The Fight for $20 and a Union
Another California Minimum Wage Earthquake?
This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the
May/June 2022 issue.
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California is the epicenter for a nationwide grassroots movement to raise the wage floor for U.S. workers. As of January 1, 2022, $15 an hour is the minimum wage for large employers in the state and $14 an hour for small ones (rising to $15 for all employers in 2023). Meanwhile, 39 California cities and counties have established rates that are higher than $15 an hour, with Emeryville, Calif., offering the highest hourly rate at $17.13. The Fight for $15 movement has reshaped public opinion, pushing local and state officials around the country to approve a $15-per-hour minimum wage. Eleven states and 54 cities and counties have $15 minimum wage floors, according to the National Employment Law Project, and four in 10 workers live in states that are on the pathway to a $15 minimum wage. At the national level, the Raise the Wage Act, approved by the House, would boost the federal minimum wage from $7.25 an hour to $15 an hour by 2025; but it is blocked in the Senate. In the 2022 midterm elections, this impasse could well impact the outcomes of competitive Senate and House races.
In California, an initiative to hike California’s minimum wage to $18 an hour funded by tech entrepreneur Joe Sanberg appears to be a lock for the November 2022 ballot. California House races that Democrats must win could hinge on the state’s minimum wage.
So, why has the higher wages movement exploded in California? How might the fight for higher minimum wages impact the 2022 midterms? And what’s next for the movement?
Inequality and the California Higher Wages Movement
Soaring inequality in the Golden State, rising costs of living, and a large low-wage service sector are the story behind the higher wage movement. According to the California Budget and Policy Center, average real income for the top 1% skyrocketed by 134% while the incomes of the bottom 40% fell by 16% between 1987 and 2017.
The bottom has dropped out for California workers because of stagnating wages. In 2018 the median wage of $21.79, adjusted for inflation, was just 1% higher than in 1979. For the bottom 10%, hourly wages rose by a meager 4%. The California Future of Work Commission reported in 2021 that one in three California workers earned less than $15 per hour. The majority of those are essential workers who cannot work from home and experience high rates of Covid-19 workplace infections. The United Ways of California estimate that in 2019 one-third of California households were working poor, i.e., with at least one household member working but without enough income to meet basic needs including food, shelter, health care, transportation, childcare, and taxes.
Rents have far outpaced wages for decades, further squeezing California workers. According to the California Housing Partnership, between 2000 and 2019, annual median rents increased by a whopping 35%, while renters’ incomes grew by just 6%. As a result, California renters face increased overcrowding, eviction, displacement, and homelessness.
Origins of the Movement and the Fight for $15
The California higher-wages movement began in 1997 when the Los Angeles City Council approved the state’s first living wage law. It required the city, large city contractors, and firms receiving economic development assistance to pay more than the state minimum wage. Proponents argued that contracting out city services to private employers had created poverty-wage jobs that forced workers to rely on government assistance.
Throughout California and nationwide, 120 cities and counties soon followed suit. In these campaigns, coalitions of labor, faith, immigrant rights, and environmental organizations educated the public about what it cost for working families to make ends meet and what local governments can do to address inequality. In 2003, San Francisco went a step farther, becoming the first California city to approve a citywide minimum wage higher than the state’s—which, unlike living wage laws, covered virtually all local workers.
Such efforts multiplied after the 2008 financial collapse and the Great Recession. Occupy Wall Street exploded in 2011–2012, with more than 600 tent encampments in cities across the nation, including 143 in California. While Occupy protests ended, the movement energized new campaigns to halt foreclosures and evictions, promote financial regulation, end student debt, and raise the wage floor.
In 2012, New York City fast-food workers—among the lowest paid in the service sector—held a one-day strike demanding $15 and a union, which seemed like a pipe dream at the time. Yet, fast-food strikes supported by SEIU, the nation’s second-largest union, spread to 190 cities by 2014, while low-wage workers organized sit-ins and civil disobedience demonstrations at McDonald’s and Walmart stores in coastal California cities.
The Fight for $15 movement was born, and campaigns were launched across the country to pass citywide minimum wage laws. In 2012, there were just four U.S. municipalities with such laws, but Fight for $15 coalitions in SeaTac and Seattle, Wash., won the nation’s first $15 citywide minimum wage laws in 2013 and 2014, respectively. Over the next two years, San Francisco, Los Angeles, San Jose, and San Diego followed suit. Since that time, 51 cities and counties nationwide have approved $15 minimum wage laws.
In 2015–2016, California higher-wage advocates collected enough signatures to approve a state $15 minimum wage ballot initiative. Polling indicated that the voters would overwhelmingly approve such a proposition, so the California legislature jumped in to enact the first $15 state minimum wage in 2016, followed by New York, Massachusetts, Connecticut, New Jersey, Illinois, and Maryland over the next three years.
In November 2020, the dominos continued to fall when Florida voters approved a $15 minimum wage, and in 2021 when the Rhode Island, Virginia, and Delaware legislatures did the same. In addition, since 2016, nine states have adopted lesser minimum wage increases ranging from $11 an hour to $14.75.
Notably, most of these state and local minimum wage increases include an annual automatic cost-of-living adjustment to prevent the erosion of the purchasing power of the minimum wage over time. Moreover, eight states that set their minimum wage above the $7.25 federal minimum have eliminated the unjust subminimum wage for tipped workers. The subminimum allows restaurants and other employers to pay tipped workers as little as $2.13 an hour as a base wage. After the Civil War, this practice was part of a legacy of racial segregation when railways, restaurants, and hotels–whose workforce was predominantly Black–did not want to pay wages to freed slaves. The One Fair Wage Coalition is currently leading a nationwide campaign to abolish the subminimum wage.
