still lives below the poverty line." However, this is a very uncommon scenario. According to The Bureau of Labor Statistics only 1.7 million of the nation's 73.9 million hourly wage-earners are paid exactly the federal minimum wage, and half of those workers are under age 25. Furthermore, a 1992 study shows that few workers are stuck at minimum wage permanently, so there is plenty of upward mobility for the president's hypothetical blue collar family.
However, let's assume that this family does exist. The president's blue-collar family resides in California, and that family's income earner is being paid the current California minimum wage of $8 an hour as a fry cook at his local fast food restaurant. The employer keeps him because his value to the business is equal to his pay. Should California raise the minimum wage to $9.25, the relationship would no longer be mutually beneficial, as the fry cook's performance would not be worth the new minimum wage. Hence, his employer could afford to keep him and our fry cook would be unemployed. The minimum wage increase would not raise his hourly wage from $8 to $9.25, but decrease it from $8 to $0.
Currently, California has the ninth highest unemployment rate in the union. Hopefully, California state senators will use this extra time before they vote on the proposed increase to think about how an increase will exacerbate the problem, and hurt minimum-wage-earning families.