Editorial: Poverty and the minimum wage hike

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According to revised figures released by the United States Census Bureau late last year, California has the highest poverty rate of any state in the country.

That rate is 23.5 percent, higher even than the District of Columbia (at 23.2 percent) and well ahead of second-place Florida (19.5 percent).

And according to an American Community Survey, three California metropolitan areas – Fresno, Modesto and Bakersfield-Delano – rank among the top five regions in the country with the highest percentage of residents living below the poverty line. Hard to believe, perhaps, but the Fresno area is the second most impoverished site in the nation, just behind the U.S.-Mexico border area of McAllen-Edinburg-Mission, Texas. Bakersfield-Delano and Modesto ranked fourth and fifth. The 2011 data compared large metro areas of 500,000 people or more.

The revised poverty figures now measure more than just the cost of food, and place poverty in the context of living costs, including housing, which is particularly expensive in California.

And lest we mistakenly assume that Fresno has to be an isolated pocket of poverty, it’s important to remember that the Redwood Empire Food Bank, which serves Sonoma County, is now feeding 78,000 people a month in what is considered to be one of the more affluent and recession-proof regions of California.

It is wise to keep these statistical realities in mind as Gov. Jerry Brown prepares to sign the minimum wage bill passed by the Legislature on Thursday. The governor has indicated strong support, stating that, “The minimum wage has not kept pace with rising costs.”

He’s right, but the California Chamber of Commerce, among other business interests, called the bill “a job killer” and warned that the wage-rate increase could doom the state’s slow recovery from the recession.

In fact, it is entirely possible that the first bump from $8 to $9 per hour, set to take place in July 2014, could result in some lay-offs or slowed job expansion. But it will also help thousands of struggling Californians to keep their heads above water, and most of the extra pay they receive will flow right back into the economy because minimum wage workers don’t save – they can’t afford to. The minimum will then rise again to $10 per hour in January 2016.

Washington State’s rate is pegged to the Consumer Price Index and is currently the highest minimum wage in the nation, at $9.19.

Exhaustive research suggests that past minimum wage increases have little or no negative effect on employment. And, in fact, low-wage jobs can have the adverse effect of increasing the cost of social services required to help low-wage workers survive. A recent Congressional study reported by Rep. George Miller revealed that a single, 300-employee Wal-Mart “super center” in Wisconsin cost taxpayers between $1 million and $1.75 million a year in federal safety-net benefits.

Hard figures are elusive, but one estimate puts the number of Californians who will benefit from the higher wage at 3.4 million. A full-time minimum-wage worker in California currently earns $16,512 a year, and anyone who considers that a live-able wage simply isn’t in touch with economic reality.

  • annevincent

    The massive California poverty is not tied to the “minimum wage”….it is tied to the prevailing rate of pay for illegal/cheap labor. If you increase the minimum wage while prohibiting the use of eVerify and enforcement for our sitting immigration laws….you just increase the poverty of our state, because employers are just encouraged to continue to hire illegals. This is what our California Democratic party has done to us. Massive illegal importation of poverty and total deterioration of our state. These politicians will not be happy until the state is totally composed of rich employers and poor illegal workers. The rest of us will need to flee.

    • Randy Cook

      This response implies that the hiring of illegal workers is just another part of doing business, and is acceptable because there is no watchdog preventing the hiring of illegal workers. Budget problems are not due to the poorest end of the social spectrum, rather from the hoarding and consolidation of wealth that never returns to the greater economy.

      • annevincent

        Read the editorial. This is about the impact of the minimum wage on specific geographic sites of massive poverty. Where are those sites? Those are the specific areas in California with the greatest concentration of illegal labor use. When we increase the minimum wage in our state…..the employers in those locations are not likely to decrease their use of illegal labor. The increase in the minimum wage just acts to enhance the likelihood that those employers will continue to hire illegal workers, because the government prohibits the use of eVerify and refuses to enforce our sitting illegal employment laws. This is essentially a tacit approval for employers to continue to hire illegal workers. This, in turn, leads to more and more illegal immigration (because if the illegal jobs are available for people, they will come to take them). So we continue to import poverty, and drive out our middle class. The increase in the minimum wage will not positively impact the concentrations of poverty that this editorial references.

  • Phineas Worthington

    Good economists evaluate both the seen and the unseen effects of any given policy. The seen effect of the raise in minimum wage is the pay increase of those with jobs in the minimum wage category. The unseen effects are the jobs that have to be cut to raise the pay of others on the payroll and the loss of jobs that will not be created at all due to the money intended for hiring that is diverted to pay the mandated higher wage to others. Minimum wage laws are not a big overall job killer in and of themselves. Minimum wage laws do kill jobs in the very segment of labor they intend to help, poor, low skilled entry level workers. Anecdotal evidence of this is borne out in the current employment statistics where the young and minorities are still suffering unusually high rates of unemployment and underemployment in the recovery. It would be nice to see the efficacy of these laws tested somehow and if they are found to inhibit set objective goals like higher overall employment, then they should be repealed.

  • Robert Piazza

    David, I again ask the question, “what hourly or annual wage is a living wage”?
    I’ve asked that question several times in these blogs and haven’t received an answer from anyone.

    Answer that and we can have an intelligent and meaningful debate over the benefits and detriments!

  • Tom Sokolowski

    Great point about Walmart: “Walmart a single, 300-employee Wal-Mart “super center” in Wisconsin cost taxpayers between $1 million and $1.75 million a year in federal safety-net benefits.”

    Our government subsidizes Walmart because employees earn so little that they qualify for Medicaid, food stamps and housing assistance, and are not provided with any company health insurance.

    Good for Governor Brown in signing the bill to increase the minimum wage of California workers and giving Americans who make the least amount of money a helping hand; one of the reasons the majority of Californians voted for Governor Brown in the first place.

    Anne, sorry but I don’t understand why you want to punish the vast majority of our lowest paid workers to insure a few undocumented workers don’t get paid.….pretty mean spirited if you ask me.

    Increasing the minimum wage doesn’t import poverty and remove our middle class; that’s absurd. What it does do is put a little more money in the pockets of our lowest paid workers who barely make it as it is. Do you have any evidence to back your claim, or did you just make it up.