California reaches deal to up minimum wage

Change

Potential increases to the minimum wage for working Americans have been on the horizon for some time, and the plans put forth in states looking for increases have been lauded and criticized in equal measure. However, California lawmakers have seemingly made up their mind.

The New York Times reported that California reached a deal to raise the state's minimum wage to $15 an hour by 2022, and if the plan is approved it will be the first state to take on such an increase. The state's minimum wage was already raised to $10 an hour on Jan. 1, and under the new plan it will increase incrementally to reach $15 over a six-year period.

“This is a very big deal,” Paul K. Sonn, the general counsel to the National Employment Law Project, a national research and advocacy group on wages, told the New York Times. “It would mean a raise for one of every three workers in the state.”

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THE CAMPAIGN
The wage increase has deep political roots in this year's presidential election, with both Democratic candidates Hillary Clinton and Bernie Sanders running on a platform that includes wage increases. Clinton is calling for an increase to $12 an hour, with some cities reaching $15 an hour, while Sanders' push for $15 an hour is a central part of his bid.

Michael Reich, economist at UC Berkeley, told The Press Enterprise that a higher wage will lift profits because consumers will have more money to spend. Business owners, however, are not as excited for the wage hike. Christopher Thornberg, director of University of California Riverside’s Center for Economic Forecasting and Development, told The Press Enterprise that the increase is going to result in layoffs and punish low-skilled workers who won't make the cut for jobs.

“Would the state’s economy survive? Of course it would. But that’s not the point,” he said. “The right question is, ‘Will a higher minimum wage reduce poverty?’ It won’t.”

Two of the hospitality industry's largest lobbying groups, the Asian American Hotel Owners Association and the American Hotel & Lodging Association, took the city of Los Angeles to court over its initial decision to raise wages in 2014. The California Restaurant Association, California Hotel and Lodging Association, California Manufacturers and Technology Association and a number of chambers of commerce are also stepping in to confront the current plan for the state.

“We are all in favor of fair raises, but only a fraction of the industry is currently making minimum wage,” Jay Patel, chairman of AAHOA, told HOTEL MANAGEMENT in an interview earlier this month. “A lot of what has been proposed, how it could impact the industry is tremendous. Owners are being painted as bad guys; they think we aren’t paying our employees but it’s not true.”

SMALL WORLD
On the other side of the country, a similar wage hike may be coming to New York. This increase has been on the books for some time, but the New York Daily News reported that New York state Governor Andrew Cuomo is "cautiously optimistic" that a deal on the state's budget will be reached Friday, including provisions to raise wages and the creation of a state-paid family leave program.

"We're not at closure, but the direction has been good," Cuomo said in a statement. "The conversations have been positive."

The budget has largely been stalled by wage discussions, which currently plan on raising the minimum wage in New York City to $15 by 2018, and the rest of the state by 2021. The majority of the concerns focus on the impact the increase will have on upstate New York, and focus on increasing the length of time between bumps.

Whether any entity succeeds in pushing back or abating these wage increases, the industry needs to recognize that they are coming in some form. So far the battle over hourly wages has taken place in a select few high-profile cities, bleeding into larger discussions about the state down the line. But on March 2, Oregon Governor Kate Brown signed a law making workers in her state the highest paid in the country, upping their pay to $14.75 inside Portland, $13.50 in midsize counties and $12.50 in rural areas by 2020.

Furthermore, when 2016 began eight states and the District of Columbia were paying workers above New York's current $9-an-hour wage, something no economist could expect to last. The question right now is "when?"

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