Studies show that the marginal propensity to consume of low-income families (those who primarily work minimum wage jobs) is much higher than those of middle class or upper-class families. This means that most of the money that is made by minimum wage workers is spent, going back into the economy.
It is a known fact that when a person makes a higher wage, they have more money to put into the economy. With the increase to 10.50 an hour minimum wage in California, this gives those who cannot make ends meet a way to put more money in their pockets and improve the lives of their families, It also gives those who have to choose between, rent, food and medicine the option to have all three because more money means more security that leads to more spending and improved lifestyles.
Remember that old addage, "Time will tell"? We, as a society, can only wait and see the repercussions (if any) fall out from this raise. I, as an American member of society and not one of California statehood, believe that lower-paid workers deserve any respite they can get. After all, they are working.
The divide between the rich and the poor has increased dramatically in the wake of the 2008 financial crisis. Many families are struggling on minimum wage to pay bills and feed mouths. Wages need to increase to meet the cost of living, and while any increase of wage is welcomed, people are still needing much more.
First and foremost, minimum wage is not intended to be lived off of. The issue with today's generation [millennials] is not understanding that minimum wage jobs are intended to help young people [primarily teens] who are looking for work accumulate some capital, some skill, and a resume to present to future employers. Minimum wage jobs are not intended to be lifelong careers.
Second, the higher a minimum wage is, the higher the prices of goods and services become. Small businesses often cannot afford wage hikes, and cannot afford to provide their customers proper services. Why not? Because it becomes too expensive. High wages will inevitably benefit corporations [like WalMart, who lobbies for $15/hr], because small business will crumble under them.
The free market's invisible hand (for reference, see: Adam Smith's The Wealth of Nations) will punish businesses that refuse to pay workers adequate wages and which refuse to provide adequate service to its consumers. That is, if the market is left unfettered.
A starting up business does not have the capital to afford such an expensive starting wage for a worker. Not only does it hurt small business but it is also going to affect employment. A business can't hire as many people when they have to raise the wages. This can lead to downsizes and layoffs. More people will be pushed out of the work force because of this. Getting rid of the minimum wage would be the best move, but that can only work most effectively when we don't have a federal reserve that can manipulate the worth of the dollar. This will further increase the division between the wealthy and poor because you are giving less opportunity for people to work. Also, people forget that business' are competing for the best workers. Which would naturally drive up wages, however when you stamp a minimum wage, businesses can get away with screwing workers because there is less competition for work.
Although $10.50 is a small hourly wage, forcing companies to pay an amount that the free market was not forcing them to pay before will surely drive some businesses out of business and leave some people out of work. If it was a good move for the business to pay someone more they would. Additionally, the higher labor costs are the more it makes sense to employ automation and robots., which would inevitably lead to the reduction in workforce.