An up-close view of the pros, cons of raising minimum wage
Rich Winefield has seen first hand the pros and cons of the minimum wage increase.
As executive director of BANANAS, an Oakland-based nonprofit that connects families with childcare providers, he has seen how Oakland’s minimum wage hike has impacted workers who benefit from a higher wage, while creating new challenges for families facing more expensive or reduced access to child care.
“Everybody believes that it’s a good thing, that we do need to improve wages, because childcare providers are woefully underpaid,” he said. “ But the implications can be complicated.”
In March, the minimum wage in Oakland jumped to $12.25 from $9 an hour. “The increase in the minimum wage is absolutely having a dramatic impact on the childcare field,” Winefield said.
The wage hike is restricting access to child care for lower-income families, he said.
“In some instances, childcare providers have hired assistants to work with them, with the children,” Winefield said. “But because of the increase to the minimum wage, they have not been able to hold on to those folks. They just simply can’t afford to keep those assistants.
“Their profit margins are so thin to begin with, so they have to lay off those providers. So those are working people who are out of jobs. Then what happens is they have to reduce their services to families because license requirements (say) that if you don’t have a certain number of people in the center or the family childcare home, you have to reduce the number of families you serve. So families have lost their child care.”
Along with housing and health insurance, childcare is among the largest expenses for families with young children. The average annual price of daycare for infants is more than $13,000 a year, according to KidsData, a nonprofit foundation that collects data on the wellbeing of California children. For a preschooler the cost is about $10,000 a year.
“There’s definitely a missing piece,” Winefield said. “The piece is the state subsidies. There are currently subsidies for families who meet the income requirements, which are already very stringent.”
An analysis from the California Budget & Policy Center found, after accounting for inflation, the state’s childcare subsidy has lost 20 percent of its value since 1980-81.
Legislative efforts this year to boost the childcare subsidy were vetoed by Gov. Jerry Brown.
The state employs thousands of minimum-wage workers, particularly those who provide in-home services to the sick, elderly and disabled, according to the state Department of Finance. Increasing the minimum wage would mean increasing government costs by several billion dollars or more a year.
“Those subsidies have not been increased in many, many years,” Winefield said. “They have not kept pace with inflation. So if you add the additional costs (from an increased minimum wage), those families (who need child care) are in trouble.”
Anthony York is a former Los Angeles Times reporter and is currently publisher of the Grizzly Bear Project.