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Running head: MINUMUM WAGE 1 Minimum Wage in California
Brooke Jackson
Gen 499: General Education Capstone
Instructor Bethune
06/03/2017 MINIMUM WAGE 2
Minimum Wage in California When people think of California they imagine beaches, sunshine, and wealth, they
imagine the American Dream where hard work and dedication create a livelihood that is
obtainable by anyone willing to work. Living in a rural farming community this dream is less
obtainable because most entry level positions pay minimum wage. California is set to raise the
minimum wage on an annual basis until it reaches $15.00 per hour in 2023. The minimum wage
increase can affect everyone from employees to employers, producers to consumers. With a lot
of discussion about whether or not minimum wage should be increased, it has been a topic of
concern for many including myself. Minimum wage should not be increased because it will
eliminate jobs because fewer employers will be able to support the minimum wage hike,
therefore more Americans will be unemployed. Instead of increasing minimum wage
Californians should look for ways to provide more people with jobs and help create skill sets for
individuals to be able to obtain higher paying jobs.
Problem
Minimum wage is a controversial issue because there are many who passionately want
higher wages and people who avidly are against increasing wages. According to the Department
of Industrial Relations (2017) minimum wage in California began in 1916 and was set at $0.16
per hour, 101 years later as of January 1, 2017, minimum wage is now at $10.50 and will
increase annually until it reaches $15.00 per hour January 1, 2023. This is a societal problem
because increasing minimum wage affects everyone. “Minimum Wage hikes end up hurting the
very people they are intended to help by jeopardizing the jobs of those most in need of
assistance” (Flynn, 2006) Smaller towns will more likely be affected by a minimum wage MINIMUM WAGE
increase that larger town and small businesses will be impacted more than large businesses or 3 corporations. Small businesses can potentially go out of business because they will not be able to
pay the wages and the increase in costs that will be associated with a minimum wage increase.
This will cause many to become unemployed.
Another problem associated with a minimum wage increase is that it significantly affects
the consumers. Companies will be increasing prices in order to cover the wage increase,
therefore it is costing the consumers more money. According to McCurdy (2015) businesses will
have three options when minimum wage increases “First, they can reduce employment or adjust
other aspects of the employment relationship (e.g., fewer fringe benefits or training
opportunities), in which case some low-wage workers pay themselves through loss of their jobs
or by receiving fewer nonsalary benefits; second, firms can lose profits, which case owners pay;
and, third, employers can increase prices, wherein consumers pay.” All of these options
negatively impact all citizens in one way or another.
Minimum wage increase can sound like a great idea, people will have more money to
spend, and then that, in turn, brings more money into the economy. With that being said there are
also consequences to that because if wages increase then the costs increase and that hurts
everyone’s checkbook. According to a report by the Congressional Budget Office (2014) “Most
of them would receive higher pay that would increase their families income, and some of those
families would see their income rise above the federal poverty threshold. But some jobs for lowwage workers would probably be eliminated, the income of most workers who became jobless
would fall substantially, and the share of low-wage workers who were employed would probably MINIMUM WAGE
fall slightly.” When many low-wage workers lose their jobs they become more dependent on 4 government assistance.
A small increase in minimum wage does more harm than good to low-wage workers. The
article “Who Benefits From a Minimum Wage Increase?” is important because their results show
us that low-wage workers who experience a small increase tend to have lower wage growth than
if there had been no wage increase at all. A big increase in minimum wage not only increases the
wages of those workers who previously earned less than the new minimum wage but also helps
workers with reasonably higher wages too. Another article pulled information from the years
2005-2008 and specifically looks at “estimating how the wage effects of a minimum wage
increase differ across the wage distribution and by the size of the minimum wage increase. Most
studies assume that a minimum wage increase causes those workers with an initial wage between
the old and new minimum wage to have their wage bumped up to the new minimum wage”
(Lopresti & Mumford, 2016, p.3). It is important to look at all aspects of wage distribution when
setting minimum wage requirements.
Minimum wage jobs were created to help people get into the workforce, like high school
students, people right out of college, or a spouse or family member to add a second income, not
to support a family. Most minimum wage workers are young adults and high school age, and the
purpose of a minimum wage increase is to help out poverty stricken people not high school
students who are new to the workforce. “Many people who live in poverty do not work, and
would thus be unaffected by an increase in the minimum wage. In addition, workers who earn
minimum wage are generally not the primary breadwinners in their households.” (Hassett & MINIMUM WAGE
5
Strain, 2013). Minimum wage positions should be for young adults or a secondary income for
families.
