The State of California increased the minimum wage from $16.50 per hour to $16.90 per hour starting on Jan. 1. The change follows the Department of Finance’s yearly minimum wage review and corresponds with a years-long trend of increase, according to CalMatters.
The change requires all employers to provide this minimum wage, unless they are already required to follow the Health Care Workers or Fast Food Workers minimum wage, are indentured apprentices following the State Division of Apprenticeship Standards or are an employer’s child, spouse or parent, according to the Department of Industrial Relations.
However, the increase has little to no affect on consumers’ consumption of goods, according to economics teacher James Ferrel.
“Goods that would [typically] be purchased more when people have ample funds — normal goods — have been reduced, due to people prioritizing basic necessities,” Ferrel said. “Commodities like groceries have become way more expensive.”
While this minimum wage increase is a way of reducing inflation, there is still a debate whether the new wage will follow rising living costs, according to Ferrel. In fact, Ferrel said that some economists’ arguments state that these increased wages will exacerbate inflation due to labor’s high costs, and that this minimum wage change should be discussed from lenses beyond general economics.
“We look at it from a morality standpoint,” Ferrel said. “We look at it from an inflationary standpoint. We also look at it from the general health of the economy. Our economy is creating this K-shaped economy where people who have established higher socioeconomic standing are not seeing the biggest impact, whereas there [are] many Americans who are living day to day and trying to survive in the basic needs because of those increased costs of what they’re trying to purchase.”
Senior Yunny Jang said that she has noticed prices increasing across restaurants and retail establishments in the last several months. She expressed concern over the increased minimum wage’s impact on inflation.
“I’m wondering, ‘Would raising the minimum wage have been worth it if things are just gonna become more expensive?’” Jang said.
Ferrel said that he is unable to make definitive conclusions about a causal relationship between inflation and increased minimum wage.
To stay updated with inflation, recommended resources include NPR Marketplace, Nerd Wallet and the money and finance section of news platforms.
