Blink and you’ll miss it. Special interests have struck a backroom deal to raise California’s minimum wage to $15 per hour in just six years. The deal was rushed through the Democrat-controlled Legislature-with little public input-and signed into law by the governor in less than a week. It’s almost as if no one wanted to take the time to stop and listen; if they had, they might realize they’re making a huge mistake.
While a $15 per hour minimum wage may seem like a good deal for workers, it will cost many their jobs and raise the cost of living for all. A one-size-fits-all approach to combating poverty will fail in an economically diverse state like California.
Even supporters of raising the minimum wage realize the danger. A recent UC Berkeley study found that raising the wage in Los Angeles would cause the city’s unemployment rate to rise and economy to shrink. Creating more poverty and shrinking the economy shouldn’t be the goal of public policy.
For further evidence, take a look at Seattle. The state of Washington saw major job gains in 2015, except in Seattle which recently adopted a $15 minimum wage. Not only did the city see no increase in jobs, the food service industry experienced the largest job losses since 2009.
While most restaurant owners can’t pack up and leave California, it’s foolish to ignore the potential devastation.
Troy Paski, founder of Hoppy Brewing Company in Sacramento, is still adjusting to the last minimum wage hike. He’s worried about how another 50% increase will affect his business and the ability of his customers to enjoy a night on the town.
“It’ll be $10 for your beer and $20 for your burger,” Paski said. “I think a lot of people are in for a rude awakening when they realize they can’t afford to eat out anymore.”
The intentions behind a minimum wage increase may be pure, but it ends up hurting the very people it’s meant to help. Young, inexperienced workers trying to pay for college and struggling families will find it harder to find jobs when businesses find automation to be a cheaper option.
“At some point we’ll have to cut staff,” Paski said. “You can only raise prices so much. Eventually you have to cut service.”
Even Governor Jerry Brown has said raising the wage too high will cost jobs and put a lot of poor people out of work. Balance is needed.
Yet the governor seems to have given up his fight for local control when it’s needed most.
Think about it: $15 per hour in Fresno means something completely different than in the Bay Area. Cost of living and disposable income vary dramatically from city to city. And rural California is a completely different world than coastal cities like San Francisco.
It’s silly to treat every part of California the same. That’s elitism.
But if the minimum wage isn’t the answer, how can we help low-wage workers obtain higher pay?
The answer lies in understanding how value is created. No employer in his or her right mind would pay $15 per hour for someone who only provides $10 per hour of value. The key is helping employees gain skills so employers want to pay them more or risk losing the value they provide.
There’s no easy fix to poverty, but if the governor and Legislature want to help Californians increase their skills they need to prioritize education.
Whether it’s college, technical schools or trade schools, workers need opportunities to better themselves and move up the economic ladder. And maybe, just maybe, if the governor and Legislature weren’t so busy making backroom deals, they might find time to increase their own governing skills. Because bad laws hurt just about everyone.
George Runner is an elected member of the California State Board of Equalization.