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California Enacts Highest Statewide Minimum Wage In US

Photo caption:

Photo credit: Associated Press

California Gov. Jerry Brown discusses proposed legislation to increase the state's minimum wage to $15 per hour by 2022, during a news conference in Sacramento, March 28, 2016.

California Enacts Highest Statewide Minimum Wage In US

GUEST:

Peter Brownell, research director, Center on Policy Initiatives

Transcript

Gov. Jerry Brown signed a bill into law Monday giving California the nation's highest statewide minimum wage of $15 an hour by 2022.

That and a similar effort in New York mark the most ambitious moves yet to close the national divide between rich and poor. Experts say other states may follow, given Congress' reluctance to act despite entreaties from President Barack Obama.

Republicans and business groups warn that the move could cost thousands of jobs, while a legislative analysis puts the ultimate cost to taxpayers at $3.6 billion a year in higher pay for government employees.

A $15 base wage will have "devastating impacts on small businesses in California," Tom Scott, executive director of the state branch of the National Federation of Independent Business, said in a statement. "Ignoring the voices and concerns of the vast majority of job creators in this state is deeply concerning and illustrates why many feel Sacramento is broken."

Democrats who control the Legislature approved the compromise legislation Thursday, days after the agreement was announced. The measure passed with no Republican support.

The bill will bump the state's $10 hourly minimum by 50 cents next year and to $11 in 2018.

Hourly $1 raises will then come every January until 2022, unless the governor imposes a delay during an economic recession. Businesses with 25 or fewer employees have an extra year to comply.

Wages will rise with inflation each year thereafter.

The Democratic governor negotiated the deal with labor unions to head off competing labor-backed ballot initiatives that would have imposed swifter increases with fewer safeguards.

About 2.2 million Californians now earn the minimum wage, but University of California, Irvine, economics professor David Neumark estimated the boost could cost 5 to 10 percent of low-skilled workers their jobs.

Brown has said California, with the world's eighth largest economy, can absorb the raises without the problems predicted by opponents.

California and Massachusetts currently have the highest statewide minimum wage at $10. Washington, D.C., stands at $10.50. Los Angeles, Seattle and other cities have recently approved $15 minimum wages, while Oregon officials plan to increase the minimum to $14.75 an hour in cities and $12.50 in rural areas by 2022.

New York's state budget includes gradually raising the $9 minimum wage to $15, starting in New York City in three years and phasing in at a lower level elsewhere. An eventual statewide increase to $15 would be tied to economic indicators like inflation.

Local reaction

Councilman Todd Gloria, who authored a ballot measure to raise San Diego's minimum wage and provide workers with five paid annual sick days, called the bill signing a "bold step" in the right direction.

"It's a strong signal that we get it, and that there are real families that are working very, very hard but not making ends meet," Gloria told City News Service. "This is an attempt to try and address that — we have more to do."

In a statement, San Diego Regional Chamber of Commerce President and CEO Jerry Sanders said businesses are still struggling because of the Jan. 1 increase to $10 an hour.

"Now, businesses are facing an additional five years of increased costs and we aren't providing real opportunities for sustained growth or prosperity," Sanders said.

"It's unrealistic to think that this dramatic legislation won't cause businesses, particularly small businesses, to consider cutting their employees' hours or letting them go," Sanders said. "Some may even have to close their doors."

He said the wage hike is part of a regulatory environment that makes it difficult to conduct business in California and is counterproductive for many of the families in need of solutions.

The wage hike will affect 5.6 million workers, or about one-third of the statewide workforce, officials said.

"Wages are not keeping pace with the cost of living in California. Income inequality continues to grow," said Assemblywoman Toni Atkins, D-San Diego. "This proposal will help millions of hard-working Californians while protecting taxpayers and small businesses if the economy experiences a downturn. We can be prudent and make sure workers are paid a reasonable, livable wage at the same time. It doesn't have to be a choice."

City News Service contributed to this report.

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