Dispelling The Fear Mongering Surrounding Minimum Wage Increase

Sacramento, California (TFC) – There’s been heavy discussion, and a whole deal of pandering flooding social media recently regarding California Governor Jerry Brown’s decision to sign Senate Bill 3 the; ‘Fair Wage Act’ to effectively increase the minimum wage to $15/hour by year 2022. I’ve done some research and thinking on this topic, and I’d like to break down the Senate Bill, some opinions from both sides of the equation, and hopefully put the pandering to rest.

The summary of SB 3 from Ballotpedia;

Under existing law, California’s minimum wage will increase from $9.00 per hour to $10.00 per hour on January 1, 2016. This measure increases the minimum wage to $11.00 per hour, effective January 1, 2017, and by $1.00 each of the next four years, to $15.00 per hour on January 1, 2021. Thereafter, adjusts the minimum wage annually based on the rate of inflation for the previous year, using the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

Proponents of SB 3 are numerous including Lt. Governor Gavin Newsom, San Francisco Mayor Ed Lee, and a host of labor unions. “Who can live off $21,000 a year? Nobody can. People have a right to a decent wage, wherever they live in California.” Said Mayor Ed Lee.

Antagonists of the bill including the National Restaurant Association argue that the impact of the bill on their industry is enough to cripple the economy. Here’s an excerpt from restaruant.org;

Restaurants are a critical provider of employment to millions of individuals. They are labor-intensive businesses that already devote about a third of their sales to wages and benefits. Pre-tax profit margins for restaurants typically range from 3 to 6 percent. Many restaurateurs would be forced to limit hiring, increase prices, cut employee hours or implement a combination of all three to pay for the wage increase. According to National Restaurant Association research, 58 percent of restaurant operators increased menu prices and 41 percent reduced employee hours following the 2007 minimum wage increase.

So let’s break this down a little further. The Association would like for restaurateurs (applies for all industries). To tremble with fear at the thought of incremental increases in minimum wage for their employees. Which is a valid reaction from an industry that is notorious for paying workers low wages. With this in mind, and with the affordable care act effectively pushing employers to drop their employee hours to avoid giving them benefits, is it any wonder that legislators are noticing the youth get buried with higher costs of living amid stagnant wage increases? Is it any wonder that those very youth are speaking out and demanding wage increases?

Take a look at the chart below regarding home prices compared to other states with a large populace. From Legislative Analyst’s Office

From LAO

I live in CA, and work a 9 – 5 that pays well over the current minimum wage. To find a decent 2 bedroom home for rent where I preside takes just about half of my monthly income, without any children, without a car payment, credit card debt, just basic essentials like water/garbage, gas, insurance, cell payment, etc. my current cost of living allows for almost nothing to be saved. I couldn’t fathom being a single parent in a single income household in this state.

Guess which industry tops the chart with regard to employees whose household also received one or more benefits through Public Assistance?

public_assistance_share_of_workers_by_industry

Now to dismantle the meme itself. The meme depicts machines that are alleged to be automated ordering devices for a fast food restaurant chain. It’s an ignorant meme, and here’s why…

Meme circulating alleging massive jobs losses with minimum wage hike. From facebook.com

Meme circulating alleging massive jobs losses with minimum wage hike. From facebook.com

The amount of employees that take orders at the front of a fast food store equal about 1 to 3… Maybe 1 more during lunch rush in a busy city. Then back to 1 or 2, for the rest of the day. The meme purports that multiple workers per store would lose their positions. Have you been into a supermarket, or big box store with automatic checkout? There isn’t ever a lack of cashiers in those places. In fact… There’s always an employee or 2 that watch over the machines for loss prevention, and to guide people less technologically advanced on how exactly to weight the cabbage in a sea of produce on the screen before them. My point is… An employee is inevitable at these machines just to keep people from going crazy while using them. Not to mention that whenever something becomes automated it takes a team of people to come up with a concept, manufacture, sell, program, and maintain the machinery. So while a machine might make obsolete the job of one person, it has created 2 for a different industry.

Let’s take that a step further now. In my lifetime, I’m expecting to see driverless vehicles. The cars we drive will one day commute everyone about freeing them up to read the news, or say, finish breakfast on the way into the office. What happens when the day comes that cars are flawless and there isn’t a need for Highway Patrol officers to extort citizens on their commute?

We need to be looking at the bigger picture. A few restaurant owners losing their businesses is likely to happen, but if it increases your 28 year old daughter’s paycheck enough to finally move out of the house. Is it worth it?