Policy brief finds Living Wage Act could benefit millions of CA workers

A policy brief by Michael Reich, UC Berkeley professor and chair of the Center on Wage and Employment Dynamics, found that the Living Wage Act, or LWA, would allow pay increases for millions of California workers.

Current minimum wage for California is $15. According to the brief, the proposed ballot measure would increase the minimum wage to $16 in 2023, $17 in 2024 and $18 in 2025, followed by adjustment for inflation in 2027.

“About 4.8 million workers would get pay increases, making up for the loss in their purchasing power caused by inflation,” Reich said in an email. “The effects on consumer prices and number of jobs would be negligible, and 3.5 million Californians would be lifted above poverty.”

Reich said the LWA will likely not be on the November 2022 ballot, since it failed to attain the verification of signatures from San Diego County before the June 30 deadline. Instead, the act will most likely appear on the 2024 ballot, according to Reich.

Reich studied how the LWA would affect price and pay increases, number of jobs and poverty rates among working families. The policy brief took into account current state minimum-wage increases without the LWA and local wage laws already in place. Reich stated around one-third of workers in the state are already covered by higher local minimum-wage laws.

“The results of the study indicate that California could gradually increase its minimum wage to $18, creating important benefits for low-wage workers and their families without the adverse effects on jobs predicted by minimum wage critics,” Reich said in the email.

A complementary analysis conducted by UC Berkeley Labor Center researchers estimated about 26% of the California workforce would receive increased wages by 2026 under the LWA, according to a UC Berkeley Labor Center press release.

This report also looked at the age, race, ethnicity, education and employment status of workers who would be affected by the act.

According to the report, the affected workers tend to be adults and less educated than the overall workforce. Furthermore, Latine workers were found to be more likely to earn low wages, making them therefore more likely to benefit from the wage increase.

Reich added that Berkeley and many other cities in the East Bay would not be affected by the act, as many local minimum-wage standards will continue to increase with inflation and will likely reach $18 without the LWA.

Berkeley Mayor Jesse Arreguín said the value of the minimum wage has deteriorated over time as rising costs of living have outpaced increases in people’s wages.

“Raising the statewide minimum wage to $18 by 2026 is needed to help low-income families remain in California and close gaps in economic inequity,” Arreguín said in an email. “I strongly support this proposal and believe that people who work full time should be paid a living wage.”

Contact Ananya Rupanagunta at [email protected]and follow them on Twitter at @arupanagunta.

Michael A. Bynum