California’s low-wage workforce just got some much-needed economic relief yesterday. The Senate and Assembly passed Assembly Bill 10 (Alejo), which incrementally raises the state minimum wage from today’s $8 rate to $10 by January 1, 2016. The final version of AB 10, which Governor Brown has indicated he will sign, results in a more timely increase in the minimum wage than the previous iteration of the bill. That version, from June of this year, would not have raised the minimum wage to $10 until January 2018, more than four years from now. With this faster timeline, California’s minimum wage will more effectively regain purchasing power lost over recent years as the cost of living has increased, and will give low-wage workers a critical boost in income. As the following chart shows, by 2016 the value of California’s minimum wage will be the highest it has been since 1979.
The need to increase the minimum wage is an issue we have discussed in the past, and the final passage of AB 10 is good news. It comes at a critical time when low-wage workers have seen their wages stagnate or decline in recent years. Last year, the purchasing power of wages for the bottom fifth of California’s earners remained virtually unchanged from 2011 and well below pre-recession values. In other words, as the cost of living has increased, these workers’ wages have not, placing additional financial strain on families who are still recovering from the worst economic downturn in generations.
It is important to note, however, that AB 10 is just one of many steps that California must take to ensure that the economic recovery — as well as the state’s long-term economic growth — benefits all workers. Looking forward, the state must continue to invest in its workforce, such as by improving access to higher education — which is critical for any state’s overall prosperity — and ensuring the availability of child care and other supports that workers and their families need to secure good jobs and move up the economic ladder.
— Luke Reidenbach