Whereas some other parts of the USA are concerned about the impact of any minimum wage legislation, Silicon Valley seems to be embracing all the measures and rules. This trend is supported by many startups that are mushrooming in the area.

California is Introducing a Higher Minimum Wage

Regardless of any misgivings that other industries may have about the measure, cities in Silicon Valley are already planning to introduce a $15 minimum wage faster than the rest of the state. This should be a concern to anyone with the intention of growing a business or staring one. These are the key things to remember:

  1. Minimum wage rules are normally set at the state level.
  2. Northern California is joining other states in introducing a new minimum wage.
  3. It is anticipated that by 2022, the minimum wage will be $15 per hour.
  4. Silicon Valley is calling for a faster adoption of the new minimum wage.
  5. Lower wage workers have been inspired by Silicon Valley to organize and demand an even higher minimum wage.

The Minimum Wage Levels for Various Cities and Towns

In 2019, the following cities will introduce a $15 minimum wage:

  1. Milpitas
  2. Palo Alto
  3. Cupertino
  4. Mountain View
  5. Los Altos
  6. Sunnyvale

Part of the reason for this early introduction is the fact that all of these cities lie in the tech-belt that is home to some of the biggest software and technology companies. These include PayPal, eBay, Apple, and Google.

Because some of these locations actually have an inflation index that is linked to average wages, it is expected that the minimum wage in these areas may even be higher than $15 per hour. This will represent a real boost for low-income workers within these areas. The downside is that this might affect business formation rates in other sectors that are unable to support such high minimum pay rates.

What is Next for Low Paid Workers?

Some people have raised concerns that these high wages are good on paper, but there is no guarantee that they will be fully implemented. Some companies are asking for support and advice.

Researchers such as labor economist Sylvia Allegretto have found that although there are potentially big wins for low paid workers, inflation puts a damper on their impact. Specifically, the increases in the minimum wage will also drive up inflation. Inflation simply means that the prices of goods are higher than the previous purchasing power that their price used to command.

Example of a Higher Minimum Wage in Practice

A minimum wage of $15/hr is meant to increase employment and improve the standard of living of low-income workers, but in practice, it can cause unwanted side effects. A group of economists at the University of Washington presented a paper on the impact of the minimum wage in Seattle, which is headed toward $15 for all employers by 2021. Their research found that an increase in the minimum wage caused employers to reduce employee hours which would reduce employee earnings of low-wage workers by $125/mo.

Contact a Silicon Valley Employment Attorney Today

Silicon Valley is very enthusiastic about this legislation, but there is no guarantee that it will be good for business or even low paid workers across the state. If you are a business or employer looking for support, call Kalia Law P.C at (650) 701-7617 or reach out online for further advice.

- Claire Kalia

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