Gov. Gavin Newsom recently announced that California would keep in place the planned increase of the state’s minimum wage to $14 an hour next year, saying it would help lower-income workers who were heavily hit and continue to struggle to keep afloat amid the coronavirus pandemic.
Though having the ability to suspend the schedule increase given the state’s current troubled economy, Newsom said that for hourly workers the increase represents the raise they deserve. He also pointed out that many of those workers “are on the front lines of the pandemic, providing child care, working in our hospitals and nursing facilities and making sure there’s food on grocery store shelves.”
The minimum wage is set to increase to $14 an hour in January of next year for employees working for businesses with more than 25 workers. For businesses with 25 or fewer employees, the increase is to $13. In Los Angeles and in unincorporated areas of the county, the minimum wage was raised to $15 for workers at businesses with 26 or more employees, and $14.25 for those with 25 or fewer employees.
On the other hand, the federal minimum wage of $7.25 per hour has not changed in over a decade, so states, counties, and cities all have taken matters into their own hands to set their own minimum wage. In contrast, workers today who are paid the federal minimum wage are, after adjusting for inflation, paid 29% less than their counterparts 50 years ago.
However, business groups are worried that the increase would push struggling employers towards collapse even further, making it even harder for jobs to come back after they were wiped out by the pandemic.
The state director of the National Federation of Independent Business, John Kabateck, told Mercury News that heftier payroll costs could be a “death flow” for many small businesses that were already struggling to keep their doors open.
According to Jot Condie from the California Restaurant Association, who also spoke to Mercury News, said that as many as 1 million of the state’s restaurant workers have been laid off or furloughed during these times, and that the minimum wage increase would make it “even tougher to bring workers back.”
According to a press release for a 2014 UCLA study, Los Angeles has the most unaffordable rental market in the country. On average, renters in L.A. are paying 47% of their income for rent. Los Angeles has a lower median household income than comparable cities such as New York or San Francisco, but only a small difference in median rents.
