STUDY: California to lose 400k jobs amid $15 minimum wage

California is the home of illegal immigrants, hysterical President Donald Trump haters, and dirty hippies. But it is also the home of inane and disastrous economic policies, like the $15 minimum wage.

By 2022, The Golden State will raise the minimum wage to $15. Even with Governor Jerry Brown conceding that it doesn’t make economic sense, the state is moving ahead with a job-destroying, anti-poor initiative.

Jurisdictions that have already instituted the $15 minimum wage have witnessed many negative economic developments, such as a loss of jobs or the decline in incomes for the impecunious.

Well, California will not be immune from this.

According to a new study from the Employment Policies Institute (EPI), California’s plan to hike the minimum wage to $15 will result in the loss of approximately 400,000 jobs. And low-income workers will be hit the hardest.

Researchers found that with every 10 percent increase, California has seen a two percent decline in employment. It’s worse for lower-paid workers, which jumped to five percent.

Here is what EPI writes:

The economists’ preferred model show that past minimum wage increases in California have caused a measurable decrease in employment among affected employees. Specifically, they find that each 10% increase in the minimum wage has lead to a nearly five-percent reduction in employment in industries with a higher percentage of lower-paid employees. Across all industries, their findings imply that each 10% increase in California’s minimum wage has reduced employment for affected employees by two percent.

The authors apply these estimates to the state’s forthcoming $15 minimum wage. By 2022, approximately 400,000 jobs would be lost as a consequence. (This estimate is conservative, as it measures the impact of California’s state minimum wage but does not covering the impact of local minimum wages.) Industries with the greatest number of affected employees are most severely affected by job loss, according to Even and Macpherson; nearly half of the observed job loss occurs in foodservice and retail industries.

Real firms outside of an economic model could respond to higher minimum wages in ways that cause somewhat divergent effects. And whether the real-time response of an economy will mitigate or exacerbate the effects of raising the minimum wage is an open question. What is not in dispute, based on this study, is that California’s rising minimum wage has depressed employment opportunities in the most heavily-impacted industries. The conclusions should give pause to states or localities interested in emulating California’s wage experiment.

With automation becoming more prevalent than ever before in our everyday lives, Brown’s successor may need to reverse course. Unions shouldn’t be the only ones exempt from minimum wage laws (SEE: Union Hypocrisy: Los Angeles unions want to be exempt from $15 minimum wage they fought for).

Everyone should be as well.

 

Like this article? Get ECN delivered to your inbox daily. Subscribe here.

Comments

  1. I was discussing minimum wage with the manager of a restaurant locally. He made an interesting comment, he said all they did was raise the poverty level to $15.
    Liberals do not have the capacity to understand the end result of their decisions “disaster” the folks making eight dollars an hour $10 an hour etc. somehow make that work for themselves. I realize they’re not rich and they may never be. But they make it work for themselves. And all they want is to be left alone. So the people who claim to do them a favor just put them out of work and made them homeless! Good job liberals. One of these days you brain-dead people will wake up.

Leave a Comment