California may soon require the highest minimum wage of any U.S. state.
State Sen. Mark Leno (D-San Francisco) introduced a bill Monday to raise the state minimum wage to $11 per hour in 2015, $12 per hour in 2016 and $13 per hour in 2017. Beginning in 2018, the state minimum wage would be adjusted annually with the rate of inflation.
“This issue has garnered interest across this country at a speed unimaginable,” Leno told The Huffington Post. Leno’s bill is co-authored by Senate President Pro Tem Darrell Steinberg (D-Sacramento) and will be heard in policy committees in the Senate this spring.
Leno said that, in part, he is responding to President Barack Obama’s State of the Union address last week urging mayors, governors and state legislators to take the lead on raising the minimum wage.
California is already ahead of the pack in the national movement to raise the minimum wage. In the fall, California Gov. Jerry Brown signed a law that raises the state’s current $8 an hour minimum wage to $9 per hour in July and to $10 per hour in 2016.
However, the law does not require ongoing annual adjustments to the minimum wage based on inflation. The peak value of the federal minimum wage in real terms was reached in 1968, when it was $1.60 per hour. To equal the purchasing power of that minimum wage, the current federal minimum wage of $7.25 per hour would have to be raised to $10.77 per hour.
California’s new minimum wage is still lower than the $10.10 minimum wage Obama recently announced for workers under federal contracts. It also is lower than the proposal championed by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) to raise the federal minimum wage to $10.10 per hour and peg it to inflation.
“Historically, the federal minimum wage sets a floor for the nation,” Leno said. “Then, depending on circumstances in different states, states set higher minimum wages. It makes no sense that California wouldn’t raise the minimum wage faster than the federal government.”
Thirteen states and four cities raised their minimum wage on Jan. 1. Washington state currently has the highest state minimum wage, at $9.32 per hour. It stands to be surpassed by California’s $10 minimum wage that takes effect in 2016.
San Francisco has the highest minimum wage in California, at $10.55 per hour, and Los Angeles is considering the highest minimum wage in the U.S., $15.37 per hour, for hotel workers. On Jan. 1, a $15 hourly minimum wage went into effect in SeaTac, Wash., making it the nation’s highest minimum wage. While Leno said he expects his measure will face resistance from business lobbyists, as did the state’s recent minimum wage hike, he said he’s optimistic the “winds are changing.”
“This is where left meets right in the political debate,” Leno said. “Conservative folks like Bill O’Reilly acknowledge that minimum-wage employers who are literally paying poverty wages are shifting their responsibility for their workers’ basic needs — food, housing, health care — to taxpayers.”
In California, Ron Unz, a Republican Silicon Valley millionaire, is gathering signatures for a November 2014 ballot measure for a statewide $12 minimum wage. And former GOP presidential candidate Patrick Buchanan recently said a raise would be a good thing.
Opponents say that increasing the minimum wage will hurt businesses and job creation. Advocates of raising the minimum wage say it will stimulate the economy by bringing workers out of poverty, increasing consumer spending and reducing reliance on public assistance. Numerous studies have shown that raising the minimum wage boosts the economy and creates jobs. Earlier this year, 600 economists, including seven Nobel laureates, attached their name to a letter by the Economic Policy Institute urging lawmakers to raise the minimum wage to $10.10 an hour.
About 24 percent of California’s 38 million residents live in poverty. A Californian working full time earning $8 per hour brings home $15,360 annually before taxes. The federal poverty level for a family of four with a single wage-earner is $23,850.
Advocates say raising the minimum wage also will reduce employee turnover, which costs employers time and money to find new employees and train them. California’s current minimum wage law does not include exceptions for small businesses, but Leno said he is open to the idea. Leno, who owns a small sign company called Budget Signs, pays starting employees about $16 per hour, he said.
“How can you defend paying wages so low that your full-time employees qualify for food stamps, housing assistance and medical?” Leno asked. “I’d like to know who can honestly argue that it’s appropriate, especially given how high corporate profits are.”