Minimum Wage to $10, at Least in California

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The announcement must have sent shudders down the backs of fast-food chain and big-box retail chief executive officers.

Governor Edmund G. Brown Jr., Senate President pro Tempore Darrell Steinberg and Assembly Speaker John A. Pérez today announced their strong support for AB 10 by Assemblymember Luis Alejo (D-Salinas), which will raise the minimum wage in California from $8.00 per hour to $10.00 per hour.

“The minimum wage has not kept pace with rising costs,” said Governor Brown. “This legislation is overdue and will help families that are struggling in this harsh economy.”

What thousands of activists who have taken to the streets to protest low hourly wages at companies like McDonald’s Corp. (NYSE: MCD) and Wal-Mart Stores Inc. (NYSE: WMT) have had no success accomplishing, Jerry Brown will do with a stroke of a pen.

These same large companies now have to hope that other states will not follow California. The federally based hourly wage is $7.25. Most states have chosen to adopt the same number. A few, which include Washington state and Illinois, have legislated that the figure be higher. So, for the time being, large retailers and fast-food companies have things the way they want them.

These big companies have argued that a higher minimum wage will ruin their profits. They have to take care of their shareholders, each has claimed. The argument is at least partially right, as far as margins are concerned. However, politicians may not care. The pressure from voters to help poorly paid workers could push the legislative tide against the companies. Their lobbying dollars can only so so much.

One school of thought is that large retailers could wait out the protesters. Like “Occupy Wall Street,” the movement would fade away because it yielded nothing, probably because of confusion about what its leadership was asking for, and maybe because the people who supported it got tired of sitting in the rain and mud. The wage war is different. It has only one goal, and it is a powerful one. Millions of people in the United States cannot live on $7.25 an hour, and there is ample proof of that position.

Some of America’s largest companies may not dodge having to pay higher wages. It only takes one or two large states to begin a trend that eventually could spread across most of the country.

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