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California to raise minimum wage to $10 an hour by 2016

California Governor Jerry Brown speaks at the 7th Annual California Hall of Fame induction ceremony at The California Museum in Sacramento,
California Governor Jerry Brown speaks at the 7th Annual California Hall of Fame induction ceremony at The California Museum in Sacramento,

By Sharon Bernstein

SACRAMENTO (Reuters) - California has become the first state in the nation to commit to raising the minimum wage to $10 per hour, with the increase to take place gradually through the start of 2016, under a bill Democratic Governor Jerry Brown signed into law on Wednesday.

The law raises minimum pay in the most populous U.S. state from its current rate of $8 per hour to $9 by July 2014, and $10 by January 2016, well above the current federal minimum wage of $7.25 an hour.

The measure won support from Democrats, who wanted to help low-wage workers in a state where the cost of living is among the highest in the nation, passing the California state Senate by a vote of 26-11 and the Assembly by a 51-25 vote. But it was opposed by many Republicans, who said it would hurt small businesses and ultimately cost some low-wage workers their jobs.

Democrats in California control large majorities in both houses of the state legislature. But the party has charted a more centrist path than many expected, fearing backlash from voters in moderate and conservative districts, and the minimum wage hike did not initially seem poised to pass.

Brown, protective of the state's tenuous economic recovery, initially opposed the bill but then agreed to support it after leaders of both houses of the legislature agreed to put off the effective date of the increase until 2016.

Raising wages for the poorest workers is a "wonderful thing," Brown said at a bill-signing ceremony in Los Angeles.

"It's my goal and it's my moral responsibility to do what I can to make our society more harmonious, to make our social fabric tighter and closer and to work toward a solidarity that every day appears to become more distant," he said.

INCOME GAP

State Assemblyman Luis Alejo, the bill's author, said it would help working people pay for necessities in a state where rising costs have long outpaced wage increases for the poor and working class.

"We have created a system where we pay workers less but need them to spend more," said Alejo in a statement. "That causes middle-class families to fall down the economic ladder. It's the reason our middle class is shrinking and the reason we are facing the largest gap between upper- and lower-income Californians in at least 30 years."

No state currently pays $10 per hour to minimum-wage workers, and California had been among a number of states looking to increase minimum wages to at least that level, according to the National Employment Law Project. The minimum hourly wage in the state had stagnated after rising to $8 in 2008.

Republican Brian Jones, who represents the San Diego County community of Santee, said the increase will make California even more unfriendly to business than he believes it already is.

"I'm afraid the intentions of the author will backfire, and this will hurt the middle class and working poor the most," Jones said in a statement on Wednesday.

The U.S. enacted its first minimum wage in 1938, during the last years of the Great Depression. Today, debate continues on whether government should mandate increasing pay for low-wage workers.

"To cover the costs of this increase, employers will have to cut hours and hire fewer workers," said Assembly Republican leader Connie Conway. "Our state unemployment is still higher than the national average. The legislature should be taking steps to create more high-paying jobs, not penalizing the people who need the help the most."

The state that currently has the highest minimum wage is Washington, where employers must pay at least $9.19 per hour. That could rise to above $10 an hour by 2016, because it is set to increase with certain indicators of inflation.

(Reporting by Sharon Bernstein; Editing by Cynthia Johnston, Gary Hill, Gunna Dickson and Leslie Gevirtz)

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