California´s Minimum Wage and Recommendations for its Effectiveness

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The Economic Impact of the California Minimum Wage Increase 1.0 Introduction On September 25, 2013 California Legislature passed Assembly Bill 10 increasing the minimum wage to $10 per hour by January 2016.1 This increase in minimum wage marks California as having the highest minimum wage of any state in the nation. Jerry Brown, governor of California, said in a statement, “The minimum wage has not kept pace with rising costs. This legislation is overdue and will help families that are struggling in this harsh economy.” 2 Although California AB-10 is a step towards reducing the state’s poverty, it will fall short of helping low income families in the long run due to inflation and the reduced purchasing power of the fixed wage.Thesis 1.1 History of Minimum Wage Federal law mandates that employees working in the United States get paid no less than the statutory minimum wage. The first federal minimum wage was signed by President Franklin Roosevelt in 1938 at the height of the Great Depression.3 Its primary focus was to keep American workers out of poverty. Moreover, the wage increase would increase the consumer’s purchasing authority and restore the economy. It would also help to big businesses from underpaying its hard working employees. A raise in the minimum wage, however, has historically had a negative blowback on the unemployment rate. When minimum wages were changed from 1967 to 1968, the unemployment rate went from 3% to 3.6%.4 The unemployment rate, however, began dropping back down from 1968 to 1969. We saw a similar unemployment rate spike and settle when the minimum wage was raised in 1996 and 1997. This is due to some workers willing to work below the mandated minimum wage rate illegally, thereby pushing o... ... middle of paper ... ...992. [5] Bruno, C. (2013, March 12). Sacramento Spotlight: AB 10 – Minimum Wage Increase. Retrieved,May 5, 2014, from sacramento-spotlight-ab-10-minimum-wage-increase/ [6] Support Raising California’s Minimum Wage. (2013, August 11). . Retrieved May 5, 2014, from [7] Schumacher, K. (n.d.). Assembly Moves Forward a Much Needed Increase in the Minimum Wage. . Retrieved May 5, 2014, from [8] Johnson, K., & Greenhouse, S. (2013, October 13). In Washington State, Home of Highest Minimum Wage, a City Aims Higher. The New York Times. Retrieved May 5, 2014, from highest-minimum-wage-a-city-aims-higher

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