California, New York State Reach Minimum Wage Deals

Date: April 04, 2016

Wages To Rise To $15 In Both States

In the past week, there have been key developments on minimum wage hikes on opposite US coasts. In California, the legislature on Thursday approved a measure to increase the state’s minimum wage to $15 per hour by 2022. The AP reported that he Assembly passed SB3 with a 48-26 vote, before the Senate followed with a 26-12 vote. Gov. Jerry Brown (D) signed the measure it into law on Monday after discussing the plan with labor unions. Under the plan, California’s minimum wage will increase from the current $10 to $10.50 an hour on Jan. 1, 2017. It will then increase to $11 the following January, then increase by $1 annually until 2022. The Los Angeles (CA) Times reported that not a single Republican in either chamber voted for the measure. They had expressed concerns “about the automatic cost-of-living increases that would raise the wage higher than $15 an hour as soon as 2020.” Opponents also said the bill was “rushed and did not include a wide group at the negotiating table.” Business groups “warned that the pay hike was too much too fast and didn’t take account the broad differences between” the state’s rich and poor regions. The increase could result in layoffs and accelerated automation of low-wage jobs. Economists projected the measure would boost “the pay of 5.6 million workers across the state,” or nearly 30 percent. California’s current minimum wage of $10 an hour is the highest in the country, and the deal will put the state “on a path to remain the highest in the country.”

Also Thursday, New York Gov. Andrew Cuomo and the state legislature reached an agreement, according to the AP, that would boost New York State’s minimum wage to $15 per hour by 2018 in New York City, and a yet-to-be-determined time in the rest of the state. For now, upstate New York wages are due to hit $12.50 in 2021 under the plan.

What This Means For Small Businesses

Small businesses should be worried about the imposition of costly wage hikes in two key states. In California, businesses with 25 or fewer employees would have an extra year to comply with the law, meaning wage increases would begin in 2018 instead of 2017. Additionally, Gov. Brown and future governors could also delay the increases in the event of an economic downturn. Meanwhile, in New York State, wages are set to rise to $15, but no deadline for that to happen outside of New York City has been issued, giving opponents a chance to significantly delay, or reverse, such a plan with a new administration. However, such minuscule concessions to key job creators are far too little to undo the irreparable harm such wage hikes would do to small businesses, and the economy as a whole.

Additional Reading

The New York Times also covered the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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