California Minimum Wage Increase Initiative (2014)

From Ballotpedia
Jump to: navigation, search
Not on Ballot
Proposed allot measures that were not on a ballot
This measure did not or
will not appear on a ballot
A California Minimum Wage Increase Initiative (#13-0050) was approved for circulation in California as a contender for the November 4, 2014 ballot as an initiated state statute.

Initiative #130050 would have increased the state minimum wage to $10.00 per hour in 2015 and $12.00 per hour in 2016.[1]

Supporters of the initiative referred to it as the "Higher Wages for California Workers Act of 2014".

Text of measure

Ballot title:

Minimum Wage. Increase. Initiative Statute.

Official summary:

"Under existing law, California's minimum wage will increase from $8.00 per hour to $9.00 per hour, effective July 1, 2014. This measure would increase California's minimum wage to $10.00 per hour, effective March 1, 2015, and then to $12.00 per hour, effective March 1, 2016."

Fiscal impact statement:

(Note: The fiscal impact statement for a California ballot initiative authorized for circulation is jointly prepared by the state's Legislative Analyst and its Director of Finance.)

"Increase or decrease in state and local tax revenues of uncertain magnitude, potentially totaling hundreds of millions of dollars per year. Changes in state revenues would affect the amount of required state funding for schools and community colleges. Increase in state and local government costs for service providers and government employees potentially totaling in the high hundreds of millions of dollars per year. Potential increase or decrease of hundreds of millions of dollars in other annual state and county expenditures on health and social services programs, with net savings more likely than net cost increases."

Support

Robert Unz, who requested a title and summary for Initiative #130050, was casted as an unlikely minimum wage increase proponent.[2][3][4] Unz is a "conservative" millionaire entrepreneur from the Silicon Valley. Bill Whalen of the Hoover Institute described Unz as “a wild card in the deck of California politics.” Previously, he drafted and promoted the successful Proposition 227, which required “Limited English Proficient” (LEP) students to be taught in special classes that are taught nearly all in English. He has presented Initiative #130050 as providing an alternative to government spending on public assistance.[2]

Supporters

  • Peter Thiel, co-founder of Paypal[5]

Arguments in favor

Robert Unz called on conservatives to embrace the minimum wage initiative. He provided the following arguments to support his call:

  • "Artificially low wages” are “heavily subsidized by taxpayers.” He estimates that increasing the national minimum wage to $12 per hour would boost low-income wages by about $150 billion, thus eliminating 60% of the $250 billion that the working-poor receive annually from welfare payments.[2]
  • Taxpayers are indirectly subsidizing fast-food and retail firms. Low wages for fast-food workers benefit fast-food consumers and employers at taxpayer expense. “Taxpayers subsidize their cheap hamburgers with their own payroll deductions, hiding from the truth that they are paying for it anyway.”
  • “And by allowing government to take the credit for subsidizing low wages, conservatives play into Democrats' hands, Unz argues. Make businesses carry the true cost of their own operations, and you will weaken the link between social welfare and the ballot box.”
  • California’s low-wage jobs are mostly service or agriculture-oriented. These jobs will not “evaporate” due to increased wages. These sectors can not be easily automated or transported elsewhere and will always be in high demand.[3]
  • Higher wages would make service sector and agricultural jobs more attractive to domestic citizens, thus diminishing a common draw for illegal immigration.

In an interview with the Los Angeles Times, Robert Unz detailed his transition from viewing the minimum wage negatively to positively. He said empirical evidence is what convinced him:[6]

  • "From the conservative side, these people would no longer qualify for many anti-poverty programs. As Mitt Romney said, 47% of Americans don't pay income taxes. If every minimum-wage couple were earning $50,000 a year, which is what $12 an hour would produce, then they'd be paying income taxes."
  • "We have this huge system of corporate welfare [subsidizing the low-wage employer]. And that's ridiculous. Taxpayers are providing $250 billion a year [in social welfare programs] to workers who can't survive on their paychecks. Obviously, businesses would rather have taxpayers pay their workers than pay them themselves. That's a case of privatizing the benefits of their workers and socializing their costs onto the rest of us. That doesn't make sense from the liberal perspective or the principled, conservative, free-market perspective either."
  • "A much higher minimum wage would at a stroke solve so many different problems. You'd suddenly have millions of people who aren't as desperate as they are now. A $12 minimum wage in California would raise the wages of 40% of wage earners an average of $5,000 a year. That's a life-changing amount of money."
  • "The median wages of workers in America have been stagnant or declining for almost 40 years. That is unprecedented. One reason America avoided social unrest and conflict is that Americans always did better than their parents economically. That's no longer the case. Raising the minimum wage wouldn't solve that problem, but at least people wouldn't feel they were forced into abject poverty."
  • "In 1996 when [California] raised the minimum wage, people said it would destroy the state economy. Instead, for the next four years, unemployment dropped by a third. Obviously there are broader economic issues, but when you see huge declines in unemployment after a minimum-wage hike, it undercuts the case that it would devastate the economy... Everybody honest admits that some jobs will be lost. The question is whether it's a cost worth taking. The [CBO] showed that for every individual who might lose his job, there would be 40 or 50 workers who would get a wage increase. So 98% of the people affected would benefit, and maybe 2% would be hurt. That sounds pretty good to me."
  • "It would remove the incentive businesses have to hire illegal immigrants. Right now the wages for certain businesses are so low that the only people who will take those jobs have just arrived from other countries, desperate for work. You see a lot of industries that used to have reasonable wages now have wages that are much lower. [That] drives down wages for everybody, including the immigrants themselves. The best way to protect against that is to have a high minimum wage; people can earn a reasonable living."

