Minimum Wage
One of the many legal changes phased in with the new year is a hike to the Minimum Wage. Not nationally, though; the federal minimum wage has been fixed at $7.25 since July 24, 2009 [1]. But 13 states did raise their minimums, bringing to 19 the total that are above the federal $7.25 minimum [2].
California is not among the 13 states that raised its minimum effective January 1, though it's currently ahead of the national standard at $8 and has already enacted legislation raising it to $9 come July. In addition, two of California's largest cities, San Jose and San Francisco, already have higher minimums that index with inflation each Jan 1. In SJ it's now $10.15; in SF $10.74 [3].
One thing I hear a lot in political discussions about Minimum Wage is that it doesn't cover living expenses. There's a lot of subtext baked into that statement. Much of it I disagree with.
1) The minimum wage actually has kept up with inflation. I got my first job with a W2 paycheck in 1987. I was a high school student and I was working at a local fast food restaurant. (Note, it was not my first job for money. I had done things like deliver newspapers and mow lawns for years before that.) In 1987 the minimum wage was $3.35. In 2013 money that's $6.87 [4]. The current US minimum wage of $7.25 is higher.
2) Costs of living vary greatly across different locations. It's way more expensive to live in San Jose, CA than in Podunk, Iowa. But the federal minimum applies everywhere in the country. It needs to be kept low (by expensive city standards) so that we don't wreck the economics of rural small towns. But it's fully reasonable that many states and cities have gotten out ahead of the US government to set higher wage standards that make sense for their local economies. By the way, even in San Jose few jobs actually pay the minimum of $10.15. (Source [3] estimated 54,000 jobs, which is less than 5% of all payroll positions.) Fast food jobs generally pay at least $12/hour because of market conditions.
3) The minimum wage isn't expected to be something people would support their families on. It's designed to establish a wage floor for the least skilled, least valuable work out there. People are expected to develop and improve their skills so they provide more value and can command higher wages.
Sources:
1. US Department of Labor, History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009.
2. Huffington Post, "13 States Will Raise Their Minimum Wage For The New Year". 23 December 2013.
3. San Jose Mercury News, "San Jose minimum wage rises again, beating California and national increases". 31 December 2013.
4. US Department of Labor, Bureau of Labor Statistics, CPI Inflation Calculator.
California is not among the 13 states that raised its minimum effective January 1, though it's currently ahead of the national standard at $8 and has already enacted legislation raising it to $9 come July. In addition, two of California's largest cities, San Jose and San Francisco, already have higher minimums that index with inflation each Jan 1. In SJ it's now $10.15; in SF $10.74 [3].
One thing I hear a lot in political discussions about Minimum Wage is that it doesn't cover living expenses. There's a lot of subtext baked into that statement. Much of it I disagree with.
1) The minimum wage actually has kept up with inflation. I got my first job with a W2 paycheck in 1987. I was a high school student and I was working at a local fast food restaurant. (Note, it was not my first job for money. I had done things like deliver newspapers and mow lawns for years before that.) In 1987 the minimum wage was $3.35. In 2013 money that's $6.87 [4]. The current US minimum wage of $7.25 is higher.
2) Costs of living vary greatly across different locations. It's way more expensive to live in San Jose, CA than in Podunk, Iowa. But the federal minimum applies everywhere in the country. It needs to be kept low (by expensive city standards) so that we don't wreck the economics of rural small towns. But it's fully reasonable that many states and cities have gotten out ahead of the US government to set higher wage standards that make sense for their local economies. By the way, even in San Jose few jobs actually pay the minimum of $10.15. (Source [3] estimated 54,000 jobs, which is less than 5% of all payroll positions.) Fast food jobs generally pay at least $12/hour because of market conditions.
3) The minimum wage isn't expected to be something people would support their families on. It's designed to establish a wage floor for the least skilled, least valuable work out there. People are expected to develop and improve their skills so they provide more value and can command higher wages.
Sources:
1. US Department of Labor, History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009.
2. Huffington Post, "13 States Will Raise Their Minimum Wage For The New Year". 23 December 2013.
3. San Jose Mercury News, "San Jose minimum wage rises again, beating California and national increases". 31 December 2013.
4. US Department of Labor, Bureau of Labor Statistics, CPI Inflation Calculator.