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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