The state of California approved a measure to raise the minimum wage to $15 per hour. This is a 50% increase over the current $10 per hour wage for jobs like serving coffee, flipping burgers, and filling boxes.
California has one of the world’s largest economies, with workers ranging from Silicon Valley millionaires to farm workers in the central valley. Living costs in this US state are higher than its western neighbors with its sprawling metropolises and high population.
Farm wages have historically been low as it is a major expense in the cost of growing the world’s fruit and vegetables. In order for these foods to be affordable, farmers have kept wages at a sustainable level. Farm workers struggle to make ends meet while keeping a difficult career in manual labor.
A $5 an hour increase over current wages could impact the cost of products developed in California. Produce prices may rise to sustain the farm operations. Fast food prices, normally very affordable to the working poor may spike, forcing them to buy groceries and cook at home.
The biggest impact may be on jobs. As wages increase, employers will have a significant increase in costs without additional revenue. To offset these losses, many employers may cut work hours and jobs to avoid closing their doors. Economists are expecting a 5-10% decrease in jobs as a result of the new wage requirements. Employers will have to absorb the additional costs as they struggle to do business.
There are an estimated 4 million workers that will be impacted by this wage increase. Some are placing that number higher as the state continues to grow to 6 million.
California has a large immigrant population that sends a portion of their earning back home to support family in Mexico. This new measure may increase the cash flowing south and bringing more Mexican citizens across the border. This attractive new wage combined with lax illegal immigration policies may create a new jobs crisis.
This potential problem is being exploited by Presidential candidates like Donald Trump who threaten to build a ‘big, beautiful wall’ to keep undocumented workers from breaking America’s border laws. Millions have been drawn to this message as people fear of losing their jobs to people willing to work for less.
Another impact will be on the quality of work. Minimum wage jobs have normally gone to uneducated workers who lack the skills and experience to obtain higher paying work. Complacency, hopelessness, and lack of confidence all contribute to the acceptance of minimum wage jobs as a way of life. Others feel that flipping burgers in high school and college is fine while you work to further you education to something better. Getting a 50% pay raise for doing the same job seems difficult to swallow to people who work hard to earn higher wages.
Socialist presidential candidate Bernie Sanders and democratic frontrunner Hillary Clinton have target income equality. To win the votes of the working poor and welfare class, they demand that job creators and successful people support people who earn less.
Does paying someone more to flip burgers and stuff boxes make sense? Some critics complain that this will increase complacency as those taking mediocre jobs are rewarded with higher pay.
As employers feel the pinch of wage expense increases, they may require existing employees to work harder. As they trim their headcount, employers may need employees to do the work of more with less hours and less help. They may have to work harder to earn that pay raise. Perhaps working harder to earn more is the point.
Related: Bernie Sanders