Despite the hysterical rhetoric from Republicans and corporate CEOs, California’s minimum wage increase isn’t costing our state jobs. In fact, jobs are growing and workers’ lives are improving because of the minimum wage hike according to a new report by UC Berkeley economists.
The report, looking at the effects of California’s minimum wage increase to $15 per hour, found no negative impact on jobs, even in economically depressed areas like Fresno County. On the other hand, the increase will have a positive impact on the lives of the 5.26 million California workers that will get a wage increase under the new law. That means working people will have more money in their pockets to spend at local businesses and afford necessities that will improve health and educational achievement.
UC Berkeley economist Michael Reich:
“Our research in California sheds light on the long-running minimum wage debate nationally: These policies benefit workers and do not reduce employment.”
Advocates for working people hailed the findings, which mirror a growing body of research that shows the benefits of increasing the minimum wage far outweigh any drawbacks.
California Labor Federation Executive Secretary-Treasurer Art Pulaski:
“A higher minimum wage means a better life for millions of working people. The labor movement’s core mission is to lift up workers and their families. When workers get a raise, they spend that money at local businesses in their communities. It helps them afford basic needs and supports a stronger middle class. As this report clearly shows, the benefits of better wages don’t come at the expense of jobs. In fact, higher minimum wages simply make jobs better.”
SEIU California President Laphonza Butler noted the movement to raise wages stems from workers’ frustration with the current economy and gave credit to the Fight for $15 workers for helping to secure California’s historic wage increase.
“Working people are taking matters into our own hands and are fixing our nation’s imbalanced economy through the Fight for $15. Our nation needs this leadership now more than ever in the face of a Trump Administration that has signaled a war on workers. We will not stop fighting until every worker in America is paid a decent wage.”
The UC Berkeley team created a new model to analyze the effects of a $15 minimum wage, taking into account how workers, businesses and consumers are affected and how they respond to this type of mandated wage policy. Among their key findings:
- For the 5.26 million California workers getting raises, annual pay would increase more than 25 percent, or about $3,900 on average.
- Three industries account for almost 40 percent of the private sector workers who would be getting increases in California: retail trade (16.5 percent), restaurants (14.6 percent) and health services (8.2 percent).
- 2 percent of restaurant workers would receive a wage increase.
- Employee turnover reduction, automation and increases in worker productivity would offset some of the payroll cost increases.
- Businesses could absorb the remaining payroll cost increases by increasing prices by 0.6 percent through 2023. This price increase is well below the annual inflation rate of 1.8 percent over the past five years.
- Workers who would get pay increases earn close to half of their family’s income and 55 percent of these workers are Latino.
While the numbers are impressive, what California’s $15 minimum wage means to the lives of working people is incalculable.
McDonald’s worker Frank Trejo:
“I’m proud to have been a part of the Fight for $15 movement that helped workers like me who have been struggling to pay the rent and afford the basics for our families. I still need to work two jobs to help to support my mom, but even a small increase makes a big difference in how I see my future. Workers in low-wage jobs standing together created momentum that will never be reversed, no matter who is in the White House. I hope to eventually get an education to become an engineer, and now I have the confidence to pursue these dreams.”
Check out the full report here.