Low-wage workers will soon be getting a pay raise in California as a bill that would raise the state's minimum wage to $10 per hour by Jan. 1, 2016 has been passed by the legislature and is awaiting Gov. Jerry Brown's signature, reports the Los Angeles Times.
The current minimum wage in California is $8 per hour making it one of the highest in the country. Washington leads the way with a minimum wage of $9.19 an hour and a handful of other states have rates above $8, according to the United States Department of Labor.
The bill will raise the wage incrementally to make it easier for businesses to adapt to. The wage will be raised to $9 an hour by July 2014 and $10 by January 2016, according to NBC News.
"The minimum wage has not kept pace with rising costs," Brown said in a statement. "This legislation is overdue and will help families that are struggling in this harsh economy."
Republicans attacked the bill saying that it would slow the state's economic recovery from the recession and harm small business owners, reports Reuters.
"The impact of this is not on huge employers," Republican Senator Jim Nielson told Reuters. "It is on the smaller employer, the mom and pop operation."
A study conducted by the University of California, Berkeley in 2010 showed that minimum wage hikes do not lead to job cuts, despite the evidence some people think otherwise.
"I think the evidence is overwhelming that there is a job loss from these things," David Neumark, director of the Center for Economics and Public Policy at the University of California, Irvine, told the San Jose Mercury News. "It's a badly targeted policy."
Jot Condie, the CEO of the California Restaurant Association says that the new wage will be a "back-breaker" for the industry, according to the Mercury News.
"Given the economics in our industry, where restaurants operate at very thin profit margins, a 25 percent increase in labor costs will result in fewer job opportunities for Californians looking to get back on their feet," Condie said.
While opponents of the bill argued that it would harm California's struggling economy David Hewitt, assistant professor of economics at Whittier College, argues that if low-wage workers have a slight increase in income they will pour that money back into the economy.
"When they get extra money, they spend it," Hewitt told the San Jose Mercury News. "They're not likely to take this raise and put it in the bank or in an IRA. They're going to buy their kids a toy or a schoolbook or buy some extra clothes."
