New Year: No Money, Fewer Jobs
The new year brings another major shock to California’s wage system, with the state minimum wage rising to $10 an hour. The previous minimum, to $9, took effect July 1, 2014, up from $8. So, in 18 months, the minimum wage will have jumped 25 percent.
Nice work if you can get it. The problem is that the evidence shows minimum wage increases kill jobs, and even whole companies, when market conditions can’t sustain the added costs. And mandating a one-size-fits-all minimum wage for an economy as gigantic and diverse as California’s assumes economic conditions are uniform. Yet high-tech hub San Francisco, with rock-bottom 3.3 percent unemployment in November, is far different from Imperial County, languishing with 20.4 percent unemployment.
Even counties doing fairly well are affected by minimum wage hikes. Orange County’s 4.2 percent unemployment rate certainly is good; and the 6.1 percent rate for Riverside-San Bernardino counties is a huge improvement over recent years. Yet we already have seen McDonald’s put up self-help kiosks and local Wal-Marts and grocery stores install self-checkout counters.
Neighboring cities and counties are boosting their wages even higher, meaning some businesses will move here for more sensible wage policies. Los Angeles’ city and county minimum wages gradually will be going up, to $15 by 2020. San Diego is hiking its wage to $11.50 by 2017.
Even the liberal Brookings Institution notes how a rising minimum wage most hurts the poor and minorities. “Many employers will be very reluctant to pay high wages to workers whose skills — including the ability to speak English, in the case of many immigrants — are so modest,” wrote Harry J. Holzer, a Brookings senior fellow in economic studies. “A likely result would be not only increases in unemployment but also drops in formal labor force activity (where workers work or search for legal jobs) and perhaps some growth in undocumented work among immigrants.”`
An initiative to raise the whole state’s minimum wage to $15 an hour probably will be on the November ballot. Those idled by previous increases will have reason to vote against it.
Reprinted from the Orange County Register
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