The Morning Report
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The proposed minimum wage increase to $8 in California by 2008 was approved in the state Senate yesterday and is just waiting to be signed by Gov. Schwarzenegger. The San Jose Mercury News reports that he’ll likely do so on Labor Day, a nice photo op for a governor up for reelection in two months. Schwarzenegger has been criticized for vetoing the previous two minimum-wage increase proposals.
That report continues:
But, as the governor makes his appeal to the center, his fellow Republicans say the pay hike goes against their core conservative principles and could jeopardize his standing with his base.
“The governor’s drifting too far to the left on a number of these issues,” said Sen. George Runner, R-Antelope Valley, the GOP’s caucus chair. “As a conservative Republican, it’s a concern. I appreciate his dilemma in a state that has not only more Democrats but also a larger number of decline to states and independents you have to capture.
I’ve received a few more reader reactions to the story about the increase and the Census poverty statistics. Reader DB urged the minimum wage workers to get some education:
…the best way for these minimum wage workers to increase their salaries is to increase their educations and skills. There are so many free workshops, training, and other educational opportunities for them to take advantage of here in San Diego. To not take advantage of it is the reason why they are in minimum wage in the first place. It should not be the work of the government to subsidize or lower their housing, healthcare and daycare. If they want to increase their salaries, it is very possible to do so.
There are so many skilled industries here in San Diego that are suffering from lack of talent.
Another reader, JG reminded me of another strategy in place to lower poverty rates in the country: the “earned income tax credit.” That concept is a refundable income tax for low-income working individuals and their families.
That reader pointed me to an article from a study by a labor issues think tank, the Employment Policies Institute, that outlines its perspective on the ineffectiveness of wage “floors.” (In this instance they’re talking about a living wage rather than a minimum wage – but it’s a wage floor nonetheless.) Here’s a piece of the summary of the study, authored by Aaron Yelowitz at the University of Kentucky and Richard Toikka of the Lewin Group:
Overall, the authors have found that living wage ordinances do little to actually increase the standard of living for low-income families…
The authors state, “a reasonable reading of our results is that the living wage has a limited capability in improving the economic status of the poor.” This limited capability is important because decades of studies clearly show that mandated wage floors create disemployment effects – particularly for the low-skilled employees these laws are intended to help. Pushing the intended beneficiaries out of a job while providing minimal benefits to remaining employees makes living wage ordinances an ineffective anti-poverty policy.