President Obama's Proposal Would Raise California Minimum Wage By $1

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President Barack Obama's proposal to raise the federal minimum wage to $9.00 per hour would represent a $1.00 increase for minimum-wage workers in the state of California.

In last year's presidential election, both Obama and Governor Mitt Romney said they wanted to tie the minimum wage to the cost of living. Right now, California's minimum wage is $8.00 per hour, which is more than the current federal minimum of $7.25. But the purchasing power of the minimum wage has dropped twenty percent since 1967. Most economists agree that if the United States is going to have a minimum wage, the rate should match up to inflation, according to Dr. Alec Levenson, a labor economist at USC's Marshall School of Business.

"It's kind of silly the way we have it right now," said Levenson. "If we just indexed it for inflation, then it would go up gradually over time and we wouldn't get these big challenges around having large adjustments that take place when you're trying to make up for lost ground all of a sudden."

Raising the rate to $9.00 per hour would get it closer to the rate of inflation, but to match the purchasing power of the minimum wage in 1968, the rate would have to be almost $10.00 per hour. Levenson says it's tough to find any economic sweet spot that both Republicans and Democrats can agree on.

"If you raise it by a lot, then you're pretty much guaranteed that you will be losing some jobs, because some jobs will become not economic enough for employers to be able to offer them," Levenson said. "On the other hand, for the relatively small number of jobs that might get lost, you have the benefit to all the people who keep their jobs, who are then working at that higher minimum wage."

Raising the minimum wage would directly affect teenagers who are paid by the hour. About one in every four teenage employees are paid the minimum wage, according to the Bureau of Labor Statistics.

Neal Santos, 23, started working in batting cages and coaching baseball teams when he was 16 years old, and he was paid a minimum wage of just over seven dollars per hour. Santos is in favor of raising the minimum wage.

"Especially as a teenager, you want money to go out with your friends and have that ability to just hang out and have a good time," Santos said. "But you're always worried about the next paycheck or car payment, if you're paying for your own car. So it's hard to manage your money at a young age."

The fast food industry would likely see prices go up a bit, because they hire a lot of minimum wage workers. But Santos says it would put disposable money in the pockets of young people like him. An increase in the minimum wage would see 15 million Americans make more money for their work.

"If you go to lunch, $9.00 will get you a meal. $7.25 won't," Santos said, referencing the current federal minimum wage. "You'll have to go into another hour of work, but [$9.00] is definitely a nice bump up."