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Currently, the City of Pasadena, California, is on track to increase its minimum wage to $15 an hour by the end of the decade. Proponents of the new living wage ordinance argue that the increase in wages will assist minimum wage earners secure crucial payments such as rent, grocery shopping and utility bills. In turn, this will provide economic relief for the lowest wage earners in the city and will allow them to comfortably spend more; thus stimulating overall economic growth.

Pasadena Fight 4 Fifteen

However, opponents argue that this wage increase will only cause the price of goods, services and rent to increase as well. Despite the current noise surrounding this particular campaign, the fight for a living wage in this country has existed since the early 20th century. Here I will highlight the history of living wage campaigns in order to provide readers with the historical context of where Pasadena now finds itself.

In 1938, President Franklin D. Roosevelt signed the Fair Labor Standards Act (FLSA) which established a federal minimum wage at $0.25 an hour. The goal was to create a “minimum standard of living necessary for health, efficiency, and general well-being.” Signed into effect at the peak of the Great Depression, the law’s intended purpose was to keep workers out of poverty, prevent labor exploitation, and encourage consumer activity in order to stimulate the economy. Since 1938, Congress has increased the minimum wage 22 times. The most recent increase went into effect in 2009, when Congress increased minimum wage to $7.25 per hour.

Under the FLSA, the federal minimum wage may only be increased by Congressional approval; it does not automatically adjust with inflation. In recent decades, inflation has increased at a much faster rate than the federal minimum wage; “returning it to the value it held in 1968 would require an increase to nearly $10 per hour.” As a result, the purchasing power and living standards of workers and families who earn minimum wage have declined. Since 1980 the federal minimum wage has lost 30% of its value in terms of purchasing power.

Low-wage workers reached peak purchasing power in 1968, when the minimum wage was the equivalent of $9.54 per hour in 2014 dollars. However, due to infrequent and inadequate congressional raises, these workers are worse off economically than they have been in years.

According to the Economic Policy Institute, low-wage workers reached peak purchasing power in 1968, when the minimum wage was the equivalent of $9.54 per hour in 2014 dollars. However, due to infrequent and inadequate congressional raises, these workers are worse off economically than they have been in years.

Because Congress does not routinely increase the federal minimum wage to keep pace with inflation, 30 states have adopted their own minimum wages higher than the federal level. Over the past decade, over 40% of cities and counties across the country have also adopted their own municipal and county minimum wages laws.

The movement to get cities and low-wage employers (like fast-food chains) to increase minimum wages has been called the Fight for 15. In November of 2012, 200 fast-food workers in New York City walked off the job and refused to work, demanding $15 per hour in pay as well as union representation. Though the Fight for 15 initially began as a movement garnered for fast-food workers, the organizers have transformed it into a revolutionary campaign for low-wage workers nationwide working in a diverse collection of job sectors.

Since that first one-day strike in 2012, the Fight for 15 has called into action over 150 cities in the United States and 33 locations internationally. As a result of the momentum initiated by the fast-food protests, in June of 2014, Seattle passed the first $15 Minimum Wage Ordinance. This was a major victory for the Fight for 15 campaign, and since then, cities across the nation, including New York City, Washington D.C., and a multitude of cities in California, have passed their own laws to increase minimum wage to $15. The California cities of San Francisco, Los Angeles, Mountain View, Emeryville, Santa Monica, El Cerrito, and now Pasadena have each approved a $15 minimum wage, as has Los Angeles County .

Following close behind the movement for the Fight for 15 are the multitude of economic and research studies both in agreement and in disagreement with advocates’ attempts to increase minimum wage. Macro-level economists are somewhat divided on the subject, yet again and again research findings of both qualitative and quantitative data point towards to the dire need for a living wage–not just a minimum wage–for workers.

In their landmark 1994 study, David Card and Alan Krueger evaluated employment in the fast-food industry in neighboring counties of New Jersey, which increased the minimum wage, and Pennsylvania, which did not. They found that employment increased more in New Jersey than in Pennsylvania. This was the first evidence of its kind to demonstrate positive economic effects attributed to increasing the minimum wage.

