California's lawmakers approved a bill on Thursday to raise the state minimum wage to $10 an hour over three years.
Currently, the minimum wage in the state set four years ago is $8 an hour, 75 cents above the federal minimum wage. The bill would gradually increase the wage to $10 an hour by 2016. That would make the state's minimum wage higher than the current highest state minimum wage of $9.19 an hour in Washington.
The increase will affect hundreds of thousands of people:
About 730,000 Californians earn minimum wage of $8, and another 185,656 earn less per hour, according to the state Department of Finance analysis of U.S. Census data.
The California Labor Federation estimates 1.6 million hourly workers in the state earn less than $10 per hour.
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Some lawmakers and other groups including the California Chamber of Commerce fought the wage increase, saying it would be a job-killer. However, a recent analysis by the Economic Policy Institute on raising the federal minimum wage to $10.10 an hour showed it would boost economic growth:
Recent research reveals that, despite skeptics’ claims, raising the minimum wage does not cause job loss. In fact, throughout the nation, a minimum-wage increase under current labor market conditions would create jobs. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families when they need it most, thereby augmenting their spending power. Economists generally recognize that low-wage workers are more likely than any other income group to spend any extra earnings immediately on previously unaffordable basic needs or services.
And, while the wage increase is a step in the right direction, if the federal minimum wage had kept pace with productivity growth, the rate would be $17.19 an hour according to an analysis by the Center for Economic Policy Research.
Further, $10 an hour is still well below a living wage for Californians.
According to MIT's Living Wage Calculator, a single adult working full time in California would need to earn $11.20 an hour to make a living wage, while a single adult with two children would need to earn $26.33 an hour to make a living wage.