Backers of a $15 statewide minimum wage initiative have collected enough signatures to put their proposal on the ballot in November. And they appear to have momentum, with a dozen cities including Los Angeles having adopted wage floors higher than the state's $10 an hour, and polls showing strong public support for an increase. Nevertheless, there is still considerable concern that increasing the minimum wage by an unprecedented amount statewide would hurt rural communities or regions that have less robust local economies.
It's important to recognize that California is still in the early stages of an economic experiment with raising the minimum wage, having increased it 25% from 2014 to 2016. Studies have shown that modest, gradual pay hikes don't have significant negative effects on jobs, but there's little experience with wage increases on the scale of $15 an hour by 2021 — a 50% increase over the current minimum. What might be the effect in communities such as Fresno or Merced where the wage hike could affect as much as half the workforce? Raising the minimum wage makes sense and is a moral imperative in high-cost cities such as Los Angeles and San Francisco, where the state minimum is essentially a poverty wage. But does that same rationale apply in lower-cost regions, such as Shasta County?
Faced with such uncertainty and concern, lawmakers in Sacramento are expected to try to come up with an alternative minimum wage proposal that might persuade proponents to pull their initiative from the ballot (an option made available by the initiative reform law passed in 2014). Legislators and Gov. Jerry Brown could suggest a lower dollar figure, a longer implementation timeline for rural areas or carve-outs for certain businesses.
Another option is to look north to Oregon, where Gov. Kate Brown this month signed into law the nation's first tiered minimum wage. The state set three wage levels to be reached by 2022: $14.75 in the Portland area, $13.50 in mid-size counties and $12.50 in rural areas. The plan addresses the concerns that a wage floor set for urban areas might hurt businesses and employment opportunities in rural ones. It also better matches wages to the cost of living, which tends to be higher in urban areas and lower in rural areas. And by setting broad, regional wages, the state alleviates some of the complications and competition when cities enact a patchwork of different minimums.
To be sure, Oregon is significantly smaller than California (4 million residents versus 39 million) and it might be easier to draw lines between the state's urban, suburban and rural areas, unlike the vast sprawl of our metropolitan areas. Still, the Oregon model might offer state leaders and advocates an opportunity to better tailor the minimum wage to a state as economically and geographically diverse as California.