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A little more money

April 22, 2006

RAISING THE MINIMUM WAGE by a dollar is lot like embarking on a cross-country road trip with the tank half full, stopping at a gas station and adding just a quarter-tank more. Yes, the new fuel will allow you to travel a little farther down the road. But it won't be enough to get you to your destination.

So it is for the 1.4 million Californians -- 460,000 in Los Angeles County -- who make the state's $6.75-an-hour minimum wage or close to it. Raising the wage to $7.75, as Gov. Arnold Schwarzenegger and legislators in Sacramento are proposing, won't even pull those who earn it into the middle class. That would require an increase to well above $10 an hour, and neither the governor nor Democrats in the Legislature are prepared to go that far.

But unlike the minimum wage itself, the debate over it has hardly changed in decades. Advocates argue that it allows the working poor to eke out a living. Opponents say that it pushes up costs for business and forces job cuts.

This year's debate is mostly familiar, but there are a few surprises. First, almost everyone agrees that an increase is long overdue. The last hike went into effect on Jan. 1, 2002, and the governor vetoed increases in 2004 and 2005. But between 2000 and 2005, the price of a gallon of gas went up nearly 50%; the price of a gallon of milk, almost 25%. (And low-wage workers can forget about buying a home.) In a November 2005 poll of 800 California voters, 73% supported the higher wage.

Maybe that helps to explain another oddity this year: The increase has some unexpected supporters -- such as the governor and the Los Angeles Area Chamber of Commerce. Some studies suggest that small increases don't have catastrophic consequences on business activity.

So much for what's new. The rest is politics. The two bills that recently passed out of committee in the Assembly and the state Senate include provisions for automatic cost-of-living increases, which are very unpopular with business and the governor. (Businesses say such increases add an unacceptable level of unpredictability to their labor costs.) Perhaps election-year pressure will force a compromise by the end of the summer, when a final version of a bill is likely to land on the governor's desk.

In some ways, the debate over the minimum wage is much ado about nothing -- the very existence of Los Angeles' burgeoning "underground economy," which employs about 300,000 people, all but ensures that businesses will continue to be able to hire people at low wages, albeit illegally. Until employers and policymakers get to the bottom of the forces that allow this to happen -- and yes, that includes the U.S.' misguided immigration policy -- meaningful relief for low-wage workers will remain elusive.

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