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Fantastic Friday: California’s New Minimum Wage Law Will Make Businesses Better

California businesses are about to get a lot “better.”  Because today, the state agreed to raise it’s minimum wage to the highest in the nation – almost $3 higher than the federal minimum wage.

California has become the first state in the nation to commit to raising the minimum wage to $10 per hour, with the increase to take place gradually through the start of 2016, under a bill Democratic Governor Jerry Brown signed into law on Wednesday.

The law raises minimum pay in the most populous U.S. state from its current rate of $8 per hour to $9 by July 2014, and $10 by January 2016, well above the current federal minimum wage of $7.25 an hour.

 

And what does this mean exactly?  Well consider  what kind of effect this might have on restaurant workers. Restaurant Opportunities Centers (ROC) United, whose mission is to improve wages and working conditions for the nation’s restaurant workforce, argues that “a minimum wage of less than $5…for a worker who earns tips is not sustainable” and that “non-tipped workers [should] earn at least $9 an hour.”  So the new minimum wage law clearly helps California hurdle that threshold, especially considering that in California there is no distinction between tipped and untipped workers under minimum wage law, unlike many other states where the untipped minimum wage can start as low as $2.13 an hour.  New York, for comparison, has agreed to raise the hourly minimum wage from its’ current levels of $7.25 to $9 by 2015, though tipped workers will remain at approximately $5 per hour.

 

Regardless, these are both steps in the right direction for workers (and consumers), especially as their implementation will hopefully lead to proving wrong the arguments that opponents of higher minimum wages trot out regularly.  For instance, for all those that worry about the potential negative effects on overall wages or employment resulting from a minimum wage increase, San Francisco provides an interesting case study.  In fact, the city’s minimum wage has been $10 for a while now and has seen no negative effects on wages or employment according to this study.

 

Treating workers well is possible.  And better.

 

Photo Credit: Business Insider

 

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