What’s one of the driving forces of poverty and inequality? When the cost of living outpaces the growth in wages.
In response, California over the last two decades has raised the minimum wage every few years, as have some local governments. New state Sen. Steve Padilla, a Chula Vista Democrat, says that strategy leaves the state “constantly playing catch-up.”
So he’s introduced a bill that would require the state to create and maintain a calculation of a “living wage” — the earnings it would take for a family to actually afford rent and basic expenses in each county. It would also require California’s Workforce Development Board to recommend to the Legislature each year the minimum wage necessary to afford housing in each county and recommend a way to adjust that to reflect inflation.
It’s an acknowledgement of a common lament among anti-poverty advocates in California, that the state’s sky-high cost of living easily wipes out much of the gains from having one of the nation’s highest minimum wages ($15.50 an hour this year) and a more generous social safety net than most states.
- Padilla: “If you continue to just every few years sort of decide on a (minimum wage) number and prescribe it, you run the risk that by the time that gets implemented, other factors you don’t control, like the housing market, are way out of reach.”
There’s an important caveat: Padilla’s proposal would not bind the state to peg its minimum wage to the living wage standard. But proponents say it would be more than an academic exercise; an official government measure could influence future policy on labor or other issues.
For now eligibility for most government assistance programs, such as CalFresh or Medi-Cal, is determined by household earnings in relation to national poverty measures, which do not account for California’s higher cost of living.
There are a few measures that try to come close.
The U.S. Census Bureau maintains its alternative Supplemental Poverty Measure, which includes non-wage income, such as aid from social programs, and expenses, such as regional housing costs. By that measure California has the highest poverty rate in the nation.
Also the United Ways of California calculates its Real Cost Measure of how much a household must earn to afford the basics in various California cities, which inspired Padilla’s bill. In 2019, the latest year for United Ways’ data, two adults would need to work full time, earning $22 an hour, to make a living wage for a family of four.
Pete Manzo, United Ways president, said the measure is meant to reflect a “decent, working-class standard” of living — children getting their own room, for example. It includes housing, food, transportation, health care and child care.
- Manzo: “There are multiple ways to try to get (families) to meet that self-sufficiency level. Let’s first figure out how many people are struggling, what’s reasonable to pay out of their earnings, and then can we increase their earnings or figure out other ways to help.”
Meanwhile California voters will get to decide on two wage-related measures on the 2024 ballot. One would raise the statewide minimum wage to $18. The other is a referendum on creating a fast food industry council that would have the power to, among other things, raise fast food workers’ minimum wages to $22 an hour.
Tax relief: In case you missed it, late Friday the Internal Revenue Service issued some long-awaited guidance for taxpayers: California’s Middle Class Tax Refund does not have to be reported on federal income tax returns and will not be subject to federal taxes.
More than 16 million payments, ranging from $200 to $1,050, have been sent to Californians through direct deposit or debit cards. Early on the state’s Franchise Tax Board made it clear the payments don’t need to be reported as income on state returns.
But until Friday it wasn’t clear what the IRS would do, even though it started accepting individual returns on Jan. 23. The IRS said figuring out whether special payments in 21 states should be taxable was too time-consuming, so it “determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.”
Meanwhile Republican state lawmakers, who fired off a letter last week to President Joe Biden on the issue, tried to take credit for the IRS decision.
- Sen. Rosilicie Ochoa Bogh: “Taxing Californians on their tax refund is double dipping. With inflation already squeezing Californians, the federal government should not be taking more money out of working families’ pockets.”
TELL YOUR FRIENDS ABOUT CITIZENS JOURNAL Please keep us publishing – DONATE
