In Tuesday’s State of the Union address, President Obama urged Congress to increase the federal minimum wage from $7.25 to $9 an hour by 2015 and to provide for annual cost of living adjustments. The California Assembly will also consider a bill which would raise state hourly rates to $9.25 by 2016. We discuss the politics and economics of the proposed minimum wage increases, and the impacts on workers and businesses alike.

John Kabateck, California executive director of the National Federation of Independent Business (NFIB)
Sylvia Allegretto, labor economist for the Institute for Research on Labor and Employment at UC Berkeley

  • Stacy

    It seems if you own a business and you can not afford to pay your employees a living wage, the business is not properly functioning and should shut down.

  • Ben

    San Jose recently raised the minimum wage to $10. The guy who runs the pizza restaurant in my neighborhood raised his prices for the first time in 8 years to cover this. I am happy to pay a little more for my pizzas to help the workers.

  • Elliott Eugene Blake

    Let’s not forget that fulfillment and job satisfaction goes up as wages go up until about 300k. This makes better, happier workers that are more productive.

  • Karin

    Several San Jose students just completed a grassroots campaign to raise the San Jose city minimum wage to $10 (from $8). These young people did it in under two years – it can, and should, be done – all the research shows many benefits with few drawbacks. A minimum wage raise stimulates the local economy without increasing unemployment or harming small businesses, and helps low wage workers afford Silicon Valley’s pricey rent and food. Measure D passed by a majority in the November 2012 election, and the new rate goes into effect on March 11 – see the details here, including links to national studies:

  • Karin has solid info for a minimum wage raise too:
    Raise the minimum wage!
    From saving working families much-needed cash to reducing poverty, it’s a great way to kickstart the economy

  • jurban

    The way to think about the impact is to talk about the timeframe of its implementation and the local vs broad impact. It will impact some small businesses in the short term. But, the community will, overall, improve its wealth – however modestly at that income level – thereby increasing the consumers’ ability to consume. The “market-driven-wage” argument is a limited scope of understanding of the impact to the local economy.

  • Alonso

    It seems like Mr. Iverson keeps cutting off Sylvia’s comments. Sounds very unfair to her, and makes him sound unprofessional.

  • Demographer

    I agree in theory with minimum wage laws because, as the labor economist argues, otherwise taxpayer-funded income supports to low wage workers are necessary & end up subsidizing business profits, and because very low-income workers can’t buy very much, which isn’t so good for the economy as a whole. But the sad reality is that for many lower end jobs here, minimum wage laws cannot be effectively enforced because this country and this state tolerates so much illegal immigration of low-skilled workers.

    Undocumented “guest workers” in particular can easily be paid below minimum wage because they can live in temporary dormitory style housing (four men to a room) and then send money back to much cheaper countries where that below-minimum wage buys much more than in the US.(US rental housing is about 180% higher than in Mexico, for example).Citizen & permanent resident workers who have to pay American prices & have a family (i.e. for privacy need at least a studio apartment) cannot possibly compete with “guestworkers” whose basic living expenses are so much lower. Current Obama proposals on the illegal immigration just encourage more illegal immigration because it rewards those who chose the illegal rout with quicker benefits than those who choose the legal route. Plus it encourages more “temporary” i.e. “guest workers.”.

    I would be more impressed with the labor economist if she not only supported raising the minimum wage, which is easy for her because it is popular with most Americans of all political & cultural backgrounds, but if she also advocated real enforcement of immigration limits, a position which is politically much more difficult because it is NOT as popular with many of the same constituents who support increasing the minimum wage.

  • Kurt thialfad

    The minimum wage is not a living wage – in the United States. However, it is a living wage in other countries. That’s why a worker can work in the US for minimum wage, while supporting his family back in where-ever-land, where the cost of living is much, much cheaper. Hmmm. Chew on that thought!

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