California's Top Economists Say Raising the Minimum Wage Will Help California Economy

Statement by California Labor Federation Executive Secretary-Treasurer Art Pulaski

 

Forty-six economists from Stanford, UC Berkeley, UCLA and other top California universities have signed a letter to Governor Schwarzenegger urging him to sign AB 2832 (Lieber). The bill, which is sponsored by the California Labor Federation, AFL-CIO, would raise the state minimum wage from $6.75 to $7.75 in two 50-cent increments over two years, in July 2005 and July 2006.

In the letter the economists argue that, “The evidence indicates that the proposed increase of the minimum wage would alleviate poverty, would not hurt the state’s employment and would benefit the state budget.”

Economists in support of a higher minimum wage have often pointed to studies that show that California taxpayers could save well over $2 billion if the state minimum wage were raised to $7.75. Low wages cause the cost of public assistance programs to increase because low-income households rely upon such programs to meet their basic needs.

Michael Reich, an Economics professor at U.C. Berkeley who spearheaded the letter to the Governor, said, “It’s important for the Governor to form his policy decisions based on accurate economic information. The empirical evidence shows that raising the minimum wage in California has not hurt the state s employment levels and would in fact reduce employee turnover and increase productivity. Signing AB 2832 makes sound economic sense.”

AB 2832 is currently awaiting action by Governor Schwarzenegger.

###