When Jerry Brown was first governor back in 1976, he raised the minimum wage in California from $2.00 an hour to $2.50. Now that he’s back in the governor seat, he’s doing the same thing again.
For the first time in over six years, the California minimum wage will be raised, changing from $8.00 an hour to $9.00, effective July 1. On Jan. 16, 2016, it will be raised again, up to $10.00 an hour. This will likely make California have the highest minimum wage in the country by 2016.
While the minimum wage in California is set to increase on July 1, San Francisco has already made plans of its own to have an even higher minimum wage than required.
Starting Jan. 1, San Francisco increased its minimum wage, which is indexed to inflation, from $10.55 an hour to $10.74, making it by far the highest required minimum wage in the country.
Even though California is one of the 19 states with a higher minimum wage than the federal required total, it may not be enough. According to the Massachusetts Institute of Technology, the living wage for one adult in Larkspur is $12.83, with the minimum wage $4.83 below. And according to Pew Research Center, 76 percent of people making minimum wage or below were above the age of 19.
However, it’s not quite a no-brainer, as opponents of raising the minimum wage argue that doing so would lead to higher unemployment rates. According to the Congressional Budget Office, a federal increase in minimum wage could lead to a 0.3 percent increase in unemployment.
San Francisco and California seem to be following the national trend, as President Barack Obama recently signed an executive order setting the minimum wage to $10.10 an hour for all federal contract workers.
While this initially only benefits a couple hundred thousand federal workers, it is part of a larger plan by Obama to raise the federal minimum wage throughout the country to $10.10 per hour. In addition, the minimum wage could potentially adjust for inflation.
This increase comes at a time when, according to Pew Research, income inequality in America is at it’s highest level since 1928, and that the top one-fifth earning Americans make close to three-fifths of America’s income.
“We clearly have an inequality problem and something has to be used to address it,” AP Economics teacher Paul Ippolito said. “Technology replaces workers, globalization outsources factory jobs, and low skilled immigration makes more competition for low skilled [jobs].”
The hope of a minimum wage increase is to accomplish one of Obama’s goals to level the playing field.
The effect of the increase will differ depending on the individual state’s economies, as twenty states currently use the federal minimum wage as their own and adjust it to its changes. The highest level set by a state is $9.32 in Washington state, and it is not yet known if and by how much the states which currently have higher minimum wages than the federal level will extend theirs above $10.10.
“The minimum wage rising to $10 an hour will have very little effect in Marin and will totally change a state like Texas,” said Ippolito, who worked on Wall Street before becoming a teacher.
Ippolito said he believes that it is more effective for states to set minimum wages, since the federal minimum wage is essentially a price floor for the lowest states.
