By Christopher Wysocki, Executive Director, CASE
Sometimes the Legislature just doesn’t get it. Assembly Bill 2832 would raise California’s minimum wage from the current $6.75 per hour to $7.75 per hour – just as our state is trying to work its way out of a recession.
In 1938, a federal minimum wage was proposed as a way to curb abusive practices by employers. Over the last 60 years, the base minimum wage has been transformed by many as a political tool to redistribute wealth from the wealthy to the poor. Currently, there is a
No reasonable person will dispute the fact that the minimum wage (currently set in California at $6.75 per hour) is incapable of supporting a family. The cost of living is admittedly high in the Golden State, and recent increases in the price of gasoline and energy make it increasingly expensive to live, work and raise a family.
Reasonable people, however, will come to the conclusion that the minimum wage is not meant for those tasked with supporting a family. Instead, the minimum wage is a training wage – a wage paid to those workers who are unskilled and/or new to the workforce. According to a recent study by the Employment Policies Institute, over 62% of those entering employment at the minimum wage receive wage increases within one year of employment.
In California, the current minimum wage is 31% higher than the national minimum. Teenagers, unskilled workers, and those looking to get off welfare and become gainfully employed begin in minimum wage jobs and quickly graduate upwards after skills are obtained. Raising the minimum wage will only make it more expensive to bring new people into the work force. And isn’t it better for someone looking for work to make $6.75 per hour than nothing?
What supporters of a minimum wage increase fail to disclose is that AB 2832 will not only make it more expensive to operate a business (roughly $40,000 per year for the average small business in California), but it will also harm consumers in the long run.
Increasing the minimum wage by $1 per hour will make goods and services more expensive and less available. The financial burdens of operating a small business (labor costs, unemployment insurance costs, workers compensation insurance costs, to name a few) are ever escalating in California, and increasing the minimum wage cause inflation in the amount we pay in goods and services.
California is trying to pull itself out of recession. We are losing thousands of jobs to other states where the costs of doing business are lower. We are losing entrepreneurs who would like to stay here, but regulatory and tax policies prevent them from doing so. In short, raising the minimum wage would be a final straw to break the proverbial back of the small business community.
AB 2832 is bad public policy. It sends the wrong message and will only serve to further drive jobs out of California and towards other states. The minimum wage is an entry-level wage, and if we raise the price too high, then fewer people will be able to enter the job market at all. Now is not the time to mandate additional taxes and costs on small businesses. AB 2832 deserves to be defeated.
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Christopher Wysocki is the Executive Director of the Consumer Alliance for a Strong Economy, a nonprofit advocacy organization made up of more than 9,000 consumers, small business owners and taxpayers from across California.