In California, we are fortunate to have a state minimum wage that is higher than the federal minimum wage of $7.25 an hour. California’s minimum wage applies to nearly all workers in the State, with limited exceptions. On July 1, 2014, California’s minimum wage will increase to $9.00 an hour. It will increase again to $10 an hour on January 1, 2016.
I have written before about how important it is to raise the minimum wage. One of the biggest problems with the minimum wage is that it is adjusted manually, rather than increasing automatically in relation to inflation. So, for example, the minimum wage had been flat at $8 an hour since the last increase 6 1/2 years ago. The result is that each year without an adjustment, workers lose out. As I previously explained, the reason is simple: when the cost of living rises each year but wages do not increase to match, their value is slowly eroded.
Consider, for example, that the federal minimum wage in 1968 was about $10.60 an hour in today’s dollars. Even with adjustments by Congress, the real value of the minimum wage declined steadily since then, and hasn’t gotten close to $10 an hour in real dollars, even with adjustments. In 2006, it was at its lowest point in over 40 years, at only $5.97 an hour in 2013 dollars.
More changes may be on the way. Legislation to further increase the California minimum wage passed the State Senate earlier this month. If it succeeds, it would raise the minimum wage to $11 an hour in 2015 and to $13 an hour in 2017. Most importantly, it would also tie the minimum wage to inflation starting in 2018. If passed, this legislation would ensure that the minimum wage doesn’t fall behind again.
Let us hope that the minimum wage increase has a positive impact not just on those who are earning the bare minimum, but also on those who make a little more than that but still do not earn a living wage.