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Additional research over the past few decades suggests that when the economy is doing poorly, increasing minimum wage allows for a stimulus effect to boost the economy: workers are rewarded for their hard work by increased pay; consumer activity increases; and the economy is stimulated. Moreover, higher wages reduce employment turnover and encourage increased productivity and healthy competition within the workplace. Thus, during especially hard economic times, minimum wage should be increased in order to improve the economy and employment.

In their evaluation of a $15 minimum wage in Los Angeles, Daniel Flaming and Patrick Burns suggest that raising the minimum wage can have positive effects on both workers and industry. For low-wage workers, this can include increased income and an improved standard of living which often translate to happier, healthier, and more productive workers. They argue that this increase can serve as an economic stimulus, as low-wage workers tend to spend a larger chunk of their pre-tax income than more affluent employees, and spend it in the local economy. In LA County, this extra spending would amount to $9.2 billion in annual sales and generate a potential new 64,700 jobs.

Daniel Flaming found that in Los Angeles, 58% of workers who make less than $15 an hour are financially burdened by their rent, versus 40% of workers who earn $15 or more. The 2013 poverty threshold for a family of four living in Los Angeles was $23,550. With a $15 wage, a full-time worker working 35 hours a week for 50 weeks a year would earn $26,250 a year before taxes, enough to pull them above the poverty line and provide for a family.

The University of Washington reported that the Seattle minimum wage increase to $15 an hour resulted in overall higher pay for low-wage workers. They also reported a 9% decrease in hours after the raise to $13, and projected a loss of 5,000 low-wage jobs. The same month, the University of California, Berkeley reported that Seattle’s increase did not increase unemployment in 2015 or 2016, but rather that employment in sectors like food service remained fairly stable after an increase to $13.

The two studies present differing conclusions on the impact of the wage increase. Both studies use “synthetic” models to base their conclusions upon, but they each draw from differing datasets. The University of Washington report focuses not just on “minimum wage” jobs, but on “low wage” (less than $19 an hour) jobs in order to account for employers raising pay for those making more than minimum wage.

The Berkeley report focuses on the impact of the wage increase for workers in the foodservice industry by analyzing county and city-level data for 2009 to 2016 on all employees counted in the Quarterly Census of Employment and Wages, accounting a data threshold higher than $19 . Additionally, the UC Berkeley study analyzed county and city-level data to create a “synthetic” model to identify the effects of Seattle’s minimum wage, while the University of Washington researchers used areas outside of King County somewhat unlike Seattle to base their research. It is likely that these two studies will influence Pasadena City Council’s decision to continue to increase minimum wage during the 2019 economic assessment.

Absent from the literature was research on how minimum wage increases can benefit low-wage workers and their families. The majority of minimum wage research comes from a strictly economic perspective, and lacks the narratives or experiences of those who are getting a raise.

Absent from the literature was research on how minimum wage increases can benefit low-wage workers and their families. The majority of minimum wage research comes from a strictly economic perspective, and lacks the narratives or experiences of those who are getting a raise.

In Pasadena, the concentration of income is highly unequal. The richest one-fifth holds 53.4% of resident income, and the poorest one-fifth holds just 2.39%. The gap between the top 5% of households is roughly 38 times greater than that of the poorest 20%. Over 22,000 out of 70,000 employed Pasadena residents earn less than $15 an hour. The majority of these are concentrated in low-wage industries such as retail, fast food, car washes, full service restaurants, parking lots, department stores, and supermarkets.

Peter Dreier argues that Pasadena has a blind spot when it comes to its residents at or below the poverty line–with a poverty rate at 16.3% (higher than the national average), the number of households making $200,000 a year increased by 4%. For this reason it is essential that future wage studies include the voices of those workers currently earning minimum wage.

In conclusion, living wage campaigns are nothing new in this country. As cities change so does the price for a sustainable quality of life. However, laws must not be written without the input of the people currently living off of the minimum wage that is supposed to guarantee that sustainable quality of life. Mathematical, economic algorithms provide wonderful insight into the quantitative factors that must be considered when determining a living wage.

However, a lack of the human narrative will always result in a disconnect between legislation and the people it intends to benefit. As Pasadena continues to increase its minimum wage, it is my hope that the voices of low wage workers are incorporated into the legislative process.

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David Mariscal