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Pros and cons of a higher minimum wage

Workers in California will see an increase in their hourly wage come January 1st. The first state to approve a minimum hourly wage of $15, the state is steadily increasing the rate annually, and everyone, with some exceptions, will be paid this amount as of January 2023. Although employees are happy about this, there are arguments on both sides as to whether a higher wage is beneficial for everyone.

According to the California government, the hourly rate will be $10.50 for employers with 25 or fewer workers and $11.00 for those with more than 25 workers. Employees of larger businesses will see a $15 hourly rate starting January of 2022, while those of smaller companies will not see this amount until 2023.

According to Phys.org, some critics against this hourly increase have stated it would have a negative effect in terms of job loss due to reduced sales or automation. However, research performed at the University of California, Berkley has shown this not to be the case. Looking at both Fresno County and the entire state, the biggest positive outcomes are improved purchasing power and worker productivity. While this increased wage leads to some automation, it is not a lot.

In terms of raising prices to balance out the wage increase, the research shows if businesses increase their prices by .6% every year, it still is much lower than the annual inflation rate of 1.8%. This keeps this negative effect to a minimum, and reduced worker turnover is also a benefit to increasing the hourly wage. The study also says higher-paying cities will not see as big of an effect as smaller, lower-income areas.

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