Assembly Bill No. 10: Increase of Minimum Wage (Pros/Cons)

California Governor Brown approved Assembly Bill (AB) No. 10 to raise California’s minimum wage. There is celebration on one end for those dedicated to these minimum wage employment opportunities, but on the opposite end of the spectrum lies those who can’t grasp why in a struggling economy California is taking the lead in raising minimum wage past the single-digit wage threshold.

The Bill: What it is

The Bill was approved back in September 25, 2013 and raised minimum wage to $9 per hour on July 1, 2014 and further increased minimum wage to $10 per hour by 2016. It is important to note that at the time of the Bill’s signing, California was the first state to surpass the double-digit minimum wage threshold. Now however, raising minimum wage has become a national epidemic with even President Obama calling on Congress to raise federal minimum wage.

How does this affect my business? What should I consider?

Here is a list of the potential pros and cons and factors to consider for business owners:

• Overall increase in business costs;

• Minimizing the number of employees;

• Hiring challenges due to increased wages for unskilled/lower-skilled workers;

• Increased minimum wage job competition;

• More experienced minimum wage employees;

• Increased managerial salaries;

• Decreased profits;

• A need for more efficient business planning/structure;

• Increased spending of employees contributing to the economy;

• Increased productivity;

• Improved customer satisfaction;

• Better overall work talent;

• And overall growth in the economy.

Considering the list of possible ramifications, is increasing California’s minimum wage a good or bad thing for businesses? The list is not comprehensive one and there are many more things to consider.