California raises the minimum wage, why this is good news

Schwarzenegger and the California legislature

By Alec Brandon

Schwarzenegger and the California legislature agreed to a hike in the state’s minimum wage. It pissed me off to no end to read this justification for the hike:

The agreement would benefit low-paid workers, said Assembly Member Sally Lieber, a Democrat who had advanced a minimum wage bill earlier this year. “We have a moral obligation to ensure that the minimum wage keeps pace with federal poverty guidelines. This bill does that,” she said.

But Schwarzenegger was in a tough position. There was strong public demand to increase the minimum wage and Schwarzenegger had to choose between a temporary increase that won’t be touched for a decade and an increase tagged to inflation (which would devastating).Kudos to Schwarzenegger for playing it cool and appeasing public demand with minimum long-run cost.