California's $15 Minimum Wage Will Keep the Poor, Poor

Imagine you are attempting to get out of your family's cycle of poverty in a sketchy, less developed area of California, and you have a job to support at least the most basic of needs, you're struggling but at least you're slightly above the poverty line in your county. Suddenly, you get laid off, and it doesn't look like another job is in sight, and you can't afford to move to LA or SF where there's work.  

Nobody should live below the poverty line. That should be the point of a minimum wage. The current political approach to minimum wage nearly abandons this for the sake of politics. The previous minimum was too low, but it doesn’t make much sense to simply wait for the minimum to become outdated so the poor hit rock bottom, and then agree to raise it to a new level, until enough people eventually agree it should be at some other level, and so forth.

The underlying argument makes even less sense in the grand scheme of preventing poverty. ‘We should set minimum wage at $X an hour for the foreseeable future’ does not work to stabilize poverty in the long term. Minimum wage policy should not be a tool to exert control on lower class wages. Costs of basic necessities and the poverty level are results of local economic factors; they are not set by policymakers. If the goal is to make sure workers aren’t living in poverty, the minimum wage should also be a result of our economy, not a way to control the supply and demand of unskilled labor and try to drastically improve the lives of the poor overnight. The minimum wage should rise proportionally to rises in the cost of basic living. Whether or not full-time workers are living in poverty should not depend on the bets of current policymakers.

The California minimum wage change creates a short-term solution at best; it would eventually need to be updated. Due to the lack of federal action, minimum wage is now largely a state issue, but sometimes even a county/city decision. Even before the state decision, Los Angeles incorporated a higher minimum wage for the sake of the high living expenses in the city. The problem with the state following its lead is that it costs significantly less to live in most of the California that exists outside of the major urban counties, a rural population consisting of well over half of the state.

California has a large living wage variation in different parts of the state, an economic phenomenon virtually ignored in this decision. Businesses have decisions to make that are affected by the cost of labor. No company is going to put money into any type of jobs that don’t warrant a return. If outsourcing wasn’t already a huge threat to the economy, having to pay $15 an hour for unskilled labor anywhere in California will largely discourage investment into rural and lower class areas that need small businesses, development, infrastructure and jobs the most. This change will deplete those areas and keep most of the poor poor.

The Living Wage Calculator developed by Amy Glasmeier, a professor of urban planning at MIT, portrays this problem and thus the ignorance of this decision. The living wage for a single adult with no children in San Francisco and the areas surrounding ranges from $13 to $14 per hour. For the most expensive counties in Southern California near Los Angeles, this number ranges from $12 to $13. The vast majority of the state, however, has a living wage of about $9 to $10. Businesses do not stay alive by providing unnecessary welfare to minimum wage earners. A favorable difference of roughly 30% above the cost of living for a large portion of the unskilled working-class population will drive much of California out of consideration for any type of investments that require that level of labor and it will end up severely damaging the state economy. We’ll see small businesses suffer, more borderline-poverty level workers move to part-time, and much of the poor will be out of work altogether.

The minimum wage should be updated proportionally to rises in the cost of basic living for specific counties or large areas inside of which the living wage can be reasonably averaged out and then updated on a yearly basis, so all areas of the state can continue to grow with the economy and more minimum wage workers can actually find jobs to avoid living below the poverty line. Until we make this change, minimum wage will always be an argument instead of an attempt at an actual solution that reduces poverty and helps get less privileged people out of their cycles.