Much of the work that we do at Fishman, Larsen & Callister, and that Sierra HR Partners does, is within rural California. These areas are far from the coast and huge metropolitan areas where large businesses support a vast economy.
Governor Jerry Brown has announced that the state minimum wage will rise to $15 by 2022. How will this impact the rural areas of California where wages are generally lower and the economies are not as robust as Silicon Valley or Los Angeles?
An interesting editorial in the Washington Post makes reference to setting minimum wage at about half of the median hourly wage. The editorial refers to a Brookings Institute paper which advocates tying minimum wages to the median wage. Apparently, other industrialized nations have used this approach.
The Post indicates that California’s current minimum wage is just about half of the state’s median wage of $19. In other words, minimum wage is probably about where it should be. Raising minimum wage more will probably result in inflation, encourage employers to automate, and result in slower economic growth.
Consider, however, that in many rural areas in California the median wage is much less than the state’s median wage. For example, here are the median wages for several rural counties:
Fresno $15.30
Tulare $13.86
Kings $18.42
Kern $16.15
Merced $15.31
Stanislaus $16.28
In comparison, the median wage for Santa Clara County is $28.14.
A $15 minimum wage will be higher than Tulare’s median wage, about equal to two other counties, and not much less than the remaining counties’ median wages. The increase will devastate rural economies. Perhaps if California politicians were really concerned about economic growth, and a person’s ability to move up the economic ladder, the Legislature would examine the research and set realistic minimum wages based on research and scholarship. Perhaps they would tie the minimum wage to a percentage of the median wage in each county or allow local communities to determine their own minimum wages.
This increase in minimum wage will devastate rural California communities and cause the most intense suffering on those persons the lowest skill levels. Thank you to the politicians of California!
You can read the Washington Post editorial at: https://www.washingtonpost.com/opinions/the-risks-of-californias-minimum-wage-increase/2016/03/30/6d58cc6a-f68e-11e5-a3ce-f06b5ba21f33_story.html
You can read the Brookings Institute paper here: http://www.brookings.edu/~/media/research/files/papers/2014/06/19_hamilton_policies_addressing_poverty/state_local_minimum_wage_policy_dube.pdf
You can learn about other countries using the median wage as a tool to set minimum wage at the website of the Organisation for Economic Co-Operation and Development: https://stats.oecd.org/Index.aspx?DataSetCode=MIN2AVE
You can check the wage information for California counties here: http://www.labormarketinfo.edd.ca.gov/data/oes-employment-and-wages.html