LOS ANGELES -- When the minimum wage in California rose to $10.50 an hour Jan. 1, more than 1 million people got a raise. But for an untold number of families across the state, that pay bump will price them out of child care.
This year, for the first time, two parents working full time at minimum wage jobs, with one child, will be considered too well off to qualify for state subsidies for day care and preschool. It's been 10 years since the state set the threshold for who is poor enough to get the benefit, which is pegged to 2005 income levels.
"It's an unintended consequence that was never part of the plan," says Rich Winefield, the former executive director of Bananas, a day care and preschool referral agency in Oakland. "It's unbelievable that we have policy that creates this."
That's just one of the likely ripple effects a rising wage will have for California businesses, their employees and their customers. Most of the minimum-wage debate nationwide has focused on rising worker incomes and possible job loss as employers adjust to higher costs. But votes to gradually increase the minimum wage to $12 or $15 in several states could also affect parents' access to child care benefits.
California gives the poorest parents in the state a discount on their day care and preschool expenses, which came to hundreds of dollars a month for parents of 403,561 kids last school year.
But the state has not raised the income limit to qualify for child care subsidies since 2007, when it determined that to get the discount, a family of three had to make $42,216 or less, which was 70 percent of the state's median income in 2005. The income limit rises for larger families.
Two people making the current minimum wage in the state and working 40 hours a week earn $43,680.
For years, parents have been turning down promotions and raises at work so that they can keep their benefit, say advocates and child care professionals.
Until October, May Martinez and her husband were taking in less than the income limit on his salary as a security guard at CBS Studios. Martinez, 27, is studying to earn a bachelor's degree and got a subsidy from the state to put her 4-year-old and 2-year-old in day care while she was in class.
Then Martinez's husband got a promotion, and a $4-an-hour raise. She was thrilled -- until she told her kids' day care center the news.
The Center for Early Childhood Education, at the College of the Canyons in Santa Clarita, notified Martinez that the raise would put the couple over the income threshold that the state set for child care subsidies.
Instead of paying $167 each month to the Center for half-day care, Martinez would be charged the market rate of $2,400.
After paying for rent, utilities and food, the new day care costs would outweigh the new income from Martinez's husband's promotion. "By a longshot, we would be in the hole," Martinez said.
At first, Martinez's husband tried to turn down the pay bump, begging his supervisors to give him the promotion without the raise. No dice. The couple had serious conversations about turning down the new job altogether, but neither wanted to risk angering his bosses.
Martinez eventually decided that this year, she will move to a part-time schedule at La Verne College, and take night and online courses, so that she can take care of her children during the day.
"It is an injustice," Martinez said, adding that now she has no idea when she'll be able to finish her degree and start working. "It's going to be delayed completely."
Six hundred miles away, in Humboldt County, Alicia Combs is in a similar panic.
Combs was homeless six years ago, bouncing around on friends' couches, but started to remake her life after she had her first son in 2010. She got a job as an office assistant in Eureka, eventually had another son, and put both in day care thanks to a state subsidy.
Then, in September, the single mom was given an automatic raise of less than a dollar. That put her wage at $21.21 an hour, which meant she would earn about $160 more than the monthly income limit for her family of three.
She pays around $360 to send both kids to day care with the help of the benefit. Now, she will have to pay close to $1,000 a month, which she says she can't afford.
"I worked really hard to get where I am at, and if I lose the child care subsidy I am not sure what I'll do," Combs said.
As California's minimum wage heads to $15, more and more parents stand to be in a similar squeeze, since they can't turn down the mandated raise.
"Many legislators, probably including the governor, did not realize the impact the minimum wage would have on the cost of providing child care," said Kim Kruckel, the executive director of the Child Care Law Center, a legal advocacy nonprofit in San Francisco.
Business on 01/13/2017