Raising California’s Minimum Wage May Kill More Jobs Than People Think

Enjoy it while it lastsCredit: © Nyul | Dreamstime.comCalifornia’s Assembly voted Thursday to increase the state’s minimum wage from $8.00 to $9.25 in phases by 2016 and then tie future increases to the rate of inflation. Given the Democratic supermajority ruling the state, it has a pretty good chance to become law, though attempts to ban plastic shopping bags and limit fracking were defeated this week as well, so it’s not a sure thing. Here’s how bill sponsor Assemblyman Luis Alejo (D-Salinas) explained the need, courtesy of the Sacramento Bee:

Assembly Bill 10 by Assemblyman Luis Alejo, D-Salinas, passed 45-25 mostly along party lines. It would be the first bump in minimum wage since 2008, when it was raised by 50 cents to $8.

"The last time the minimum wage was increased, gas was $3.25 a gallon in California," Alejo said. "I don't know about you, but I haven't seen gas prices at that level in a long time."

And you never will, given that California has the highest gas taxes in the country and will be sticking drivers with another 3.5 cent-per-gallon increase come July. It’s quite remarkable how oblivious he is about the reason why gas in the state is so expensive. And given that gas station employees likely fall on the low end of the wage spectrum, he might well make it even more expensive. (And no doubt somebody out there who doesn’t understand franchises will wonder why all those huge oil company profits don’t trickle down to gas station employees)

Plenty of economically savvy folks talk about how minimum wage increases actually kill low-wage jobs so I won’t get into that redundancy. But there’s an additional potential economic harm hidden in California’s employment laws when it comes to salaried employees. In California, in order to classify an employee as an “exempt” salaried worker (exempt from the state’s rather inflexible overtime laws and other officious monitoring rules) that employee must earn at least twice the minimum wage.

As noted above, the last bump in the minimum wage took place right in the midst of the recession. From my own anecdotal experience at a newspaper company (which admittedly was struggling due to industry-wide problems as well), this jump didn’t just eliminate some low-level positions. It resulted in the elimination of some mid-level supervisory positions. When this minimum wage increase reaches its maximum in 2016, employers will have to pay salaried workers at least $18.50 an hour in order to exempt them from the tiresome wage-slave laws and grant some flexibility. This will most likely prove most burdensome on smaller businesses who can only afford a small cadre of people in supervisory positions. It may even make it harder for those low-wage employees who have jobs and show promise to move up within their companies.

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  • SeaCaptain(Yokeltarian)||

    +1000 internets for the alt-text pic.

  • Anonymous Coward||

    Does she take dic...tation?

  • Adam.||

    with that shirt i'm sure she'll get a raise!

  • Sevo||

    She already has!

  • Sevo||

    That's my sister's uncle's barber's kid making higgledy-thousand per hour. www.sucker.com

  • ||

    Best laugh of the day.

  • CE||

    Most of it from me.

  • jorgeborges||

    Being considered exempt in California is more complicated than just earning twice the minimum wage. I make 5x the minimum wage and I'm non-exempt.

  • Scott S.||

    It's certainly not the only requirement, but I wanted to make sure folks understand that there is a wage floor.

  • jorgeborges||

    Right, but what what I want to point out is this:

    If an employee makes a little under twice the minimum wage, raising their salary to a little (or a lot) over that mark will absolutely not make that employee non-exempt.

  • jorgeborges||

    I meant the last word to be "exempt".

  • The Heresiarch||

    Yes, exactly. For those initiated in the ways of California wage and hour law, it is actually very easy to fall out of the exemption for all sorts of things. California is, hands down, the most difficult state in the union to qualify for exempt status. This is primarily because it has a quantitative duties test and not a primary duty (FLSA) test.

  • Sigivald||

    The idea that payment ends up bidding to the marginal product of the labor seems to be one that legislators can't grasp.

    I suppose that's unsurprising, because legislators are exceptionally dense as a group.

    What seems odder, but probably shouldn't, is how rare that understanding is in the world at large.

    You get paid what your labor is considered to be worth; if you aren't worth hiring at a given wage you won't be.

    Remuneration is not a reflection of your "value as a person", nor does it have anything to do with "how much you need to make to live at some standard or other" - and trying to make it do those things breaks everything.

  • Invisible Finger||

    I assume that some legislators are NOT that dense. I think some of them are THAT hateful and purposely do the economically wrong thing BECAUSE it is the politically correct thing to do.

  • Marshall Gill||

    "Hateful"? Nah, the word is evil.

