'Fight for $15' rally. (photo: Mary Altaffer/AP)
30 March 16
California announces deal to reach $15 an hour by 2022, New York could soon follow
hen
it began a few years ago, the campaign for a $15 minimum hourly minimum
wage seemed little more than a populist pipe dream. The target was more
than twice a federal floor of $7.25 that hasn’t been touched since
2009, and it easily swamped the most aggressive proposals from leading
Democrats, which barely scraped double digits.
That goal looks much different now, as two of the
nation’s largest states are poised to write $15 minimum wages into law
within the span of a week. Both California and New York would phase in
their increases over several years, but simply enshrining a path to $15
marks a rapid advance that has surprised liberal activists and
economists alike.
On Monday, Governor Jerry Brown struck a deal
among top legislators, labor leaders, and his Democratic administration
in California to reach $15 an hour by 2022 for large businesses and a
year later for companies with 25 employees or less. The state
legislature could enact the plan by the end of the week. In announcing
the agreement, Brown leapfrogged fellow Democrat Andrew Cuomo of New
York, who for weeks has been trying to cajole legislative leaders into
raising the wage floor to $15 statewide within five years and sooner for
New York City, where the cost of living is higher.
If both states pass their proposals, more than 5
million minimum-wage workers could see a raise, according to government
estimates. Democrats might need to win the White House and both houses
of Congress to enact increases at the federal level, but states and
cities have been leading the way on the minimum wage for a while now.
The deal in California is “the biggest victory yet”
for the Fight for 15 movement, said Kendall Fells, the campaign’s
national organizing director. Momentum at the city level has been
building since 2012, fueled by public pressure that included rallies and
strikes by fast-food workers. Cities including Seattle, San Francisco,
and Los Angeles have enacted paths to $15, and Massachusetts has moved
to raise the hourly pay of home health workers to $15. In New York,
fast-food workers are set to hit the target following action by the
state’s wage board, which Cuomo controls.
Yet California would be the first state to enact $15
statewide across all industries—unless Cuomo can strike a deal in New
York that would increase the state’s $9 minimum wage at a much faster
clip. While the governor’s office told The Wall Street Journal
that Brown’s announcement would not impact negotiations in Albany, a
top union advocate for increasing the state’s minimum wage said
otherwise. “It’s absolutely lit a fire under the negotiators,” said
Michael Kink, the executive director of the Strong Economy for All
Coalition, in an interview Tuesday afternoon. Kink said he expects Cuomo
and legislative leaders to announce a budget deal that includes a
minimum-wage increase within the next 24 to 48 hours. “There’s a
competitive streak in our governor,” Kink added, in what most political
observers would consider an understatement about the second-term
Democrat. “I think that he intends to demonstrate national leadership.”
Unlike California, New York could create different
minimum-wage time lines for New York City as compared with the rest of
the state. But the Golden State proposal includes key “off ramps” that
have not—thus far—been under consideration in New York. They would allow
the governor to unilaterally pause or slow the yearly increases if job
growth stalls or tax revenue plummets. Once the minimum hits $15,
however, the governor could not lower it. “You get a big recession, and
particularly in different parts of the state where wages are a lot
lower, there could be real problems in terms of a reduction of jobs,”
Brown said. The off ramps, as he called them, would take into account
“the vagaries of the capitalistic economy.”
There were already indications on Tuesday that
Republicans in New York were seizing on the fine print in the California
proposal to extract concessions from Cuomo, which liberals vowed to
fight. “We would oppose the kind of off ramps proposed in California,
and they’re not under consideration in New York,” said Bill Lipton, the
state director of the New York Working Families Party. “A $15 minimum
wage is the minimum that it will take to make sure working people can
support themselves and their families, and when families can not just
survive but thrive, that’s good for the economy.”
While Cuomo has been pushing for a $15 minimum
wage in New York for the last six months, Brown faced a different
political dynamic in California. The deal he struck was, he
acknowledged, an attempt to head off a ballot initiative that was
expected to pass in November. The proposal on the ballot would have
phased in the increases sooner and without giving the governor
flexibility to slow them during a recession.
Union leaders who had been
backing the ballot initiative said they would scrap it as soon as the
legislature passed the compromise proposal. Fells said it was an
acceptable trade-off for most workers. “The difference between a year or
two is not a big difference when you haven’t been receiving any raises
at all,” he said. “That’s the situation these workers are in.”
Brown’s demand for off ramps underscores the
concern that exists even among supporters of a higher minimum wage that
an increase to $15 an hour could have negative economic effects,
especially in regions where prices and wages are lower.
Alan Krueger, a
Princeton economist and the former chairman of President Obama’s Council
of Economic Advisers, wrote last October
that while a “moderate” minimum wage should have little to no effect on
employment, a $15 an hour floor “could well be counterproductive,” at
least on the federal level.
Longtime opponents of higher minimum wages have far
fewer doubts that the new laws would discourage hiring. “We’ve already
run the experiment. We know the answers,” said Douglas Holtz-Eakin, the
president of the conservative American Action Forum and a former
director of the Congressional Budget Office. He said the impact would be
particularly bad for teenage unemployment, which shot up to more than
20 percent after the last federal increase was enacted in the middle of
the Great Recession. “They are the classic low-skilled,
least-experienced kind of worker that gets hit by the minimum wage,” he
said on Tuesday. “We’ll see the same thing in California and New York
and whoever else decides to go that way.”
Holtz-Eakin said, however, that the consequences would
be more subtle than mass layoffs. “The caricature of the employer
throwing them out the front door—that’s not how it happens,” he said.
“They can’t afford to expand, and the new locations can’t afford to
start, and the dynamics of employment growth get interfered with.”
Supporters of minimum-wage increases argue that any
negative effects on hiring will be more than outweighed by the boost in
the purchasing power of workers with bigger paychecks, who will spend
more money and spark a virtuous cycle for the economy. And they say $15
is not as large—or dangerous—a figure as it might look at first blush.
Because the minimum wage was never indexed for inflation, either on the
federal level or in most states, it lost value over the years, and the
sharp increase merely catches it up to where it was—relative to the
broader economy—in the 1960s. As Kink put it: “This is not necessarily a
wild experiment.”
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