The $15 Mistake

Minimum wage

On the same day in April, the governors of both California and New York approved minimum wage hikes. Once they've fully kicked in, both states' rates will be more than double the current national level.

By the end of 2022, all California businesses with 26 or more employees will be required to pay their workers an hourly rate of at least $15. The first bump goes into effect on January 1, pushing the state minimum to $10.50. Several Golden State cities and municipalities had already set a wage floor at $15, including Los Angeles and San Francisco.

There's an asterisk in the new law, however—one that reveals more than its authors may have intended. The governor has the authority to delay implementation of the higher wage in the event of an economic downturn, an outcome that seems increasingly likely in a state already plagued by the perception that it is unfriendly to business. In his remarks about the law, Democratic Gov. Jerry Brown acknowledged that there might be some flaws in the plan, saying that "economically, minimum wages may not make sense. But morally, socially, and politically they make every sense."

Wages will rise more quickly in New York City, where the bottom rate will be $11 by the end of 2016 for firms that employ at least 11 people, with a target of $15 per hour by the end of 2018. The wage floor will increase more slowly in the rest of the state.

Several other states, including Missouri and Oregon, have similar plans under consideration.

CORRECTION: The item initially stated that California suffered from unusually high unemployment. It does not.