  • Rrabbit||

    if you aren't worth hiring at a given wage you won't be.

    True.

    You get paid what your labor is considered to be worth;

    Not true - employers will happily pay you less than what your labor is worth.

  • flye||

    Agreed -- you get paid slightly more than your replacement cost. Worth ain't got nothin' to do with it.

    Unless you're in a union of course.

  • Sevo||

    "Not true - employers will happily pay you less than what your labor is worth."
    Yes, and?

  • CE||

    And you're free to look elsewhere.

  • Sevo||

    Exactly.
    I'll be more than happy to offer the gas station $2.50/gal, and they'll be more than happy to tell me to look elsewhere.

  • Sevo||

    "Given the Democratic supermajority"
    You misspelled "Idiotic"

  • Almanian!||

    Brawndo has electrolytes.

  • Anonymous Coward||

    It may even make it harder for those low-wage employees who have jobs and show promise to move up within their companies.

    Something, something, greedy fatcats. Something, something, good intentions.

  • ||

    "The last time the minimum wage was increased, gas was $3.25 a gallon in California," Alejo said. "I don't know about you, but I haven't seen gas prices at that level in a long time."

    Hell I saw close to that last week. Hmmmm I wonder why gas is cheaper here.

  • ||

    Ach, beat me to it. We need a "Meanwhile, in Houston" picture of happy drivers and low gas prices.

  • Invisible Finger||

    When does the union break apart?

    I'd say this is Greek-level stupid, but maybe the proper phrase is Brussels-level stupid.

    At least the shitholes of the EU expect Britain and Germany - the largest economies of the bunch - to bail them out.

    The largest economies of are union are California, New York, Texas, Illinois, Pennsylvania, Florida, Ohio... Texas and the Dakotas can't possibly bail out all of the others.

  • Almanian!||

    Fucking cause and effect - how does it work?

  • H. Protagonist||

    Sticky wages? Is that what happens when you drop your paycheck in maple syrup?

  • OldMexican||

    Plenty of economically savvy folks talk about how minimum wage increases actually kill low-wage jobs so I won't get into that redundancy.


    Oh, don't worry about being redundant or reiterative. The economically not-so-savvy will keep repeating ad nauseam the canard that the minimum wage is better for the economy because it raises employee productivity and aggregate demand and blah, blah, blah. They will surely go into that particular redundancy, from now until the day the sun becomes a white dwarf.

  • Sevo||

    There was a man-in-the-street interview when Berkeley raised the MW a month or so ago.
    The idiot said 'yeah, it's a good idea since stuff costs too much', conveniently ignoring that raising the wage will raise the already 'too high' costs.
    The idiot was a 'political econ' major at UCB, and I was corrected from the thought that he was somehow connected to the econ school. Nope; entirely separate, with no GPA requirement.

  • PapayaSF||

    The solution to California's budget problem is obvious. Simply make the minimum wage $1,000,000/year, and the state coffers will overflow with tax revenue.

  • Sevo||

    This 'solution' never seems to occur to the idiots promoting 'living wages' or some such horseshit.
    Nor does it occur to them that adding labor costs (plus that darn markup) means that the costs of goods outruns the wage increase.
    You live in SF; you probably read the comments on SF Gate. Pathetic.

  • PapayaSF||

    Actually, SFGate comments are a lot less politically correct than the Chronicle itself. There are period beacons of common sense, and they are often modded up.

  • PapayaSF||

    period = periodic

  • IceTrey||

    Haven't you heard? California doesn't have a budget problem.

    http://www.newrepublic.com/art.....ced-books#

  • IceTrey||

  • PapayaSF||

    Yeah, I'll believe this when I see it. California has a history of overestimating revenues and underestimating spending, and Democrats now totally control the legislature, so the temptation to spend even more will be tremendous.

  • ant1sthenes||

    I don't get why conservatives don't always just do this (but slightly more reasonable, like $150/hr) as a counter. It will create obvious terrible results, and prove them right in the event it passes. More likely, enough sensible liberals will balk that it will cause dissent between the mendacious and the truly stupid, which will be fun to watch.

  • WomSom||

    Dude seems to know which way is up!

    www.WorldPrivacy.tk

  • davejones||

    It isn't precisely a secret that fewer people are earning a great living nowadays at California, as wages have been trending downward for simply the past decade. It's bad news not only for the wallet, but for health as well, as a variety of low wage health effects are being noted in studies. Source of article: bad credit loans pay installments

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