California governor Jerry Brown has proposed a $15 minimum wage by 2022. If the legislation passes, it will wreak havoc on city budgets, state budgets, businesses, and jobs.
Please consider California Moves Toward $15-an-Hour Minimum Wage.
Gov. Jerry Brown’s administration has told leaders in the Democratic-controlled state Legislature he supports boosting the state’s minimum wage to $15 by 2022, a person familiar with the matter said. The approach would give the governor some control over an issue that looked set to be decided directly by voters in November.
Moving ahead with the plan would give the most populous U.S. state the nation’s highest minimum pay floor. The minimum wage in California is now $10 an hour, already one of the highest of any state, though some cities have set higher minimum levels.
States appear to be the next battleground. Lawmakers in New York are in advanced discussions to bring that state’s minimum wage to $15 an hour, from $9 now. Gov. Andrew Cuomo, a Democrat, is trying to include a vote in the Legislature on the measure as part of the state’s budget, due April 1, although details are still under negotiation.
The proposed increases have met resistance from business groups and Republicans—including presidential front-runner Donald Trump—who say they will lead to fewer jobs for low-skilled Americans. Critics say they are an inefficient way to help the poor, as many minimum-wage earners are high-school students or others without dependents.
Of particular concern is the magnitude of the proposed increase. Previous hikes have generally been more gradual, and large swaths of big states like California have a low cost of living and fragile economies.
“I think there’s going to be job loss everywhere,” said David Neumark, an economist at the University of California, Irvine. “You get out of the big cities and California is not a rich place at all.”
The plan, which was outlined to legislative leaders by Mr. Brown’s office last week, would raise the wage from $10 an hour to $10.50 on Jan. 1, 2017, followed by a 50-cent increase in 2018, the person familiar with the proposal said. Yearly $1 increases would continue through 2022, the person said.
Minimum Wage Hikes Kill Jobs
Proponents of such legislation claim hikes don’t hurt jobs. They point to job growth and studies as proof.
However, it’s a mindless argument, because no one can prove what would have happened had there not been wage hikes. The fact of the matter is employment goes up over time simply because of population growth.
Cities and municipalities will be affected, even poor cities that can least afford such wages.
Stores that are marginally profitable at one pay scale may not be marginal at another. Proponents claim businesses can raise prices. But some businesses cannot do so without losing business. And if prices go up, those on fixed income will get clobbered.
Already there is pressure on businesses to automate workers away. This move is guaranteed to increase the pressure on businesses to automate; it’s guaranteed to slow the expansion of retail stores and restaurants; it’s guaranteed to slow the growth in jobs, and it’s guaranteed to put pressure on cities to raise taxes.
Logically speaking, there’s not a single good thing one can say about forcing the minimum wage up to $15.00.
Mike “Mish” Shedlock