Employees that earn minimum wage typically perform at a minimal productivity level
often times because they are unskilled or uneducated, some maybe just unmotivated. A lot of
employees are not willing to put in the effort to try and get a better paying position. If minimum
wage increased then in some cases it would be beneficial for employers to lay off those workers
and cut back on their staff and hire someone who may be willing to do the job of two people and
make more than minimum wage. “Some lucky workers will earn more money after a minimum
wage increase. But because low-skill workers will be more expensive to employ than they were
before, the increase will cause many workers to have their hours cut and lost their jobs. (Mathur
& Strain, 2012). This is good for some, but not for all.
Ethics involves the greatest good for the greatest number of people. We must not bite the
hand that feeds us, if we increase wages too high, small companies are not going to be able to
compensate their employees and will eventually shut down. A lot of businesses in small towns
are already shutting down because of the increases in wages. Another ethical dilemma looking at
youth coming into the workplace, if we pay them too much it will discourage them from going to
college, or try to obtain a higher education because they are about to work right out of high
school and money seems great.
Money can be a great incentive for some, but a lot of employees will do more for less
money if they are appreciated and respected. Minimum wage increases are like a Band-Aid
fixing a broken system. The employees will be happy temporarily but if it is not a job they love
for people they care about, they will continue to want more money all the time. “Critics of MINIMUM WAGE
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minimum wage increases often cite factors that will reduce employment, such as automation or
reduced sales, as firms raise prices to recoup their increased costs. Advocates often argue that
better-paid workers are less likely to quit and will be more productive, and that minimum wage
increase positively affects jobs and economic output as workers, can increase their consumer
spending” (Reich, M., Allegretto,S. C.M., 2017). If employers really want to get their employees
to be more productive, they should let them know they are appreciated and provide them with
positive feedback. Money may be a motivator but it is just a small piece of a puzzle for
employers to keep employees happy.
Conclusion
Minimum wage jobs were created for young adults and not to support a family. If we
really want to do the greater good for the greastest number of people, increasing miniumim wage
is not the way to go. We need to create more jobs not take them away from people that are
willing to work. We need more incentives for working adults that do not necessarily revolve
around increasing wages. Minimum wage should not be increased because it will eliminate jobs
because many employers will be unable to financially support a minimum wage hike, and that
will leave more Americans unemployed. MINIMUM WAGE 7
References Congressional Budget Office. The Effects of a Minimum-Wage Increase on Employment and
Family Income. 18 February 2014. https://www.cbo.gov/publication/44995
Fillion, R. (2016). Division of labor: the debate over how to create jobs and support works
continues to split along party lines. State Legislatures, (6), 10.
Flynn, M. (2006), Employment Policies Institute ("Hot Topic" WSJ 2006 Pg. 1)
Hassett, K.A., & Strain, M.R (2013, March 10). Why we shouldn’t raise the minimum wage.
Retrieved May 26, 2017, from https://www.aei.org/publication/why-we-shouldnt-raisethe-minimum-wage/
History of California Minimum Wage. (n.d). Retrieved May 26, 2017, from
https://www.dir.ca.gov/iwc/MinimumWageHistory.htm
LaRose, A. (2015, October 07). Raising and Indexing the Federal Minimum Wage: An Ethical
and Economic Imperative. Retrieved May 26, 2016, from
http://harvardschoolreview.com/raising-and-indexing-the-federal-minimum-wage-anethical-and-econonmic-imperative/
Lopresti, J.W., &Mumford. KJ. (2016). Who Benefits from a Minimum Wage Increase? ILR
Review, 69(5) 1171-1190. Doi; 10.1177-0019793916653595
MaCurdy, T. (2015). How effective is the Minimum Wage at Supporting the Poor? “Journal of
Political Economy 123, no. 2: 497-545. EconLit With Full Tex, EBSCOhost (accessed
June 1, 2017). MINIMUM WAGE
Mathur, A., & Strain, M.R. (2012, July 18). Are Minimum Wages Fair?. Retrieved May 22, 8 2017, from http://www.aei.org/publication/are-minimum-wages-fair Reich, M., Allegretto, S.A & C.M. (2017, January 11). Effects of a $15 Minimum Wage in
California and Fresno. Retrieved May 22, 2017, from http://irle.berkeley.edu/effects-of-a15-minimum-wage-in-california-and-fresno/
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