$15 Minimum Wage to Cost California 400,000 Jobs

california minimum wage
VENTURA, CA - DECEMBER 09: California Gov. Jerry Brown (C) gives a briefing on the Thomas Fire and other Southern California wildfires during a news conference at the Ventura County Fairgrounds on December 9, 2017 in Ventura, California. Firefighters continue to battle the Thomas Fire that has charred over 148,000 acres and destroyed 537 structures. The fire is 15 percent contained. (Photo by Justin Sullivan/Getty Images)

It was only a few years ago that the concept of a $15 minimum wage would be mocked on both sides of the political spectrum. Heck, I remember arguing many years ago against a hike in the minimum wage from $7.25 to $9 or $10 an hour by asking, “Well if that’s so great, why not $15 or $20?” I didn’t anticipate living in a world where the response would be, “great idea!”

The so-called “Fight for Fifteen” (mainly led by labor unions, which would like to see higher union dues) has managed to make the ridiculous proposition a mainstream rallying cry among Democrats, and was further popularized by the candidacy of Bernie Sanders. The Democratic Party later would add the $15 minimum wage to their party platform.

Thus far, a handful of cities have passed legislation allowing for $15 minimum wages to be phased in over the next couple of years (and as we’ve reported, there’s been plenty of suffering even before the full $15 minimum has gone into effect).

Despite all the economic evidence against significant hikes in the minimum wage, California decided “screw it,” the laws of economics don’t apply. After passing a bill that would raise the state minimum wage to $15 an hour by 2022, Governor Jerry Brown acknowledged that “economically, minimum wages may not make sense,” but that he’s doing this for “economic justice,” or some mumbo-jumbo like that.

Now, what will the costs be? A new study is out and it doesn’t look good.

According to Fox News,

A study conducted by the Employment Policies Institute (EPI), which analyzed employment trends from 1990 through 2017, found that each 10% increase in the minimum wage in the Golden State has resulted in a corresponding 2% decline in employment for affected employees. The impact was larger, 5%, for lower-paid workers. By those estimates, the EPI projects that the pending $15 minimum wage hike would cost California 400,000 private sector jobs, with heavy losses in both the foodservice and retail sectors.

As of January 1, California’s minimum wage will increase to $11 per hour from the current level of $10.50 per hour for businesses with 26 employees or more. From that point, it will be a $1 per year increase trajectory through 2022. Businesses with 25 employees or less will reach the $15 per hour threshold by 2023.

It also must be noted that since California has an above-average cost of living, the adverse effects of a $15 minimum wage would be significantly larger in your average state. The cost of living in California is about 10 percent higher than the national average, meaning the equivalent of a $15 minimum wage in an average cost-of-living state would be about $13.50.

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By Matt

Matt is the co-founder of Unbiased America and a freelance writer specializing in economics and politics. He’s been published... More about Matt

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