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California poised to pass $10 minimum wage. Is now the right time? (+video)

California legislative leaders and Gov. Jerry Brown are set to raise the state's minimum wage to $10 an hour, which would be the highest in the country. Critics say it could harm a recovering economy.

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David McCuan, a political scientist at Sonoma State University, agrees.

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“Given the long economic recession, the stagnation of wages for lower wage workers, and the vulnerabilities of those workers to circumstances beyond their control, a minimum-wage boost like this is more likely to help on balance than hurt the overall state economy,” he says.

Advocates of living wages agree with Senate president pro tem Darrell Steinberg, that the high minimum wage will help fuel the recovery because minimum-wage workers will have more money to spend.

“What increases in wages do is twofold. They lift hard-working Americans out of poverty, and are the only sustainable way of growing the economy,” says Roxana Tynan, executive director of the Los Angeles Alliance for a New Economy, an advocacy organization.

She says two LAANE studies show no evidence of job loss as a result of living wage increases much higher than what the state is proposing. “Our study of the impact of a living wage increase on the airport hotels in LA showed that in the years following the increase, hotels near the airport increased revenue by every measure: overall profits, room rates, and occupancy – all without layoffs.”

“What is astonishing,” Ms. Tynan says, “is the number of times over the last 100 years that some in the business community have gotten away with making these claims and being quoted in the press without a shred of evidence.” 

Still some academics think the timing is not optimal.

“There is never a good time in the middle of a lukewarm recovery to raise the minimum wage,” says Michael Shires, a professor of public policy at Pepperdine University. “If there was a strong and sustained recovery, where there was high demand for even low-skilled labor, then the effects would be mitigated by overall rising wages,”

“Today, however, California is in the midst of a slow recovery and the low-skill, low-wage part of the economy is languishing the most,” says Professor Shires. “Stack on top of that the ambiguities of the Affordable Care Act ['Obamacare'] and its prospective impacts on low-wage jobs, and the timing is even worse.”

But the timing appears right for now. Assemblyman Luis Alejo introduced similar bills in 2011 and 2012, but both died because of opposition by Republican members and business lobbyists, who apparently made the "job killer" tag stick with legislators.

The current federal minimum wage is $7.25. The state with the highest current minimum wage ($9.19) is Washington.


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