Liabilities and Losses: $15 Minimum Wage Increase

ERIN KIM
Staff Writer

On March 28, California Gov. Jerry Brown announced that he had reached a deal with lawmakers and labor unions to raise the minimum wage from $10 per hour to $15 per hour by 2022. The law, known as SB-3, would essentially allow the governor to delay minimum wage hikes during an economic decline. Proponents argue that the legislation would benefit workers, leading to greater work efficiency, lower rates at which businesses lose staff, and greater gross domestic product. Labor unions had initially started a $15 minimum wage initiative called the Fair Wage Act of 2016 that was certified for the Nov. 8, 2016 ballot but due to the passing of Senate Bill 3, the act will most likely be withdrawn.

According to the Los Angeles Times, there are also several problems that will accompany the enaction of this legislation. When the minimum wage rises, the cost of goods and products will also rise. This ultimately results in inflation when the rise in prices leads to the lessening ability of customers to buy goods and services. Contrary to the belief that raising the minimum wage would lead to lower turnover for businesses, this piece of legislation would actually lead to greater loss of staff for employers since these business owners would have to pay more money to their employees. While some employees may be making slightly more money, others will inevitably be left unemployed. It’s essentially an ineffective tool to combat unemployment as business owners would eventually consider replacing workers with robots or computers. The result will be a huge burden on businesses and consumers alike.

Raising the minimum wage to $15 could also present various challenges for parents. Since the cost of services will rise, so will the cost of day cares which is already high enough as it is. Parents would have trouble searching for day cares they can afford, and child care programs may also start going out of business. As such, students with younger siblings may realize that a higher minimum wage results in negative effects such as less allowance and greater difficulty for parents to support their children’s college tuitions. The idea of raising the minimum wage to $15 is supposed to create a “living wage” instead of creating more poverty and inequality.
Although SB-3 comes with certain advantages, the reality is that a $15 minimum wage would simply be a tax on everyone. The point of raising a minimum wage is to provide a “living wage.”