California's Increase in the Minimum Wage is Long Overdue
California is frequently a bellwether state with respect to workplace ethics issues. Exhibit A is the recently adopted law that mandates a minimum wage of $15 by the end of 2022. Under a deal reached with state lawmakers on April 4, the state minimum wage will rise to $10.50 on January 1, 2017 for businesses with 26 or more employees. Annual hikes will result in a minimum of $15 per hour in January 2022. California is the first state to lay out a specific plan to meet the $15 per hour goal by a designated date.
Ethics of Providing a 'Living Wage'
We can argue the ethics of raising the minimum wage starting with the burden it may place on small businesses, although the new Law provides that smaller businesses will have an additional year to phase in each increase. Will it raise the cost of products and services so that consumers will have to pay more for the same item? Will the products and services be any better or is this just another way of taking from the (relatively) rich and giving to the poor? In all likelihood product appeal and functionality will stay the same because businesses have never been known to act in an altruistic manner.
I look at a living minimum wage as a moral issue. The Golden Rule says “To treat others the way we wish to be treated.” Who among us could survive on $10.00 per hour (which went into effect on January 1, 2016); $400 per week; and $20,800 per year? This works out to $1,733 per month just for rent not to mention food and clothing. In some parts of California, you are lucky to get one room to rent for that amount.
According to a 2013 study from the Economic Policy Institute, the bottom 60 percent of workers are earning less than they did 13 years ago. According to a 2014 report by the Center for Economic and Policy Research, black Americans — who have earned much higher average levels of education over recent decades — have lower chances of earning a living wage today than they had 30 years ago.
As I see it the issue is one of greed and has infected the corporate world for several years. It has translated into overly-small wage increases driven by the demand exceeds supply reality of the post-recession era. Moreover, there is no doubt that bringing in unskilled workers to do jobs that, ostensibly, Americans do not want to do adds to the problem fueled by the worker visa program which disproportionately affects California businesses because of our high technology industry.
H1-B visas allow U.S. companies to hire foreign workers on a temporary basis, usually for up to 3 years. Many American companies use H-1B visas to bring in small numbers of foreigners for openings demanding specialized skills, according to official reports. But for years, most top recipients of the visas have been outsourcing or consulting firms based in India, or their American subsidiaries, which import workers for large contracts to take over entire in-house technology units — and to cut costs. The immigrants are employees of the outsourcing companies.
Corporate Social Responsibilities
Corporations have a social responsibility to advance the cause and improve the well-being of American workers unless it can be clearly demonstrated that there are no Americans with sufficient skills to fill a job. Even then I contend that a socially responsible corporation should establish a training program, perhaps in conjunction with U.S. universities, to provide the skills necessary to fill employers’ needs.
The $15 per hour minimum wage is long overdue. I am cognizant of the argument that workers at McDonalds do not deserve such pay. But, as I see it, a higher wage may make it more likely they can afford to attend costly colleges and better themselves in order to become contributing members of society. Perhaps graduates will not be saddled by enormous debt obligations that haunt them for years to come.
Steven Mintz is a professor in the Orfalea College of Business at Cal Poly San Luis Obispo. Dr. Mintz also blogs at www.workplaceethicsadvice.com.