Minimum wage in California, currently $10, will rise to $15 an hour by 2022. The state will increase the wage by 50 cents every two years, then in 2018, increase the wage by a dollar yearly until it reaches $15 at 2022.
This bill passed by the Legislature and signed by Gov. Jerry Brown has generated lots of praise and also dissents. The raise will hopefully improve the living conditions of lower-income workers. However, that may come with a few negative consequences.
California is known for having a minimum wage much higher than the federally required figure of at least $7.25 per hour. But California is also the most populated and expensive state where prices for food, housing, and other necessities are the nation’s highest.
For people who need to support a family, for students working part-time, or simply just for people trying to get by in life, the new wages will help a lot. There will be a lower turnover rate if employees are becoming more satisfied with their minimum wage job, which results in fewer expenses for hiring new employees.
However, a ripple effect may be created for other industries and in society because of the raise. If a company has a tight budget, there will likely be more layoffs because the employer now has to pay more for each employee. As mentioned before, if people are satisfied with their jobs and pay, there would be less people dropping or quitting, hence fewer hirings. Also, prices for food or living conditions could go up because employers are trying to compensate for paying their employees at a higher rate.
“Of course, in urban areas, the raise will have more beneficial results because the cost of living is higher there and the extra money will help them. But things might be different in more rural areas; there will be an effect on jobs and small businesses because they can’t afford to pay so much for their workers, so it might lead to more layoffs,” said economics teacher Ross Williams.
We’ll see by 2022 whether the final outcome will have more positive or negative results on all of society.