‘Raise the Wage Act’ will have little effect in California
FOR IMMEDIATE RELEASE
Contact: John Kabateck, California State Director, 916-956-9027, [email protected],
or Shawn Lewis, Policy Director, 916-342-9315, [email protected],
SACRAMENTO, Calif., July 18, 2019—Although it would have a huge impact on many states in the nation, today’s vote on H.R. 582, the Raise the Wage Act, will cause barely a ripple in California.
“The Raise the Wage Act will have little effect in California, because our minimum wage is scheduled to increase to $15 an hour on Jan. 1, 2023, a full year sooner than the federal proposal,” said John Kabateck, California state director for the National Federation of Independent Business. “Like California’s incremental minimum-wage increases, the federal government’s would also make it more difficult for teens, young adults, and the least skilled to find a job and keep it. And, like California’s, it will do absolutely nothing to alleviate poverty.”
Kabateck cited three reports to support his point:
- Only around 2 percent of Americans earn a minimum wage or less, according to the U.S. Bureau of Labor Research, and as University of Georgia economics professor Jeffrey Dorfman points out, “Within that tiny group, most of these workers are not poor and are not trying to support a family on only their earnings. In fact … 63 percent of workers who earn less than $9.50 per hour (well over the minimum wage of $7.25) are the second or third earner in their family and 43 percent of these workers live in households that earn over $50,000 per year. Thus, minimum wage earners are not a uniformly poor and struggling group; many are teenagers from middle class families and many more are sharing the burden of providing for their families, not carrying the load all by themselves.”
- According to Dorfman’s fellow economist, Joseph Sabia, “Advocates of increasing the minimum wage to $15 have argued that such a hike will alleviate poverty and reduce public expenditures on means-tested public benefits. But a review of the literature on the effects of past minimum wage increases on poverty provides little support for these claims. The vast majority of poor individuals and individuals on welfare do not work part-time or full-time and will not gain from increases in the minimum wage.”
- Argues Michael Saltsman of the Employment Policies Institute, “The best case against a higher minimum wage might be its irrelevance. Since the last increase in the federal minimum wage was fully phased-in in 2010, both the number and percentage of people earning it has fallen every year, as employees earn raises through their own initiative. Multiple studies confirm that a majority of minimum wage employees–who are disproportionately young and less-educated–earn a raise within one to 12 months on the job. For employees who are older and/or have children, better alternatives exist—including the Earned Income Tax Credit, which operates through the tax code instead of a mandate on employers.”
In a letter to U.S. House members, NFIB President and CEO Juanita Duggan wrote, “The Raise the Wage Act will eliminate hundreds of thousands of small business jobs. The non-partisan Congressional Budget Office confirms that this legislation will damage the small business economy, estimating that 1.3 million workers will become jobless and total real income will be reduced by $9 billion by 2025. NFIB’s own Research Center estimates this legislation will cost the economy 1.6 million jobs, reduce real GDP by over $980 billion, and reduce economic output by more than $2 trillion by 2029 …
“… Small businesses employ nearly half of the private-sector workforce. More than doubling the federal minimum wage over a short period will have real and significant consequences for small business owners and employees.”
The House vote today is expected no later than 3 p.m. EDT.
Keep up with the latest on California small-business at www.nfib.com/california or by following NFIB on Twitter @NFIB_CA or on Facebook @NFIB.CA
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For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.
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