Today, California’s minimum wage has been increased to $9. For all who are employed at a minimum wage rate, the increase is a positive move by the State’s policy makers, but this may not be good news for long. The economic impact of a raise in the minimum wage is inevitable for everyone. A wage increase will allow people working at minimum wage to be able to afford more goods and services for the amount of money earned on an hourly basis. As minimum wages increase, so will prices of goods and services.
An increase in minimum wages will cost businesses more to employ workers which could possibly also increase prices of goods and services. When a business is faced with increased costs such as the rate that they pay employees, there is a choice on whether to pass the cost on to consumers by raising prices or absorb the cost and find a way to become more efficient and productive instead of literally passing the buck down to the consumer. We cannot assume that all businesses will pass the added cost down to the consumer, but there will be an inevitable adjustment that needs to be made in one way or another.
An increase in the minimum wage by $1 may not seem like much, but the plan for California is to continue to increase wages until it reaches $10 by 2016. This minimum wage increase in California is not only one increase. It is a part of a plan to increase minimum wages significantly over time. Although a $1 increase may not be anything to write home about, a $2 increase in a 2 year period is over 20% change in income for someone who is working at minimum wage. It should make a significant impact on the lives of minimum wage employees.
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