Minimum Wages in California and the U.S. Economy

The Federal Minimum Wage Law passed by lawmakers in Washington two years ago has left some California employees skeptical of its affects, while others think little of its impact.

Luis Martinez a server at a local hotel chain in San Pedro, California, leans on the lobby desk and, with a bit of pensiveness, says the wage law has not affected him. "It is a good thing," he said, "but some employees were already getting paid the minimum wage, and now the companies do not want to raise the pay rate."

Governor Anrnold Schwarzenneger signed a bill that went into effect two years ago in January of 2007, which raised the California minimum wage from $6.75 to $7.50 per hour. These increases have affected some professionals who maintain salaries tied to the state minimum wage, but its overall impact is felt most amongst those who are at the lower end of the economic chain.

Martinez also contends that the reason the wage change past in 2007 does not affect him, is because he already makes the new minimum wage set for California. "I was getting paid minimum wage already. For me, it's okay, he said. "But for other employees, it is different."

While the current federal minimum wage has been set at $5.15 per hour since September of 1997, your background, such as age, type of employment, and even where you live can change the legal minimum hourly wage your employer is required to pay.

Some contend that the benefits of raisinging the minimum wage add stability to the economy. Evidently, higher wages decrease turnovers, creates loyalty, and boost employee morale.

Martinez said that some of his fellow employees were willing to work minimum wage jobs merely to see if the company they worked for would eventually give them a raise..

An anonymous employer claims that some have no choice about the amount they can make, so they work at the hotels. "Some are service oriented and that is what they do," he said. "Others depend on tips to substitue money for extra living. They take these opportunities hoping the guests will tip them."

Notwithstanding, research has shown that minimum wage also increases welfare dependency merely because the wages do not compensate for the cost of living in some states. For example, a study was done by Peter Brandon of the University of Wisconsin that looked at welfare rates in states that increased their minimum wages of the past and how they faired with those that did not. In comparison, the average time on welfare was 44% higher than in states that did not have the increase. Much of the reason was due to reduced employment opportunities for welfare mothers.

Despite the welfare dependency throughout ciities and states, San Pedro, California, similar to most, if not all California cities, maintain a high cost of living for residentss in the state. When referring to the Federal Minimum Wage change in the San Pedro area, one manager said, "It is not going to have a big impact because the commodities are already high."

Martinez admits that he has heard murmurings about wages and how difficult it is to maintain a descent lifestyle when companies stay at certain pay levels. He says that some of his peers were unhappy before the pay increase. Martinez acknowledges that he does not know what the hotels can do to make the necessary changes.

Some sources contend that the case against the minimum wage is strong. But until necessary changes are made, hotel employers and owners of San Pedro will continue to seek viable alternatives to maintain descent pay rates for employees.