Wednesday , October 18 2017

Raising the US minimum wage to $15 an American dream – California, New York poised to become highest-paid-wage states

Supporters of a bill to raise California’s minimum wage, celebrate outside the state Senate Chamber after the measure was approved by the Senate on March 31, in Sacramento, California. The bill, SB3, that will gradually raise California’s minimum wage to a nation leading $15 an hour by 2022, was approved by both houses of the Legislature and sent to Gov Jerry Brown who said he will sign it. (AP)
Supporters of a bill to raise California’s minimum wage, celebrate outside the state Senate Chamber after the measure was approved by the Senate on March 31, in Sacramento, California. The bill, SB3, that will gradually raise California’s minimum wage to a nation leading $15 an hour by 2022, was approved by both houses of the Legislature and sent to Gov Jerry Brown who said he will sign it. (AP)
New York, Seattle, California: in the battle over the US minimum wage, cities and states are taking their own initiative, making regional advances toward the goal of a $15 an hour floor.

Some cities have voted through spectacular increases, making the dream of better pay a reality for hundreds of thousands of employees in a country where the federal minimum wage level has remained unchanged at $7.25 an hour since 2009.

New York was the latest state to act. State lawmakers reached a deal Thursday with Governor Andrew Cuomo to raise the minimum wage in New York City to $15 an hour by the end of 2018.

Under the deal, the minimum will go up more slowly in the rest of the state, hitting $12.50 an hour by the end of 2020.

To close the deal, Cuomo needed to get the state’s Republican-controlled senate on board.

Republicans and Democrats have generally split on the need for a national wage hike.

Democratic presidential candidates Hillary Clinton and Bernie Sanders both support an increase, differing only on the scale and timing of such a move.

The former secretary of state calls for a smaller, slower raise while the Vermont senator wants the minimum doubled.

With rare exceptions such as Mitt Romney, the presidential nominee in 2012, Republicans have generally resisted calls for an increase, citing potential job losses.

Republican control of Congress over the past five years has ensured that the federal level remained unchanged.

It’s now a third below the minimum wage in France, Belgium and other wealthy European countries, taking into account the relative purchasing power in those countries, the Organization for Economic Cooperation and Development says.

Like many other progressive causes in a country polarized between left and right, action is taking place at the state and municipal levels.

Minimum wages in 29 states and the capital Washington have surpassed the federal level. New York has instituted $9 an hour and California, $10. Major companies in Seattle have paid $13 an hour since January 1. In New York City, fast food employees earn at least $10.50.

A total of 18 states have voluntarily increased their minimum wages since 2013, some after holding referenda on the issue, according to the White House.

A new wave is expected in 2016.

The most significant change is brewing in California, the most populous US state, where local officials have recently agreed to progressively reach $15 an hour by 2023, a target large companies will hit even earlier.

More than a third of California’s workforce would benefit from wage increases, according to a study from Berkeley University.

Clinton hailed the plan on Monday, tweeting a “big win for workers.”

Sanders parried, also on Twitter. “But here’s the difference,” he said. “I support a $15 federal minimum wage. @HillaryClinton does not.”

Her proposal calls for raising the federal level from $7.25 to $12.

A sudden minimum wage increase would be felt differently in various regions.

In the relatively poor South, the cost of living is far lower than on the country’s wealthy coasts.

Doubling restaurant employees’ salaries in Mississippi would have greater effect than in San Francisco, where salaries are already higher.

New York’s high cost of living also makes raising the current minimum wage more urgent there.

“You’re going to have higher legislated minimum wages in urban areas versus rural areas, Northeast and California versus the deep South,” Jacob Kirkegaard of Washington’s Peterson Institute said.

He believes those variations will only grow.

Unions and activists are pushing for a nationwide increase nevertheless.

In real value, the federal minimum wage has fallen to around a third of its peak level in 1968.

“The $7.25 minimum wage is only about $15,000 a year for a worker, and that’s not enough to support a family anywhere in the country,” said Laura Huizar of the National Employment Law Project.

The government sets the poverty line for a family of three at $20,160.

It’s an issue that is almost never raised in the Republican primary campaign.

Texas Senator Ted Cruz has come out against any minimum wage increase.

Ohio Governor John Kasich flirted with a “reasonable” increase in September before changing tack during a debate earlier this month.

“Well, well, wait a minute, first of all, I didn’t say I was for an increase in the federal minimum wage,” he said in response to a question in apparent alarm.

“If states want to do it, they ought to sit down with businesspeople and the lawmakers and figure out what will work.”

Donald Trump said in November that wages were “too high,” which was hurting American competitiveness.

That changed after Republicans began taking President Barack Obama to task over wage stagnation.

Trump corrected himself in December: “Wages in our country are too low.” “This minimum wage increase will be of national significance,” Cuomo, the Democratic governor, told reporters. “It’s raising the minimum wage in a way that’s responsible.”

Cuomo had initially proposed a simpler phase-in: three years in New York City and six years elsewhere. The more gradual, nuanced approach was the result of negotiations with Senate Republicans who worried such a sharp increase would devastate businesses, particularly in the upstate region’s more fragile economy.

Economists have long debated the impact of a higher minimum wage. Some studies have found that higher wages contributed to job cuts, while others found little effect on hiring because employers could absorb the costs or pass them along to customers.

The Congressional Budget Office conducted an analysis in 2014 finding both benefits and trade-offs with an increase. A higher minimum wage would generally raise incomes and lift people above the poverty line, but it also would lead to a wave of job losses for some low-income workers.

The non-partisan agency examined the prospect of raising the national minimum wage to $10.10 an hour from $7.25. It would raise incomes by a net of $17 billion for families below or relatively close to the poverty line. But it would cost 500,000 jobs, a 0.3 percent decline in total employment.

In California, Brown was previously reluctant to raise the base wage. He negotiated the deal with labor unions to head off competing November ballot initiatives that would have imposed swifter increases without some of the safeguards included in the legislation.

The governor now says California’s fast-growing economy can absorb the raises without the problems predicted by opponents. (Agencies)

About 2.2 million Californians now earn the minimum wage. The University of California, Berkeley, Center for Labor Research and Education projected that pay would rise for 5.6 million Californians by an average of 24 percent. More than a third of the affected workers are parents.

Latinos would benefit most because they hold a disproportionate number of low-wage jobs, the researchers said.

The right-leaning American Action Forum countered with its own projection that the increases would slow the rate of job growth, potentially costing the state nearly 700,000 jobs over the next decade.

The increases are expected to eventually cost California taxpayers an additional $3.6 billion annually for higher government employee pay.

In New York, the tentative deal also includes middle-class state income tax cuts starting in 2018. The cut would apply to New Yorkers with incomes between $40,000 and $300,000 and rates that currently range from 6.45 percent to 6.65 percent starting in 2018. The rates would gradually drop to 5.5 percent by 2025.

Cuomo administration officials estimate the lower tax rates will save more than 4 million filers nearly $6.6 billion in the first four years, with annual savings reaching $4.2 billion by 2025. (Agencies)

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