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CA & NY Minimum Wage

With California and New York implementing statewide plans for a $15 an hour minimum wage, we can expect other states and likely more cities to propose their own minimum wage increases soon.

The push for a $15 minimum wage has been around for several years. Demonstrations in favor of it began in November of 2012, when fast-food workers in New York City walked off their jobs in protest of their low wages. While 29 states and the District of Columbia have minimum wages above the federal requirement, and several have passed significant increases in the last year or two, the federal minimum wage of $7.25 hasn’t been increased since 2009. Since then, it has lost close to ten percent of its purchasing power due to inflation, according to the Pew Research Center. Analysts, such as the National Employment Law Project, say that the rate of $15 per hour is slightly above the cost of living in many cities and note that four in ten employees in the U.S. make under that amount.

No city or state currently has a $15 minimum wage for all employees, although the states of California and New York will be working towards that number. Some cities and states that have passed incremental increases to reach a $15 minimum wage will only apply them to certain kinds of workers. Massachusetts, for example, has a planned statewide increase to $15, but only for home health care workers. Cities with a planned $15 minimum wage for all non-exempt employees include Seattle (by 2017 for businesses with at least 500 U.S. employees and by 2021 for others), San Francisco (by 2018), the District of Columbia, and Los Angeles (both by 2020).

The largest concern for business owners is that they will be unable to afford the increase. Some owners say they may have to downsize their workforce in order to pay the required rate and still cover other costs, and that the loss of employees may bring a loss in revenue. Critics of minimum wage increases point to studies that show a connection between an increase to the minimum wage and a rise in unemployment. Supporters point to studies that indicate raising the minimum wage to $15 an hour nationally would result in nearly half a trillion dollars being pumped into the economy, giving millions of Americans more purchasing power and stimulating hiring in the process.

What comes next? In the short term, additional states might consider raising the minimum wage for certain workers or for all non-exempt employees. And as efforts to raise the federal minimum wage above $7.25 have so far failed, a national increase to $15 is for now almost certainly out of the question. In the long run, the political pressure behind the $15 minimum wage will likely increase as the cost of living continues to rise and more cities and states set $15 an hour as the new minimal standard.

Content provided by TPC HR Support Center.