California Gov. Jerry Brown will sign a bill Monday that will raise the minimum wage for hourly workers to $15, the highest statewide wage in the nation.
Supporters of minimum wage hikes say that the Golden State, among a few others that are raising their minimum wages instead of waiting for a national policy, will be a testbed for income inequality solutions at a time when the gap between the rich and poor has been growing in United States over the past several decades.
"I'm hoping that what happens in California will not stay in California but spread all across the country," the Democratic governor said last week as he announced his agreement with labor leaders.
The bill, SB3, will raise the state's $10 hourly minimum pay by 50 cents next year and to $11 in 2018. After that, $1 hourly raises will take effect every January until 2022, after which wages will rise with inflation every year. The governor can pause the raises in case of economic recession. Businesses with 25 or fewer employees will have until 2023 to comply with the new law.
California’s Democrat-controlled legislature approved the legislation Thursday, days after Governor Brown negotiated the deal with labor unions to stave off competing ballot initiatives backed by the unions that would have brought bigger increases with fewer safeguards. The bill passed without Republican support last week.
State Republicans and some business groups say that the hikes could cost thousands of jobs. One legislative analysis estimates that taxpayers will pay $3.6 billion per year in higher wages for government workers.
"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," Tom Scott, executive director of the state branch of the National Federation of Independent Business, said in a statement.
Mr. Scott told the Associated Press that a $15 base wage will have "devastating impacts on small businesses in California." The state is the world’s eighth-largest economy.
In response to the ominous warnings, supporters of state-led or city-wide wage hikes say that the various experiments will provide important lessons for the federal government. Congress has been reluctant to raise wages nationally, despite appeals from President Obama.
"If there’s no movement at the federal level [to address wage concerns], you're going to see a lot at the state level," Gabe Horwitz, vice president for the economic program at Third Way, a centrist think tank based in Washington, D.C., told the Monitor last week.
"Some will be innovative and good, some probably a little ill-designed, but there will be a little bit of everything. And then there will be a period where we can really analyze what works and what doesn’t," he said.
California and Massachusetts have the highest statewide minimum wage of $10 an hour, while Washington, D.C., is at $10.50. Cities including Los Angeles and Seattle have recently passed $15 minimum wages. Oregon lawmakers plan to increase the minimum there to $14.75 an hour in cities and $12.50 in rural areas by 2022.
New York wants to gradually raise its $9 minimum wage to $15, starting in New York City in three years and then bringing smaller increases to other parts of the state. An eventual statewide increase to $15 would be tied to economic indicators such as inflation.
This report uses materials from the Associated Press.