Could Minimum Wage Increases Hurt Those It's Meant to Help?

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September 18, 2013 — 2,191 views  
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A recent change in the legislation that looks after the minimum wages of workers in California is getting mixed reactions from the various groups affected by it. Governor Jerry Brown announced this new plan for a rise in the minimum wages of the workers in the state. It states that the minimum wages will be raised to $10 by 2016.

Local Organizations not Happy with the Rise

This announcement has caused dismay among many business groups in the state, especially in Los Angeles. These groups have criticized the rise in the wage saying that it will only result in an unfair burden on companies. President of the business group, Valley Industry and Commerce Association, Stuart Waldman expressed his disappointment over the news by stating that this hike in the wage is absolutely uncalled for. He also mentioned that it is not fair to increase the wages by around 25 percent in just two years.

He also predicted that this rise will result in an increase in the prices of consumer goods and eating at restaurants. In addition to that it will also force companies in the state to move to other locations. At the end, he harshly remarked that such rules are being passed by people who have no sense of business.

Major business organizations like California Restaurant Association and California Chamber of Commerce have also shown their opposition for the legislation. Apart from that, smaller groups that run local businesses have also raised their voice against it. Carol Schatz, President of Central City Association said that this significant increase in a short time will pressurize companies and will also not give them enough time to plan out their policies accordingly.

Looking at the Brighter Side

The supporters of this hike said that this increase will add around $4,000 to the annual paycheck of the wage earners. This money will ultimately get back into the local economy itself which will prove beneficial to the government.

The current minimum wage in California is $8. This amount is a little higher than the federal minimum wage of $7.25. But it is low compared to the wages earned by workers in Oregon and Washington, which stands at $8.95 and $9.19 respectively. The new hike in wages in California will come in two increments of $1 each. The first increment will come out in 2014 while the second will come into effect by 2016. 

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