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California Is on the Verge of Becoming the First State to Have a $15 Minimum Wage

A deal reached over the weekend between labor groups and California legislators to gradually reach that goal by 2022 puts the state at the forefront of a national debate over the issue, and could set a precedent for other states to consider.

by Tess Owen
Mar 28 2016, 4:10pm

Foto di Mike Nelson/EPA

After three years of nationwide mobilization, striking fast-food workers and their low-wage compatriots are about to score their first state-level victory in the campaign for a $15 minimum wage. A deal reached over the weekend between labor groups and California legislators to gradually reach that goal by 2022 puts the state at the forefront of a national debate over the issue, and could set a precedent for other states to consider.

The agreement, which was originally reported by the Sacramento Bee and the Los Angeles Times and described as "tentative," comes less than a week after an initiative spearheaded by a healthcare workers union — Service Employees International-United Healthcare Workers West — gathered more than enough signatures to put an initiative on the ballot that would increase the state's $10 minimum wage by a dollar a year until 2021. The state council of the union was also pushing a separate ballot initiative, increasing pressure on lawmakers to act.

California Governor Jerry Brown formally announced the deal on Monday.

"It's a matter of economic justice. It makes sense and will help our entire state do much better for its citizens," he said. "This program will happen over time in a gradual way, and there will be flexibility in the event of a recession or budgetary downfall."

"California is showing we can do right by our workers, we can advance our economy and we can do it through the legislative process," he added.

Union leaders told the Times that they hope to withdraw their ballot initiatives after reviewing and accepting the fine print.

"No one has seen the actual language of the legislation," said Dave Regan, President of the SEIU-UHW. "But what seems to be increasingly clear is that there's an absolute path to $15 hours for all workers in California."

Before the unions withdraw their initiative from November's ballot, the agreement has to be approved by moderate Democrats in the state legislature and become law. Regan believes the "odds are better than 50/50" that it will pass.

Related: Why Wages May Matter More Than Immigration For Iowa's Latino Voters

Small businesses with fewer than 25 employees would have an extra year to comply with the proposed law.

Regan said there was an understanding that the legislation would also contain a provision based on objective economic data. If California sunk into a recession, the schedule to reach $15 by 2022 could be delayed by a year.

"A pause button, the governor has called it," Regan said.

A $15 minimum wage in California will affect the incomes of more than one in three of the state's workers, said Paul Sonn, program director at the National Employment Law Project, which has advocated a wage increase.

A fact sheet released on Monday notes that the current yearly income for those who earn the minimum wage in California full time is $20,800, and would jump to $31,200 by 2022 under the agreement. Household incomes lower than $24,300 put a family of four below the Federal Poverty Level.

"It would reverse years of falling pay," Sonn said of California's wage deal. "It would mean that the striking food workers would have changed the US economic trajectory in just three years."

The federal minimum wage was enacted in 1938 and was intended to protect workers across the country. In theory, the minimum wage was supposed to establish an income floor where a person who worked full time could live above the poverty line, pay their rent, and afford to feed themselves and their family.

But labor advocates say that the inability of the federal standard of $7.25 to keep pace with the cost of living is plunging many Americans into poverty.

"These could be historical, economic policy changes that will help kick-start wage growth at the bottom part of the economy," Sonn said.

The federal minimum wage has stayed at $7.25 an hour since 2009. But increased activism has pushed for change. At the pinnacle of a three-year campaign, fast-food workers made headlines by striking for higher pay in 236 cities across the US, carrying signs that said things like "Stop Super-Sizing Poverty" and "Workers Need a McLiving Wage."

Related: Fast-Food Workers Strike for Minimum Wage Hike Ahead of Democratic Debate

Income inequality has also been an issue in the race for the presidency. Senator Bernie Sanders has made it a cornerstone of his campaign for the Democratic nomination, and has vowed to raise federal minimum wage to $15 if elected. Former Secretary of State Hillary Clinton has also supported the "Fight for $15," though she has suggested that the federal level should be $12 in areas with lower costs of living.

In states where the costs of living are significantly higher, such as New York and California, raising the minimum wage has become a particularly critical issue.

Brown signed a bill in 2013 that incrementally raised the state's minimum wage from $8 to $10 by this year. Last summer, both Los Angeles County and Oakland approved the $15 minimum wage by 2021. At the end of 2015, Walmart announced its plans to shutter about 115 of its stores in the US, including outlets in Oakland and Los Angeles. The company insists that the decision to close those particular outlets "took into account a number of factors."

Last summer, a New York wage board recommended that all fast-food workers' wages be raised to $15 an hour by 2018. New York Governor Andrew Cuomo later called for an increase in the minimum wage to $15 for all workers in New York City by 2018, and for the entire state's workers by 2021.

According to a report by the Economic Policy Institute, a think tank specializing in labor issues, a $15 minimum wage in New York City would boost the wages of 1.4 million workers — about 35 percent of the city's workforce.

"Millions of low-wage workers have to choose between paying taxes and buying food," Cuomo said in January during his State of the State address. "We can raise the minimum wage to $15 and we can show this nation what real economic justice is."

Another report by EPI found that raising the federal minimum wage to $12 by 2020 would lift wages for 35.1 million workers — more than one in four US employees. EPI found that a third of black workers and a third of Hispanic workers would see improvements to their income, as well as more than 40 percent of working single mothers.

Not everyone is in favor, however. Some economists and business groups have argued that such a bump would hit small businesses hard and lead to inevitable layoffs or hiring freezes, while larger businesses struggling to meet costs would relay these to consumers through higher prices.

"California may be the first state to pass a $15 minimum wage, but it will also be the first to find out why that's a bad idea," said Michael Saltsman, research director at the Employment Policies Institute, a fiscally conservative think-tank that has argued against minimum wage hikes. "Dramatic wage mandates are already forcing difficult decisions in relatively wealthier areas, with low margin businesses being forced to lay off employees or close entirely."

Related: The Resurgence of the Labor Movement: The Year in Workers' Power

Other opponents say that the rapid push to $15 will result in greater unemployment for low-skilled workers, harming the very people the wage increase is meant to help, and will also overstretch the budgets of government agencies. In January, Governor Brown noted that if public-sector care workers who are paid the minimum wage earn $15 an hour, state budget expenses would increase by $4 billion a year.

Advocates counter that raising someone's salary to a living wage means you decrease that person's reliance on public assistance. According to EPI, almost 67 percent of people receiving public assistance nationwide are in working families where more than one adult in a household is earning a salary.

Regan said he expects California's wage deal to encounter "significant opposition" from groups like the Restaurant Association and the Chamber of Commerce. "But the momentum is on our side," he added.

Sonn pointed out active proposals to raise their minimum wage to $15 in Massachusetts, New Jersey, and Washington, DC. Legislators in New Jersey are planning to refer the proposal to the 2017 state ballot, Sonn says, which would effectively sidestep a potential veto from Governor Chris Christie.

"The states likely to push first are the coastal blue states where there's more political support for raising the minimum wage," Sonn said. "But popular support for raising the minimum wage is very broad nationally."

According to a 2013 Gallup poll, three-quarters of Americans would support raising the federal minimum wage to $9 an hour.

Follow Tess Owen on Twitter: @misstessowen