Historic minimum wage increases

In April, the governors of both California and New York signed legislation that will eventually increase their states’ minimum wage rates to $15 per hour. In California, the current minimum wage is $10 per hour. Under the new law, it will increase to $10.50 in 2017, then to $11 in 2018, and increase by $1 annually until it reaches $15 per hour in 2022. Businesses that have less than 26 employees will have an additional year to raise their wages. The law allows the governor to delay increases by one year in case of economic changes. If there are no pauses in implementation, the minimum wage would increase each year based on the rate of inflation beginning in 2024.

In New York State, the minimum wage will increase to $15 per hour by 2018 in New York City. Increases in other areas of the state (including in wealthy suburbs of New York City) will be implemented more slowly.

Proponents of the increases have stated there’s a moral imperative to raise wages for the lowest-paid workers, particularly in the face of high housing costs and large economic disparities between the wealthy and poor. The Reverend Art Gramaje of St. Anthony Mary Claret Catholic Church in Fresno, California, supports the increase because of his belief that “the economy should serve the people — not the other way around. If wages are low and people are exploited, it serves the economy but not the people.”

Some business associations have predicted that employers affected by the increase will reduce the number of jobs or move to other states with lower minimum wages. “A raise of this magnitude this quickly represents a devastating blow to California’s businesses and employers,” said Nathan Ahle, president of the Fresno Chamber of Commerce. 

Workers affected by the increases

At first glance, $15 per hour may sound like a high wage; however, it’s important to note that California’s mandated wage will not reach $15 until 2022. The cost of living in some California cities is among the highest in the nation. For example, the cost of living in Los Angeles is about 40 percent higher than the average for our country. According to the Massachusetts Institute of Technology’s living wage calculator, an adult with one child living in Stanislaus County, California (where the cost of living is close to the national average), would need to earn $22.52 to cover basic needs such as housing, food, transportation, medical and child care. Holly Dias, a cashier at a Burger King in Sacramento, California, says that on her current $10 an hour wage, “there are days where I have to choose between buying formula or diapers, paying rent or buying monthly bus passes — these are choices mothers shouldn’t have to make.”

Who are the workers who will be affected by minimum wage increases? Most aren’t teenagers, research shows. Analysis by the Economic Policy Institute of workers who earn less than $10.10 per hour nationwide finds that only 12.5 percent of these workers are younger than 20 years old, and more than one third of them are between ages 30–54. We often think of minimum wage jobs as ones that are held temporarily. According to Ben Casselman of the website FiveThirtyEight, in the mid-1990’s “only 1 in 5 minimum wage workers was still earning minimum wage a year later. Today, that number is nearly 1 in 3.”

Economists have estimated that California’s new law alone will increase the pay of 5.6 million workers, nearly one in three across the state. Economists’ predictions about the impact of the raises have been mixed. David Neumark, economics professor at the University of California, Irvine, estimates that the raise will reduce employment among the lowest skilled workers by 5–10 percent. He states though that “there’s no question that a minimum wage increase will help more people than it hurts. But it takes a lot of people getting a $300 raise to offset someone losing their job.” Economics professor Michael Reich of the University of California, Berkeley believes that the increase will have minimal effect on jobs, and this “would be more than offset by increases in consumer purchasing power.”

Workers in other states

Groups who advocate for low-wage workers think that California and New York’s actions will prompt other states to take up more substantial minimum wage increases than have occurred in the past. Legislatures in New Jersey, Connecticut, Massachusetts and Washington, DC are all considering a raise to a $15 minimum wage.

How was the figure of $15 per hour first proposed? In 2012, the Fight for $15 campaign was launched by fast-food workers in New York City. Strikes by workers and rallies with supporters from their communities spread to other cities; and eventually Seattle, San Francisco, Los Angeles and Pasadena all passed ordinances to raise their city’s minimum wage to $15, creating momentum that led to the statewide laws in California and New York.

What about workers who don’t live in these areas? 29 states have a minimum wage that’s higher than the federal standard of $7.25 per hour. The current political climate in most of the state legislatures of the remaining 21 states makes it unlikely that state minimum wage increases would be passed. In 2014, President Obama announced in his State of the Union address that he wanted to see the federal minimum wage raised to $10.10 per hour, but Congressional Democrats were unable to get the measure passed. Presidential candidate Bernie Sanders supports raising the federal minimum wage to $15 per hour. Hillary Clinton supports a raise to $12 per hour and encourages states that want to raise their minimums to $15 to do so. Candidates Ted Cruz and Donald Trump have said in debates that they do not favor raising the minimum wage.

Faith and fair wages

In the late 1980’s, theology professor and United Methodist pastor Douglas Meeks wrote a book whose title some might find odd: God the Economist: The Doctrine of God and Political Economy. Meeks wrote that though an economist today is considered someone who is a scientist in his or her approach, the word economy is actually an ancient one that’s derived from two Greek words that mean “household” and “management.” An economist is one who manages the affairs of the household. Meeks writes that modern economics is rooted in the assumption that goods are scarce, that there will never be enough because humans will always want more. God as economist, he writes, “constructs the household with a radically different assumption: If the righteousness of God is present, there is always enough to go around.” Scripture shows us that God’s abundance can be shared over and over through stories such as the appearance of the manna in the desert and the meal of a few loaves and fishes that Jesus used to feed more than 5,000 people.

Faithful economics asks us to measure the health of our society — and our world — by how the most vulnerable are faring. An economy that requires workers to toil long hours while not earning enough to pay for basic necessities is one in need of healing. Prophets such as Malachi deliver God’s judgment not only on sorcerers and adulterers, but also on “those who cheat the day laborers out of their wages as well as oppress the widow and the orphan, and against those who brush aside the foreigner” (Malachi 3:5).

As we discuss the minimum wage, practical matters must of course be considered. It’s necessary, though, for people of faith to begin with the question, What does God’s righteousness ask of us?

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