By NATHAN GARDNER
California is poised to become the first state in the U.S. to raise their minimum wage to $15 an hour, sparking a heated national debate about the necessity of such a measure, and its consequences.
Opponents of the bill argue that, if enacted, it will present an undue burden for businesses which will be forced to slash jobs and look to alternatives, such as increasing automation — a scenario that would have a major negative impact on California’s economy. Proponents, however, claim the increase in pay would have a positive impact on the economy – as millions of people would have more disposable income – as well as decrease the widening economic gap between the wealthy and everyone else.
“It’s a matter of economic justice,” California Gov. Jerry Brown said at a news conference on Monday.
Many wonder what the wage increase will mean for small businesses.
“The perception is that, as restaurant owners, we make a whole bunch of money, but the reality is we’re skating on pretty thin profits as it is,” local entrepreneur and Tampa Pizza Company owner David Burton said. “When you take our second largest expense and dramatically raise it, there’s a lot of concern there. With these minimums that are so high, restaurants are going to have to rethink how they do business.”
Some can see a silver lining for small businesses.
“The opportunity to hire people, who are more skilled and more experienced, at minimum wage could be a benefit,” said Stephen Schrutt, founder and CEO of Hunger & Thirst Restaurant Group in St. Pete. However, even the most optimistic have reservations. “It’s also a double-edged sword in that everyone is guaranteed that, and you’re giving that to someone who hasn’t earned it,” Schrutt added.
A common concern among opponents of the bill is the unbalanced effect this change will have on lower income areas compared to their more affluent neighbors.
“That’s because the rise of the minimum wage to $15 over the next six years would push the wage floor [in low income areas] much closer to the expected pay for a worker in the middle of the wage scale, affecting a much higher proportion of employees and employers there than in high-wage cities,” Noam Scheiber and Ian Lovett said in an article for The New York Times.
In Florida, many believe this change will impact California less than it would here because the cost of living there is already so high.
“The wage will gradually rise, hitting $15 an hour in the year 2022, and I think that gradual rise is probably appropriate because California is such an expensive place to live, and you can’t have a living wage that’s less than that,” said Dr. Frank Ghannadian, Dean of UT’s College of Business. “It’s difficult to sustain one person there [on less], let alone a whole family.”
Steven Card, a senior entrepreneurship major, works at the Starbucks on Kennedy making minimum wage.
“I’m not necessarily bothered [by the fact] that I’m not making that kind of money,” Card said. “It’s not like I have a job that I feel should be paying me that amount.”
Highlighting the contentious nature of raising the minimum wage, Ghannadian continued to say he was never in favor of a minimum wage.
“It creates a disequilibrium, economics-wise, by having any kind of minimum wage,” Ghannadian said. “When you raise the minimum wage, unemployment rises because two of California’s key demographics – immigrants and young people – can’t find jobs.”