Governor Jerry Brown has signed legislation raising California’s minimum wage over the next few years to a $15 an hour. The wailing and gnashing of teeth by employers is being heard about the coming destruction of the economy.
But I don’t believe it.
I expect that the increase in the minimum wage will result in a tremendous boost to the overall economy in California and we will see that there is in fact an increase in the standard of living across the state. The incremental costs of the increase, as they are phased in, will result in slightly higher costs in some items, possibly, or increased cost saving measures by some companies, but frankly I expect those to be minimal.
When I was in high school, lo those many years ago when Reagan was president and I was working a minimum wage job at Jack In The Box for $3.35 an hour, the employee make up was mostly teenagers like me, a few immigrants who were learning English as they prepared to get better jobs and the occasional adult who was working a second job. Gas was about a $1 a gallon, as were a pack of cigarettes.
Working fast food was by and large considered to be an entry level position that one took to fill out a resume to get a “real job” later, or to provide easy cash for a teen who would then spend it on the movies, popcorn and gas money. Minimum wage jobs are minimum wage for a reason; they are low skills positions with presumably high turnover of personnel. They are meant to be the first rung on a lifetime ladder of income increases.
Minimum wages are not to be considered an ideal base which employers are to keep employees shackled to, but rather to be a launching point for employees to rise from. The concept of the minimum wage, as with much of the labor laws in the country, is to protect against unscrupulous employers; not to facilitate them in their abusive behaviors.
Absent the traditionally low wage jobs that teens like me had, mowing lawns, painting fences and babysitting, the minimum wage is where most people start; but all too commonly these days, they also end there.
With the death of the industrial complex in America, the inventory of factory jobs that people would move into after completing a stint in one of those minimum wage entry level jobs like fast food has shrunk. The disposable society we have built has further contributed to the loss of jobs that used to be respectable and had a decent wage attached to them, like repairman for appliances. Today it’s easier to just replace a broken appliance than it is to repair it, plus it probably comes with new abilities.
For those who have minimum wage jobs, and are looking at them as an end in themselves, this increase means a shot at a slightly better living standard. But make no mistake about it; this is not a tremendous increase in reality. Over the next few years as the rate increases, from $10 to $15, the extra $5 will be taxed, at likely a 20 – 30 percent overall rate, so it’s really just a $3.50 – 4 increase at most. Assuming most workers only work a 32 hour week, which is common in the fast food/restaurant industry to avoid the “full time” status, it’s an extra $128 a week or $512 a month. No one is going to retire rich off of that.
Raising the lowest rung on the income ladder is actually going to be good for our economy thanks to the multiplier of money effect. As money is spent in an economy it creates jobs and products, as those jobs and products generate new revenue, the economy as a whole grows. Yes the price of a McDonald’s hamburger may go from $1 to $1.25 (which begs the question of just how they price it at a $1 to begin with…) but the increased funds their employees have to spend at the grocery store and local bodegas increase the overall flow of cash in the state, making everyone more money.
I know this is not a popular idea among the conservatives, the libertarians and the right wing democrats, but trust me, in the immortal words of Martha Stewart, “it’s a good thing.”
David Pisarra is a Los Angeles Divorce and Child Custody Lawyer specializing in Father’s and Men’s Rights with the Santa Monica firm of Pisarra & Grist. He welcomes your questions and comments. He can be reached at email@example.com or 310/664-9969. You can follow him on Twitter @davidpisarra.