Will the minimum wage increase in California have an effect on wages higher than this new increase?

Question

It'll be raised to 7.50 in 07 and 8.00 in 08. Anyone know the economic effects of this?

Answer 1

All wages will eventually go up but less jobs will be available as businesses that were barely making it leave the state or go bankrupt. Also many employers will give up on California and find it more profitable to move out of state or outsource more work to India, Mexico, China, etc.

The poor will not benefit as it is impossible to live in California even on $15.00 an hour so how is one unliveable wage an improvement over another unliveable wage? Most people who are living making less than a living wage are not using employment to get by. For instance, the state's #1 cash crop is marijuana and it is also the leading producer of meth.

Answer 2

To keep employees business will have to pay more than the minimum wage, so it will have the effect of raising the wages in all low wage jobs. There might be some job losses but most companies will just pass the increases on to customers. Those with increased wages will now have more money to spend which will create new jobs which will replace some of the job loses. A modest minimum wage increase usually has less effect on the economy than would a tax increase tthat would provide an equal amount of help to the working poor.

Answer 3

Labor is an important factor in economy. Such a rise will not have a direct impact on the demand side in short-term. But in mid and long term a shift towards alternatives such as outsourcing will be visible. This will eventually have an impact on prices of commodity and services. Therefore all wages including those higher than the minimum will go up too.

Answer 4

It will all trickle down to the consumer.
Retail, restaraunt, and even grocery prices, etc, will all go up so businesses can
absorb the increase.
That's the obvious answer, I'm sure there's much more to it.