A Higher Minimum Wage May Mean Increased Consumer Costs

LOS ANGELES, Calif. (FOX 11 / AP, CNS) - Gov. Jerry Brown signed a bill into law Monday giving California the nation's highest statewide minimum wage of $15 an hour by 2022.

From Hal Eisner:

Jason Gray has been the solo owner of Valentino's Pizza in Camarillo for a year and a half. He has 9 minimum wage employees. Recently, this 28-year-old, was puffed up when named Camarillo's "Entrepreneur of the Year". Now, his head is spinning over the idea of raising the minimum wage of most of his workers.

Says Gray, "It's gonna force me to raise my prices. In the end I still have to make a living. To do that, he expects to have to increase pizza "prices three or four dollars per pizza" and cut payroll which means layoffs.

Minimum wage workers like Jessica Robertson and others at the Pizzaria hope that's not the case. She says, "If I make 50 hours a week that's like barely living" and adds, "it just went up to $10 which is also great, but I'm using EBT cards for food stamps too because I need that extra help still."

Across the shopping center Taylor DeFeo was struggling with the math at the Camarillo All Eyecare Optometry Shop where she's the office manager. Per year, her 3 minimum wage workers, combined, are getting "57,600... whereas in 2022 we'll be paying them anywhere from $86,400 and up."

That's an increase of $28,000 a year. Optometrist Brian Nguyen says, "I think it's going to be very difficult because now if we're increasing the wages of our minimum wage staff we're going to have to increase the cost of goods and the services that we sell to our consumers."

Meanwhile, back at Valentino's Pizza, high school student Bradley Thomson is job hunting and happy the minimum wage is going up. Says, the H.S. senior, "I think it's great because my being a high school student and getting ready for college I need as much money as I can get you know, more money means more money toward my education. It's always good to have more money."

Earlier:

The governor signed SB 3 during a 9 a.m. ceremony at the Ronald Reagan State Building in downtown Los Angeles. The state Assembly and Senate both approved the legislation Thursday, despite opposition from Republicans and business leaders.

That and a similar effort in New York mark the most ambitious moves yet to close the national divide between rich and poor. Experts say other states may follow, given Congress' reluctance to act despite entreaties from President Barack Obama.

Republicans and business groups warn that the move could cost thousands of jobs, while a legislative analysis puts the ultimate cost to taxpayers at $3.6 billion a year in higher pay for government employees.

A $15 base wage will have "devastating impacts on small businesses in California," Tom Scott, executive director of the state branch of the National Federation of Independent Business, said in a statement. "Ignoring the voices and concerns of the vast majority of job creators in this state is deeply concerning and illustrates why many feel Sacramento is broken."

Democrats who control the Legislature approved the compromise legislation Thursday, days after the agreement was announced. The measure passed with no Republican support.

The bill will bump the state's $10 hourly minimum by 50 cents next year and to $11 in 2018.

Hourly $1 raises will then come every January until 2022, unless the governor imposes a delay during an economic recession. Businesses with 25 or fewer employees have an extra year to comply.

Wages will rise with inflation each year thereafter.

The Democratic governor negotiated the deal with labor unions to head off competing labor-backed ballot initiatives that would have imposed swifter increases with fewer safeguards.

About 2.2 million Californians now earn the minimum wage, but University of California, Irvine, economics professor David Neumark estimated the boost could cost 5 to 10 percent of low-skilled workers their jobs.

Brown has said California, with the world's eighth largest economy, can absorb the raises without the problems predicted by opponents.

California and Massachusetts currently have the highest statewide minimum wage at $10. Washington, D.C., stands at $10.50. Los Angeles, Seattle and other cities have recently approved $15 minimum wages, while Oregon officials plan to increase the minimum to $14.75 an hour in cities and $12.50 in rural areas by 2022.

New York's state budget includes gradually raising the $9 minimum wage to $15, starting in New York City in three years and phasing in at a lower level elsewhere. An eventual statewide increase to $15 would be tied to economic indicators like inflation.