Minimum Wage

Report: California's $15 Minimum Wage Will Destroy 400,000 Jobs

A loss of opportunities equal to about four percent of the workforce.

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Fight for $15
2016 Marilyn Humphries/Newscom

California's massive state-wide jump to a $15 minimum wage could conservatively cost around 400,000 potential jobs, according to a new Employment Policy Institute study.

"California Dreamin' of Higher Wages," strives to evaluate what the state's jump to a $15 minimum wage will mean when it fully kicks in in 2022 by attempting to contextualize it with the empirical effects of previous minimum wage increases in the state going back to 1990.

The results are pretty dire. They believe that by the time the minimum wage fully kicks in the state will have lost 400,000 jobs as a consequence. These job losses will not be evenly distributed throughout the state's workforce. They will hit food service, retail, and agriculture jobs the hardest. Overall, this a four percent loss of jobs out of workforce estimated at around 10 million.

David MacPherson of Trinity University and William Even of Miami University have attempted to model the likely impacts in a study published by the Institute, a nonprofit research organization that's focused on the impact of labor policies on entry-level jobs.

The Employment Policy Institute regularly analyzes and warns about the economic consequences of big shifts in the minimum wage (and is not to be confused with the Economic Policy Institute, which supports a $15 minimum wage).

MacPherson and Even call their estimate "conservative" because they left out several counties with gaps in their employment data to make sure the analysis was fair and empirical. They've also removed the effects on manufacturing jobs in Los Angeles County from some of their calculation models because it had such a significant—negative— distorting effect on the overall study. If you're working in manufacturing in the L.A. area, consider yourselves warned.

The report acknowledges it covers only about three-quarters of the state's work force. Some of the counties excluded from the study, like Inyo County (deep inside the state with a total population of less than 20,000) have heavily rural populations that are more likely to see more negative impacts from the minimum wage increase. The report notes that the percentage of workers within an industry who make the minimum wage or close to it varies widely from county to county in California. Minimum wage increases in some counties will have a much bigger impact on employment than on other counties even in the same field, and some employers may be better situated to adjust than others.

When California Gov. Jerry Brown pulled the trigger on the $15 minimum wage, many folks (myself included) warned the rural inland parts of the state will pay a heavy price for politicians catering to unions in the urban coastal centers. That's what those wide county-to-county variations fundamentally mean.

Read the report here. The mathematics may be a little hard to follow, but the conclusions are easy to grasp and align with other studies that warn that jacking up the minimum wage reduces the number of entry-level jobs available and doesn't actually reduce poverty.

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  1. So you wrote a meta-post about a post written by an anti-minimum-wage pressure group.

    Well done.

    MinimumWage.com is a project of the Employment Policies Institute (EPI). Founded in 1991, EPI is a non-profit research organization dedicated to studying public policy issues surrounding employment growth. In particular, EPI focuses on issues that affect entry-level employment.

    Among other issues, EPI research has quantified the impact of new labor costs on job creation, explored the connection between entry-level employment and welfare reform, and analyzed the demographic distribution of mandated benefits. EPI sponsors nonpartisan research which is conducted by independent economists at major universities around the country.

      1. What kind of a place do think this is? Some sort of international network or, if you prefer, web of pages?

        Look, freely shared and distributed knowledge is fake knowledge, otherwise, everyone would just know that if you artificially raise the price of something, demand declines.

    1. ….and is a liberal think tank.

      Just saying. So if you’re gonna play the game, be up front about it too.

      I know it’s hard for progressives to account but we’ll do it for you if necessary.

      I will take a look to see the arguments presented though.

  2. A good test to see if someone knows anything about economics is to ask about the minimum wage or rent control…

    How about you have no right to tell me what I can sell my labor for?

    Hit the progressives where they live — how about no more unpaid internships for their rich kids in college. Isn’t that giving away your labor for free? Oh, that’s different somehow. Right….

    Just be honest and say it’s to crowd out your competition. After all, it was started to keep black people in black jobs….

    1. Economic eugenics never went away; it just put on glasses, cut its hair, and told everyone to start calling it Compassion.

    2. Nepotism is a glorious thing, and that’s what the ‘unpaid internships’ are meant to foster. Just ask those Reason interns! (lol)

  3. 1970 grandma retired on $5.75 per hour – feeling proud she had paid extra to ensure a comfortable life. At that time minimum wage was about $5.70 an hour. After that, every time SS would increase her stipend by 5 bucks the landlord would ask for $15. Today our Social Security retirement “colas” this year went 100% into Medicare, meanwhile all groceries and restaurant and non-food items raised prices, so as I see it, we are living out retirement in a gradually sinking hole and will ultimately end up on some government program. Just like gradma.

  4. Agricultural jobs will be lost. People will go hungry because they won’t pay more to eat. And, don’t forget about the tragedy of brown people who won’t cross our border.

    1. Agro jobs will be replaced by robots, increasing productivity and driving down food costs.

  5. How about we specify a minimum tax of $4.00 / hr as well. Apply it to volunteers and interns and everyone will have some skin in the game.

  6. I for one welcome our robot overlords. Seriously, it will be robots cooking the food and serving the customers. Such robots are inevitable, but this law will just make them arrive quicker.

    I except the California culture of cuisine to most vanish, leaving behind restaurants that are only affordable by affluent white liberals. Those food trucks Reason’s always going on about? No one will be able to afford them.

    California will end up like Western Europe. Progressives will call it a utopia, but no one will actually emigrate there anymore except Muslims who want the no questions asked welfare.

  7. doesn’t actually reduce poverty

    I am shocked.

  8. If I have to go to Taxifornia for some reason, I certainly won’t be leaving any tip money at restaurants. Let their pay come out of $20 hamburgers that nobody will pay for.

  9. We could laugh and say that these numbskulls deserve it, but then they move from California in to our cities and do the same thing all over again.


  10. “California Dreamin’ of Higher Wages,” strives to evaluate what the state’s jump to a $15 minimum wage will mean when it fully kicks in in 2022…”

    Idea’s so good, they had to be staggered to hide the true cost!


    1. They will hit food service, retail, and agriculture jobs the hardest.

      Nah, illegal immigrants don’t get paid minimum wage. Duh doi!

  11. The mayor of San Fran keeled over late last week; bad ticker.
    So we’re getting eulogies from all the government suck-ups; news orgs and those trying to get on camera.
    One of his “accomplishments” was to raise the minimum wage and keep kids from entry level jobs. He was a ‘moderate’ in San Fran.

    1. that is being moderate for san fran 😐

  12. Who the heck can live on $15/hr? Especially in California.
    These activists have it all wrong. $30/hr minimum wage or nothing.
    Any argument you make for a $15/hr minimum wage you can make for a $30/hr wage.

    1. It is, after all, it is now a “right” to enjoy a comfortable standard of living, and everyone knows that the “rich” can afford to pay for it. That is all the “economics” you need to know.

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