Policy makers are struggling to
create relevant public policies that can boost the broader economy and help the
low – wage workers without burdening tax payers, in the lingering aftermath of
the Recession.
Raising the minimum wage is an
often adopted solution by local governments, especially such as that of San
Jose.
New Minimum Wage Policy
Workers in Minimum wage jobs in San Jose
have received an enormous raise from $8 to $10 an hour. The 25 percent raise is
the single biggest minimum wage increase that the country has seen. Estimated
40,000 minimum wage workers will see their new pay rise. In addition, to cease San Jose's lowest wage workers pay, from
eroding over time, annual indexing in 2014 is proposed in the initiative.
Why support the policy?
The wages of the state's lowest paid workers
haven't budged in spite of the gas, food and health prices that have risen over
the past four years. It is increasingly difficult for the families to make
their ends met with a wearing minimum wage and ongoing weak recovery. It is
good policy to put a little more money in the hands of those who greatly need
it and will spend much of it locally.
Will it lead to San Jose jobs loss?
Old findings of job losses erroneously attributed
to the minimum wage as they failed to account for regional economic shocks and
long-run trends in low-wage employment. A study published in Industrial
Relations Journal found that even during times of high unemployment increases in
the minimum wage did not cause job loss.
How does minimum wage increase help?
Higher minimum wage boosts the
broader economy. According to
the Federal Reserve Bank of Chicago,
every $1 in hourly wage increase for a minimum wage worker yields in $2,800 in
new consumer spending by his or her household in the following year.
Business community who once opposed it now sees it as a way to boost worker
productivity and profits. Broad benefits include: Workers get bigger paychecks;
the economy gets a boost; and employers have lower turnover rates and vacancies
with better recruitment opportunities, and improved productivity from
experienced workers.
Raising San Jose's minimum wage
to $10 and adjusting it for inflation means the recovery will be more broadly
shared and much more sustainable.
