California could get an $18 minimum wage. Experts outline how it could get rid of worker shortages and cause a 'ripple effect' throughout the country.
Juliana Kaplan
Sat, December 11, 2021
Joe Sanberg, a progressive activist and entrepreneur, filed the ballot initiative
Activists are fighting for an $18 minimum wage in California — more than double the federal rate.
The boost may help get those fed up with pay declines relative to economic growth to return to work.
Five million workers may get an extra $24 a day with the hike, says the man who introduced the plan.
Worker advocates in California — a state that's seen price spikes in everything from housing to water — are looking to raise the state's minimum wage to more than double the federal rate.
The country's federal minimum wage remains at $7.25, but a new ballot initiative would bring California's to $18 an hour. The experts behind it say the Living Wage Act of 2022 would be a boon for about 5 million workers after decades of declining wages relative to economic growth.
Joe Sanberg, the activist and entrepreneur who filed the proposal, said those workers would get an extra $24 a day under an $18 minimum wage — and it may also help ease the worker shortages that employers complain about.
"That's a big deal," Sanberg said. "That's going to be the difference between people being able to make their rent or not, providing healthy food for their kids — three meals instead of two meals a day."
This aligns with the views of some activists, such as Saru Jayaraman — the president of One Fair Wage and director of the Food Labor Research Center at UC Berkeley — who said the economy isn't suffering from a "labor shortage," but rather a "wage shortage." In industries such as leisure and hospitality, workers are quitting en masse, with many saying they won't return.
"The real solution to getting these workers to come back to work, and having the restaurant industry we had prior to the pandemic, is going to be getting people a permanent wage increase," Jayaraman said. She added that 2 million restaurant workers — who are overwhelmingly immigrants, people of color, women, and single mothers — would benefit from a minimum-wage hike.
Saru Jayaraman, the president of One Fair Wage and director of the Food Labor Research Center at UC Berkeley.
Heidi Shierholz, the president of the left-leaning Economic Policy Institute, agreed that higher wages are a solution for so-called labor shortages.
It can't just happen at individual businesses, Jayaraman said. Workers "aren't dumb" and won't return for a restaurant raising wages on its own, since it could also reduce wages at its discretion.
"Workers aren't going to come back for anything less than a guarantee of a permanent wage increase," Jayaraman said. "And that's what this ballot measure provides."
Now, the ballot measure must get a million signatures to get on the November 2022 ballot, The Sacramento Bee reported.
"So many people are working full time and can't afford life's basic needs, and are living on a knife's edge of financial ruin," Sanberg said. "In California, where the cost of living is continuing to increase — the cost of everything is continuing to increase — those increases fall hardest on the shoulders of low-income people."
America's federal minimum is stagnant, while prices keep rising
For 12 years, America's federal minimum wage has been $7.25 — even as essentials, such as food, gas, and housing, see prices skyrocket. In October, the US experienced the highest rate of price inflation in three decades.
In the meantime, over half of the states in the country have enacted their own raises. A record-breaking number of jurisdictions raised their wages in 2021, a report from the National Employment Law Project said. California is set to raise its minimum wage to $15 for all employers by 2023.
But even with momentum that includes the president supporting $15 as a new minimum-wage benchmark, congressional Democrats still failed to move the minimum wage forward as part of President Joe Biden's first stimulus package.
Sanberg saw California as a leader in the movement and thought the ballot initiative would pass, which could have wider-reaching implications.
"I hope and expect that it's going to create a positive ripple effect throughout the country, where other states are going to follow suit and raise their minimum wage," Sanberg said. "Eventually, the federal government's going to raise its minimum wage, but the stakes are too high to wait for the federal government to act."
Under the Living Wage Act of 2022, the minimum in California would rise to $18 by 2026 and then be automatically tied to inflation.
"What California is doing, believe it or not, with this ballot measure, it's so far from radical," Jayaraman said. "It's actually way below where we would have gotten had wages gone up with inflation or productivity growth."
Dean Baker, a senior economist at the left-leaning Center for Economic and Policy Research, found that the minimum wage would be $26 today if it had kept up with productivity growth.
Rather, Jayaraman said, it's "radical" to keep the wage stagnant for so long: "When you don't raise it, the impact is massive amounts of poverty and usage of public assistance, and frankly, a failed economy. That is what we are. We're a failed economy."
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