California's Minimum Wage Increase Still Pays Poverty Wages - Women's Foundation California

SAN FRANCISCO, July 1, 2014 (PRNewswire-USNewswire)—Today, California's minimum wage increases from $8/hour to $9/hour. But it's too soon to celebrate. Because a woman or man working full-time and raising two children earns $18,720, which is still below the federal poverty line.

Furthermore, for Californians living in areas like Los Angeles and the San Francisco Bay Area, the federal poverty line is an unrealistic indicator of how much it costs to live. According to the Insight Center for Community Economic Development, in LA a family of three needs at least $65,000 to make ends meet – the equivalent of three minimum wage jobs.

Until last Thursday, it looked like California might be on track to start moving minimum wage workers toward self-sufficiency.

SB 935, authored by Senator Mark Leno, and co-sponsored by the Women's Foundation of California, sought to raise the minimum wage to $11 by 2015, $12 by 2016 and $13 by 2017. Plus the bill included a cost of living increase, to permanently keep the minimum wage above the federal poverty line. SB 935 died in the Assembly Labor and Employment committee because some legislators felt that it was too soon after passing AB 10 (Alejo), which went into effect today.

It's not just the individuals and families that benefit when working people earn a minimum wage that pays enough to live above the poverty line. Sylvia Allegretto, an economist with the Institute for Labor and Employment, explained in a recent report that increasing the minimum wage to $13/hour benefits the state's bottom line. Between the increased income and sales tax revenue, combined with the reduced costs for public benefits that working poor people are eligible for, the state of California would see a net gain of $2 billion/annually.

And what about criticisms that increasing the minimum wage is bad for business? Seattle-based entrepreneur Nick Hanauer offers another perspective. In his recent Politico article, he says that Henry Ford realized that workers were consumers, not just labor, and therefore, paid them enough to afford the cars they built. Hanauer rebuts the oft-repeated claim that minimum wage increases kill jobs when he points out that middle class consumers are the true job creators, not rich businesspeople.

It is never too soon to ensure that working people have the tools they need to earn a wage that allows them to feed themselves and their families. Today's minimum wage increase does not do enough to close the ever-widening income inequality in our state. We still have work to do.

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