National News

Raises Come With Increase in California's Minimum Wage

Posted January 5, 2018 8:49 p.m. EST

This week, nearly 20 percent of the state’s work force received a raise: the minimum wage inched up to $11 for many, giving roughly 2.5 million people more money in their weekly paychecks, according to economists at the University of California, Berkeley.

The increase is part of the gradual phase-in of the state’s $15-an-hour minimum wage, which was approved by the governor in 2016. Workers now earning the lowest wages will have to wait until 2023 to reach $15 an hour, but they can expect a $1 increase every year until then.

“For people living on the edge, 50 cents really makes a difference, but the real impact is going to come later,” said Ken Jacobs, the chairman of the Berkeley Center for Labor Research and Education. Jacobs added that several studies have showed better health in low-income children after the minimum wage increased. “When the full phase in happens that’s a significant amount of money that makes a large difference in people’s lives.”

It is far too early to say just how the increase is affecting businesses or whether the bump is changing the lives of low-income families, but economists are watching closely to understand the impact of the increase.

“The short answer is we don’t know much yet,” said David Neumark, a professor of economics and the director of the Economic Self-Sufficiency Policy Research Institute at University of California, Irvine.

Because the increase is phased in, the effect on both business and individuals will be most acute in later years, when more people will be receiving a raise.

Already, some restaurants have moved to using iPads instead of servers to save money on labor costs. And a few businesses have blamed the minimum wage increase for putting them out of business. But Neumark said he’s skeptical to believe the bump is the reason.

“What you really need to keep your eye on is two things: First, is low-skill employment declining or growing less slowly than it would have otherwise?” he said. “And are the benefits of higher wages really going to low-income families?”