The Economic Impact of Raising the Minimum Wage in California1.0 IntroductionOn September 25, 2013, the California Legislature passed Bill 10 of the 'Assembly raising the minimum wage to $10 an hour by January 2016.1 This minimum wage increase makes California have the highest minimum wage of any state in the country. Jerry Brown, Governor of California, said in a statement: “The minimum wage has not kept pace with rising costs. This legislation is long overdue and will help families struggling in this tough economy. 2 Although California's AB-10 is a step toward reducing poverty in the state, it will fail to help low-income families in the long term due to inflation and shrinking power purchase of the fixed wage.Thesis 1.1 History of the minimum wageFederal law requires that employees working in the United States be paid no less than the legal minimum wage. The first federal minimum wage was signed by President Franklin Roosevelt in 1938, at the height of the Great Depression3. Its main goal was to keep American workers out of poverty. Additionally, increasing wages would increase the purchasing power of the consumer and restore the economy. It would also help large companies underpay their hard-working employees. However, an increase in the minimum wage has historically had a negative effect on the unemployment rate. When the minimum wage was changed from 1967 to 1968, the unemployment rate increased from 3% to 3.6%.4 The unemployment rate, however, began to fall again from 1968 and 1969. We saw a similar increase of the unemployment rate and a stabilization when the minimum wage was modified. was raised in 1996 and 1997. This is due to the fact that some workers are willing to illegally work below the mandatory minimum wage rate, thus pushing back middle of paper......992.[5] Bruno, C. (March 12, 2013). Sacramento Spotlight: AB 10 – Minimum Wage Increase. Retrieved May 5, 2014, from http://www.advancingafreesociety.org/eureka/sacramento-spotlight-ab-10-minimum-wage-increase/[6] Support increasing the minimum wage in California. (August 11, 2013). . Retrieved May 5, 2014 from http://gov.ca.gov/news.php?id=18199[7] Schumacher, K. (nd). The Assembly proposes a much-needed increase in the minimum wage. . Retrieved May 5, 2014 from http://californiabudgetbites.org/2013/05/30/assembly-moves-forward-a-much-needed-increase-in-the-minimum-wage/[8] Johnson, K. & Greenhouse, S. (October 13, 2013). In Washington state, where the minimum wage is the highest, one city is aiming higher. The New York Times. Accessed May 5, 2014, from http://www.nytimes.com/2013/10/14/us/in-washington-state-home-of-highest-minimum-wage-a-city-aims-higher.