SACRAMENTO, Calif. – Industry eyes will be on California after lawmakers unveiled a plan to raise the minimum wage to $15 over six years. California is considered a bellwether state that could lead other states on a path toward a higher minimum wage.
Under California’s proposed plan, the minimum wage will rise to $10.50 per hour on Jan. 1, 2017, for businesses with 26 or more employees. The minimum wage would rise each year until topping out at $15 per hour in 2022. Businesses with 25 or fewer employees would have more time to comply with the new standard. The minimum wage in California is one of the highest in the United States at $10 per hour.
|California Gov. Jerry Brown|
“California is proving once again that it can get things done and help people get ahead,” California Gov. Jerry Brown said in a statement. “This plan raises the minimum wage in a careful and responsible way and provides some flexibility if economic and budgetary conditions change.”
The plan also includes “off-ramp” provisions that empower the governor to pause any scheduled increase for one year. One provision, for example, allows for a pause in an increase if the state’s budget is forecasted to be in a deficit.
Fast-food workers and labor unions have supported raising the minimum wage to $15. Fight for $15, a coalition of labor rights activists and unions, applauded California’s plan.
“Cities and states across the country are pushing to get their wages up,” according to the Fight for $15 website. “Workers need $15 to get by, and politicians and businesses are getting in line.”
But efforts to raise minimum wages have been met with resistance by business stakeholders who argue that a higher minimum wage will lead to fewer jobs for intended beneficiaries and higher prices for consumers. Analysts covering the restaurant industry say a higher minimum wage could pressure sales and expenses at restaurant chains if a $15 minimum wage becomes widespread. California Consumers Against Higher Prices, a broad coalition of business industry stakeholders that includes the California Restaurant Association, said the plan doesn’t solve the fundamental problems it seeks to address.
“While voters may favor a reasonable minimum wage increase, $15 turns those numbers on their head,” the coalition said in a statement. “They realize the real-life implications of the devastating impacts a $15 minimum wage would have on their lives from education cuts, increased costs to seniors, services for the disabled, and the small businesses and jobs in their neighborhood, it goes too far. It is imperative that lawmakers listen to the voices of their constituents and think about the well-being of their districts before bowing to the will of special interest groups.”
The National Restaurant Association said a higher minimum wage would be an added pressure on business owners who are struggling with higher costs and compliance with the Affordable Care Act.
The campaign to raise the minimum wage to $15 already has found success at the local level in Seattle, San Francisco and Los Angeles, which have $15 an hour minimum wage policies. In Massachusetts and Oregon, homecare workers have a minimum wage of $15.
Individual companies also are responding to pressure to raise minimum wages. In April 2015, McDonald’s Corp. announced that workers at its company owned stores would receive a wage increase, paid time off and other benefits.