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A win for California's poor

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SEPTEMBER 20, 2013

Although the state’s poorest have languished in recent years as California’s budget has been cut deeply, the State Legislature’s vote to increase the minimum wage to $10 by July 2016 is a serious sign of progress.

California’s current minimum wage of $8 per hour is ahead of most other states, but legislators in Sacramento correctly identified that it was not enough for most families to live on and accordingly took action.

That said, the legislation still has not caught up to the sky-high cost of living in Berkeley. Even with the minimum wage of $10 per hour, California’s new law still would not be enough for workers living in Berkeley to meet basic needs, according to MIT’s Living Wage Calculator. The calculator, which uses data from sources such as the Census Bureau and Consumer Expenditure Survey, estimates the minimum hourly wage needed to get by in Berkeley for a single adult is $11.51.

This is not to say that the increase is pointless or that it will only be felt by those at the bottom of the income ladder. As people earning minimum wage make more, employers who pay just above the minimum will likely be forced to raise the wages of their staff in order to compete for workers. This effect should ripple throughout the economy, elevating incomes and ensuring workers get a healthier chunk of their employers’ profits.

For students, this act will provide a much-needed boost to those working part-time jobs, many of which are at or near the minimum wage. The measure also includes workers who have wages that include tips; California’s tipped minimum wage is $8 right now, but the federal tipped minimum wage is only $2.13. California is boldly setting the example that it is unfair to pay tipped workers such a substantially lower amount, as they have been stuck with the same wage floor for the last 22 years.

However, California should just be the beginning.

Nationwide, entry-level workers at corporations such as Wal-Mart, McDonald’s, Amazon and elsewhere make very little and are often overworked, while shareholders and corporate officers reap substantial profits.

In that vein, UC Berkeley public policy professor and former Secretary of Labor Robert Reich has launched a petition on MoveOn.org calling on the CEOs of McDonald’s and Wal-Mart to increase the base pay of their workers to at least $15 per hour. State legislators would be prudent to think even bigger and advocate the new act to be expanded to other states as well.

Smaller businesses with just a few employees may initially be forced to shed workers or reduce hours as a result of the new law. This should be negligible damage, though, when compared to the standard-of-living increases that workers will experience.

California experiences one of the largest income gaps in the country, and a higher minimum wage may not close it. The new law will not completely ensure all Californians are able to earn a living wage. But it’s a start, and it’s a promising indication as to what direction the state government aims to go.

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SEPTEMBER 23, 2013