COSTA MESA (CBSLA.com) — Gov. Jerry Brown joined legislative and labor leaders Monday in announcing a deal to raise California’s minimum wage to $15 an hour by January 2022.
“California is proving once again that it can get things done and help people get ahead,” the governor said.
Senate leader Kevin de Leon, a Democrat from Los Angeles, said the increase will help nearly 6 million Californians.
Businesses with fewer than 25 employees would get an additional year to phase in the increases. The governor could pause the increases in times of budgetary or economic downturns.
Experts are split over whether the plan will boost the economy or provide a crushing blow to smaller employers already struggling.
Vilune and Giovanni Wagner own Napa Valley Pizza and Pasta in Costa Mesa. Their Italian restaurant is is among the countless small businesses that said they will either have to raise their prices 25 percent or shut down.
“I don’t know what we are going do. I think we just have to close the doors because we cannot afford to pay $15 an hour,” Vilune said. “I would love to pay my employees $15 dollars an hour. But I don’t know how because we don’t make that much money.”
“In the future, we just have to close the door. All the little businesses will close and only the big corporations will be left,” Giovanni said.
Cook, Javier Campisano, welcomes the proposed pay raise of $5 dollars an hour.
Some customers worry the wage hike will end up costing jobs when small businesses are forced to close.
“It’s a lot nicer to come eat pizza at a mom-and-pop shop rather than Pizza Hut or Dominos. Those are the companies that are probably going to survive, and these little places are going to shut down,” customer Vincent Albanese said.
If the legislation passes, California will be the first state to boost the minimum wage to $15 an hour.
Economists are warning about the potential for unintended consequences from the proposed move.
Jeffrey Clemens, an economics professor at the University of California at San Diego, said an unknown portion of low-wage workers will lose their jobs instead of getting raises.
The Employment Policies Institute’s Michael Saltsman thought the lifting the state’s pay floor to levels only previously seen in bigger cities like Los Angeles and San Francisco could prove disastrous.
“California may be the first state to pass a $15 minimum wage. But it will also be the first to find out why that’s a bad idea,” said Saltsman. “Dramatic wage mandates are already forcing difficult decisions in relatively wealthier areas, with low margin businesses being forced to lay off employees or close entirely.”