California’s minimum wage will be going up. And going up a lot. Supported only by the Democrats, a bill signed by Gov. Jerry Brown last week will give minimum-wage workers a pay hike, to $10.50 in 2017, $11 in 2018, and $1 more each year through 2022, when they will be making 15 bucks an hour across the state.
Small companies with less than 25 employees will get a one-year delay. And, if the economy tanks or unemployment goes up, the governor can delay the hikes.
I am a newspaper publisher and a small business owner with an annual payroll of around $4 million, and often little to no profit margin. We have employees who are currently paid less than $15 an hour, and we have exempt employees in California whose salaries are also tied to the minimum wage.
With our current revenues and current costs, and no other changes, the increase in California’s minimum wage would make us unprofitable.
And yet I support increasing the minimum wage: Not because I have a death wish, but because, over the years, our business has survived 12 increases in the California minimum wage.
And I can see the bigger picture.
When I took over the Chico News & Review in 1980, the California minimum wage was $3.10, having just been increased from $2.90 earlier that year. Since, the minimum wage has gone up in small jumps and big ones, like in 1988, when it went up almost 27 percent, from $3.35 to $4.25.
Every time an increase was suggested, the business community and chambers of commerce make the argument that a minimum-wage hike would lead California to an economic disaster. Thousands of companies would go out of business. There would be massive job losses. There would be an increase in poverty.
The chamber’s dire predictions never come true. What did happen is that lower-income workers made a little more money, and richer people tended to make a little less.
And this is exactly what the UC Berkeley Labor Center predicts will happen again. They estimate that the minimum-wage increase, and its ripple effect, will impact 5.6 million Californians, raising their wages an average of 24 percent.
The Labor Center also predicts that this increase will have almost no impact on net jobs. Businesses will have to raise their prices, which will cost them some sales, but the workers who make more money will spend and put that money back in the business economy.
But there are winners and losers. A manufacturing plant competing with lower-paid workers in Mississippi or China will be hurt. Retailers and restaurants, who employ one-third of all minimum-wage workers, will have to raise their prices. But businesses with a high percentage of working-class customers may see their sales go up.
I know my labor costs will go up. I may have to raise prices. But so will my competitors. I expect that my bottom line will remain about the same. But I understand that this change will have a big positive impact on working people in California. That’s why I support it.