Business Gets on Board
The writing is on the wall for U.S. companies to get on board the moving train of higher minimum wages, and the pandemic has driven the message home. A growing number of large employers have raised entry-level pay in response to tightening labor markets, a record number of workers quitting low-wage jobs, and state and local minimum-wage mandates. Bank of America leads all employers by setting its minimum pay at $21 an hour, committing to reach $25 by 2025. Amazon recently announced a boost of entry-level wages to $18 an hour. Costco and IKEA have hiked minimum pay to $16 an hour. Retailers like Target, Whole Foods, Best Buy, CVS, and Walgreens; insurers including Allstate, Aetna, and Nationwide; banks such as Wells Fargo and JPMorgan Chase; and tech companies including Google and Facebook have established a $15 entry-level wage. A milestone in the Fight for $15 was McDonald’s 2019 announcement that it would no longer oppose minimum wage increases at the federal, state, or local level. Now, a 2021 executive order by President Joe Biden has boosted starting pay to $15 an hour as of January 30, 2022 for hundreds of thousands of workers employed by federal contractors who receive new, renewed, or extended contracts.
The Wage Movement’s Electoral Impact
The higher-wages movement has profoundly altered public opinion. In 2016, Senator Bernie Sanders was the only Democratic Party candidate to champion the $15 minimum wage, but after Sanders won 22 Democratic primaries that year, the party incorporated the $15 minimum wage into its platform. When the Democratic primaries kicked off in 2019, every Democratic presidential hopeful supported it.
Voters are solidly in favor of higher minimum wages. In 2021 the Pew Research Center reported that 62% of voters supported the federal Raise the Wage Act ($15 phased in by 2025). Public support spans states with both Republican and Democratic Party majorities, as demonstrated by Florida voters approving their ballot measure to increase the minimum wage to $15 an hour by a stunning 60% margin, despite President Donald Trump’s narrow win in that state. But the political elites are not on board, as shown by how Florida’s Republican governor, both senators, and party leadership all denounced the popular $15 minimum ballot initiative and by seven Democrats joining the Republicans in the U.S. Senate to defeat the federal bill. With California now poised to raise its minimum wage to $18, it could ignite another round of increases among the states—especially given the record profits of large employers during the Covid-19 pandemic, spiraling inflation, and growing worker demands. The Congressional Research Service reports that, since 1996, minimum wage initiatives have passed in 26 states, and none have failed.
The 2022 Midterms and the Minimum Wage
The minimum wage looms over the 2022 midterms. A 2019 poll by Hart Research Associates found that two-thirds of voters in 57 Congressional districts that Democrats won in 2018 favored raising the federal minimum wage to $15. The poll also indicated that, by a large margin, voters are likely to support candidates who favor the Raise the Wage Act. California has as many as nine House seats up for grabs, particularly in the Central Valley and Southern California. Redistricting has placed five incumbent Republicans in vulnerable positions, and experts rate three of these races as toss-ups. California Republicans are skating on thin ice if they oppose an $18 an hour state minimum wage.
Many swing states with competitive Senate races, such as Pennsylvania, North Carolina, Georgia, Wisconsin, and New Hampshire still set their minimum wage at the rock-bottom federal level of $7.25 an hour. Recent Progressive Change Institute polling shows that 53% of the voters in three of these states support a $15 minimum wage phased in by 2025. A candidate’s support for the Raise the Wage Act could influence voters’ choices in these battleground states. In Arizona and Nevada, where 2022 Senate races are a toss-up, voters have previously approved state minimum wage increases by lopsided majorities. In Nevada, voters will consider another state ballot initiative to raise the minimum wage to $12 an hour by 2024.
A candidate’s position on the minimum wage could make a difference in 2022. This should favor Democrats since they have championed the higher-wage movement while Republicans have blocked raising the federal minimum wage for over a decade. The minimum wage is especially important for the Democrats’ base constituency. The Economic Policy Institute reports that the federal Raise the Wage Act would boost pay for one in three Black workers and one in four Latino workers. Under the bill, nearly 60% of workers receiving a pay raise are women.
The Next Phase of the Movement
The United Ways of California calculate that a California living wage is no less than $21 per hour for each of two parents, employed full-time to support two children. The cost of living is much higher on the coast compared to the Central Valley, but $20 an hour is an aspirational goal for the entire state, if not the nation. Allynn Umel, campaign director for the Fight for $15 and a Union, recently told CNBC, “Now, $15 is widely understood to be the bare minimum workers anywhere need to get by. $15 has always been the floor, not the ceiling, for wages—and working people will continue to demand lawmakers and employers increase pay to keep up with the rising cost of living and ensure that every community can thrive.”
Ultimately, low-wage workers must unionize to win and maintain a living wage, comprehensive benefits, and protections for health and safety. Unionized workers in low-wage industries are already pushing for a wage floor higher than $18. In 2018, Oakland, Calif., voters overwhelmingly approved a Hotel Employee Minimum Wage ballot initiative proposed by UNITE HERE Local 2850 and the East Bay Alliance for a Sustainable Economy, which mandated that large hotels pay their workers $20 an hour (or $15 if health benefits are provided).
In 2021, 20,000 California janitors represented by SEIU United Service Workers West ratified a new contract that will lift wages to $20 an hour for most and enhance their medical and retirement benefits. Union home care or IHSS (in-home support services) workers in San Francisco won a wage increase to $18.75 an hour last year. SEIU 2015, the union representing home care and nursing home workers statewide, has launched a campaign to make $20 per hour the starting wage for all long-term care workers. California was the first state to implement a $15 minimum wage, and the Golden State provided a model for the grassroots campaign that got it done. Once again, California is at the forefront of the movement to raise the wage floor—now the Fight for $20 and a Union. The difference is that now the minimum wage issue could affect the outcome of the 2022 midterms in California and across the nation.
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