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HomeSpotlight Story | Bird’s Eye View | Budget & Taxes | Politics & Leadership | Governors | Hot Issues | Once Around the Statehouse Lightly
Bypassing seven years of congressional inaction and accelerating a national trend, state legislatures in California and New York have passed laws that will gradually raise the minimum wage to $15 an hour. In separate legislation these states have also extended family leave for workers who take time off to care for their newborn.
Twenty-nine states and the District of Columbia now have wage floors above the federal minimum of $7.25 an hour, according to the National Conference of State Legislatures (see Bird’s eye view). The federal minimum has been stuck at this level since 2009 and there are no prospects for raising it during this presidential election year.
Taken together, California and New York are home to more than 57 million people, about a sixth of all Americans. The minimum wage bill signed into law by Democratic governors in these two states have similar goals but also differences produced by legislative compromise. Such compromises have eluded Congress, where Democrats favor and Republicans oppose increasing the federal minimum.
Away from the nation’s capital, the minimum wage is a somewhat less partisan issue. In 2014, voters in four Republican-leaning states – Alaska, Arkansas, Nebraska and South Dakota – approved minimum wage hikes by substantial margins. Legislatures in 10 states also approved minimum wage increases in 2014; Rhode Island joined the list in 2015.
There is considerable variety in the wage floors of the states, depending in large part on economic conditions. Some states have been creative in the standards they have adopted. Nevada, for instance, has an $8.25 minimum for businesses that do not provide health care for their workers and a $7.25 minimum for those that do.
Economists differ on the impact of increasing the minimum wage, a centerpiece of the liberal agenda favored by Democratic presidential candidates Hillary Clinton and Bernie Sanders. Presumptive Republican nominee Donald Trump has wavered on the issue, first opposing a minimum wage increase and lately hinting that he might favor it. Proponents of increases say present minimums are well below a living wage. Opponents assert that boosting the minimum will force businesses to reduce jobs and in doing so hurt people that the wage increases are meant to help.
When Gov. Jerry Brown (D) signed the California minimum wage increase into law, he called it a matter of “economic justice” but acknowledged the possibility of hardships for some at the bottom end of the economic scale. On balance, he said, the benefits outweighed the drawbacks. Brown brokered the compromise under which California avoided an expensive ballot initiative campaign. The law raises minimum wages in six stages to $15 an hour by the end of 2022.
The New York law will raise the minimum wage to $15 an hour by 2018 – but only in New York City. Unlike California’s one-size-fits-all measure, the New York measure sets varying rates and timetables in different parts of the Empire State. Long Island and Westchester County will not reach the $15 minimum until 2021; areas north of Westchester will then have a minimum wage of $12.50 an hour.
New York Gov. Andrew Cuomo (D) had wanted a uniform minimum throughout the state, but the state senate, narrowly controlled by Republicans, insisted on variable wage floors. Did the senate save Cuomo from himself? Some conservatives think so; they say less affluent areas cannot afford the same minimum as New York City.
Such an argument could be made with even greater force in California, the nation’s most populous state and third largest in size. A New York Times analysis of the new California law suggests it could be beneficial in places such as San Francisco and San Jose, where the minimum wage is half or less of the median wage, but not in Fresno or Merced, in California’s central valley, where the new minimum will be three-fourths of the median wage. “Many economists are concerned that the measure may lead to job losses in places where the minimum wage will be relatively close to what the typical worker is expected to earn,” the Times said.
The Golden State is a study in contrasts. Economic growth is surging, and the jobless rate, although still higher than the national average, has dropped to 6.3 percent. But California has the nation’s highest poverty rate at 23.6 percent. The county with the state’s worst poverty rate is Fresno, at 28.6 percent.
California also has vast disparities in wage growth. According to a Los Angeles Times study, the 482,000 Californians employed in technology, entertainment, publishing and other information businesses have seen their average weekly wage rise 44 percent since 2010 while the 5.2 million people in education, health and hospitality jobs have seen small increases and in some cases taken pay cuts. The gap between high-income and low-income Californians is twice as large as it was in 1980, the Public Policy Institute of California reported last week.
California’s legislature, solidly controlled by Democrats, has embarked on a series of efforts aimed at helping lower-paid workers and young parents who leave work to care for their families. Last month the legislature approved an expanded family leave program that, beginning in 2018, will provide most workers with 60 percent of their wages for up to six weeks, capped at about $1,l00 a week. Those making $20,000 or less annually will receive 70 percent of their regular pay. While the law makes no gender distinction, its principal beneficiaries will be working mothers.
In signing the bill Gov. Brown said he was trying to compensate for the “gross inequality” that has become a central political issue in the United States and several other countries.
The measure, costing an estimated $587 million annually when fully implemented, will be financed by an increase in payroll deductions through the state’s disability insurance system. Some Republicans fear this could prove a drag on the economy, but there was little organized opposition. The California Chamber of Commerce, a major lobbying force in Sacramento, did not take a position on the bill.
Government-subsidized family leave is commonplace in industrialized countries in Europe and Asia but rare in the United States. This was noted by President Obama in a statement praising the new California law. “Congress needs to catch up to California—and to countries all over the world—by acting to guarantee paid family leave to all Americans,” Obama said.
Three other U.S. states provide modest amounts of family leave. New York in March extended partial pay from six weeks to 12 weeks. New Jersey and Rhode Island provide partial pay for up to six weeks.
State experiments in providing family leave and higher wage floors demonstrate a valuable feature of the U.S. federal system. Supreme Court Justice Louis Brandeis long ago suggested that states can serve as laboratories of democracy, trying out “novel social and economic experiments without risk to the rest of the country.”
In 1932 when Brandeis wrote this oft-quoted dissenting opinion, the federal government was not the behemoth it is today. Too often, however, Washington resembles a hapless giant, divided by partisanship and deadlocked by the politics of maneuver.
Now, more than ever, leadership and experimentation are needed from the states. The nation can learn from what’s happening in California and New York.