Reports and analyses

Economic Policy Institute

Economic Policy Institute (EPI), an economics think tank that supports an increased minimum wage, analyzed the relationship between higher state minimum wages and changes in economic conditions to hypothesize about the effects that would be generated by the Fair Minimum Wage Act of 2013, which would increase the minimum hourly wage to $10.10. Multiple initiative campaigns have cited the research as a supporting argument. EPI developed the two following key points:[7]

  • Such an hourly amount would restore the minimum wage to an inflation-adjusted value equivalent to the minimum wage in 1968. “It is important to also recognize that today’s minimum wage has not fallen to exceptional lows out of economic necessity. Over the past 45 years, the U.S. economy has vastly expanded, and productivity (our ability to produce goods and services for the same amount of work) has more than doubled. Yet the minimum wage—our agreed-upon standard for the minimum amount a worker in our society should be paid—has been left to stagnate and decline.”
  • An increased minimum wage would create more consumer demand and thus create more jobs and spur economic growth. “Research over the past two decades has shown that, despite skeptics’ claims, modest increases in the minimum wage have little to no negative impact on jobs. In fact, under current labor market conditions, where tepid consumer demand is a major factor holding businesses back from expanding their payrolls, raising the minimum wage can provide a catalyst for new hiring.” Such an increase would indirectly raise the wages of an additional 27.8 million workers, who would receive about $35 billion in additional wages over the phase-in period.

To read the full report, see here.

Congressional Budget Office

The Congressional Budget Office (CBO) issued a report on the “principle effects” of increasing the minimum hourly wage to $9.00 or $10.10. An increase to $10.10, they concluded, would have a more substantial effect on wages and employment than $9.00. The CBO made the following conclusions about raising the minimum wage:

  • An increase to $9.00 would reduce total employment by about 100,000 and an increase to $10.10 by approximately 500,000. The CBO postulated that this would happen because employers would raise commodity prices to offset wage increases.
  • An increase may be accompanied by reductions in real-income due to inflation and higher consumer prices.
  • The aggregate income, after increases and losses, would still be net positive for low-income families. The aggregate would be an increase of $2 billion.
  • A minimum wage hike to $10.10 would boost an average family's income by about three percent.
  • The hike would also move about 900,000 people above the poverty line. Currently, 45 million people live below the poverty line.
  • Raising the minimum wage would cause a small decrease in federal budget deficits for several years following.

To read the full report, see here.

Path to the ballot

See also: Signature requirements for ballot measures in California

In March 2014, Unz expressed doubt that the measure would make the ballot after failing to garner union support. He said, “Several weeks ago it seemed reasonably likely that one of the largest California unions might be partnering with me on the campaign, while also serving as an anchor-donor. If this happened, I felt confident of being able to qualify my initiative for the ballot and also win a victory at the polls in November. Unfortunately, after careful consideration the union decided that its pre-existing political commitments were too large to allow it to take on an additional one on short notice. Other unions had roughly similar reactions.” Unz also said that his “conservative case for a higher minimum wage” attracted a “very wealthy individual” who proposed a large donation. However, the proposal fell through.

Unz expressed hope that the state legislature would pass a $12 minimum wage hike or even a $13 hike. He worried, however, that such a legislative victory would help the Democratic Party, whereas his initiative’s victory would be much more trans-partisan, with both Democrats and Republicans involved.[9]

On March 17, 2014, Unz said he ended the initiative campaign.[8]

Similar measures

The following measures related to minimum wage increases were proposed for the general election ballot in November:

Additional reading

External links

BallotpediaAvatar bigger.png
Suggest a link

References


Flag of California.png

This article about a California ballot proposition is a stub. You can help people learn about California's ballot propositions by expanding it.