California’s $15/hour wage could help workers, cost jobs
ASSOCIATED PRESS
California Gov. Jerry Brown is hugged by Holly Dias, a Burger King employee who praised Brown’s announcement of proposed legislation to increase the state’s minimum wage to $15 per hour.
SACRAMENTO, Calif. >> A political deal to raise California’s minimum wage to a nation-leading $15 an hour could help some workers cope with the state’s crushing cost of living but also deprive other low-wage earners of jobs altogether, economists said as Gov. Jerry Brown and other leaders touted what would be a landmark agreement.
California’s economy is larger than that of most countries, with a wide diversity of earners. While newly minted millionaires gentrify neighborhoods in the San Francisco Bay Area, some Central Valley field hands lack access to clean water. A jump from the current $10 an hour spread over six years would affect millions.
Rafael Gutierrez, a 53-year-old farmworker, said the increase would let him treat his family to weekend dinners out and a short vacation to Disneyland from his home in Fresno County.
His last job picking peaches and grapes paid $11 an hour. His girlfriend makes $14 an hour at Target. Though their region is far from California’s costliest, “Right now, we’re just making it,” Gutierrez said. “Life is expensive.”
And then there are employers such as Chuck Herrin, owner of Sunrise Farm Labor, which provides roughly 2,500 workers each year in the San Joaquin Valley. Herrin predicted that farmers would hire 10 percent fewer workers because of the higher cost of business.
“It’s going to be devastating,” said Herrin of the impact on fieldworkers and their dependent relatives.
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On Monday, Brown touted the deal his administration struck with legislative and labor leaders as potentially historic, calling it a matter of economic justice. Under the proposal, which the Legislature has yet to approve, the minimum wage would rise gradually, reaching $15 by 2022.
After that wages would rise with inflation, though in tough economic times the governor could delay increases.
Lawmakers could send the bill to Brown’s desk as early as Thursday, said Sen. Mark Leno, a San Francisco Democrat.
The hike would create the nation’s highest statewide minimum wage. California and Massachusetts are the current highest at $10. Washington, D.C., stands at $10.50.
Oregon’s governor signed legislation this year that would raise wages by 2022 depending on location. In the largest city of Portland, the minimum will rise to $14.75. Rural areas would see an increase to $12.50.
Income inequality has emerged as a top issue nationally, with President Barack Obama proposing an increase to the federal minimum wage and Democratic presidential candidate Bernie Sanders pushing a $15-per-hour standard.
In California’s most-desirable areas, gas, housing, food and other essentials can bring sticker shock. While the median price of homes sold in the state is about $400,000, a fixer-upper in San Francisco or parts of Los Angeles can easily top $1 million.
About 4 million workers in California earn wages in the $10 to $15 wage, according to calculations by Jeffrey Clemens, an economics professor at the University of California, San Diego. “The key question is what fraction of these workers will be lifted to the new minimum and what fraction will lose their jobs,” Clemens wrote in an email.
Advocates for the wage increase and their economists put the number of affected workers at closer to 6 million.
Economists including Clemens said in interviews that projecting what would happen in California is tough because the proposed increase is significantly larger than those in the past and may have unintended consequences.
One leading economist on minimum wage issues said an increase from $10 to $15 would reduce employment among the least-skilled workers by at least 5 to 10 percent. But the impact on employment might be even bigger because employers would have to absorb significantly higher costs.
“I would go so far as to call this reckless,” said David Neumark, an economics professor at the University of California, Irvine.
Neumark noted that the effects would vary by geography: In high-wage counties such as San Francisco and Santa Clara, about 22 percent of workers would get a raise. In places such as Fresno and Merced counties, about half the workers would see more money.
San Francisco voters approved a measure two years ago to increase the minimum wage of $10.74 an hour to $15 in 2018. It’s currently $12.25.
Brian Hibbs, owner of comic book and graphic novel store Comix Experience, said he supports the idea of a minimum standard of living, but he thinks the wage hike won’t accomplish that because it will hurt small businesses. Projecting that his payroll for six employees will be $40,000 greater in 2018, he started a graphic novel membership club to meet the new wage requirements. If the membership doesn’t grow, he said, he may have to close.
“I don’t think this was thought through,” he said. “The cost of labor is so high. It’s very, very difficult to run a profitable business at this point.”
Yasmin Fernandez, an activist who has sought a higher minimum wage, works in San Jose as a cashier at a gas station in the morning and at a Panda Express restaurant in the afternoon and evening.
The 34-year-old said she takes home about $2,400 per month after taxes. After paying her living expenses and helping her widowed mother, sick brother and four nephews back in Mexico, she usually has about $150 left for herself. She works from 6 a.m. to 11:30 p.m. almost every day.
An increase to the minimum wage will be heavenly, she said, describing how it would offer “a little more money for me, to maybe go to a concert or do something fun once in a while,” as well as “help my family even more.”
Pritchard reported from Los Angeles. Associated Press writers Scott Smith in Fresno and Sudhin Thanawala and Olga R. Rodriguez in San Francisco also contributed to this report.
24 responses to “California’s $15/hour wage could help workers, cost jobs”
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Will it ease the homeless problem or increase the number and further burden the entitlement programs and taxpayers? The economic impact is still unknown until we get there?
Sticker shock on their cost of living?? Just imagine if they had to rely on American built shipping and union seamen—they wouldn’t stand for it. But Hawaii??? We don’t have the political will or power.
Liberals want to raise the wages of labor, but the minimum wage issue is purely emotional and not based on sound economic science. It’s worse than the “Climate Change” controversy because most economists agree that what California is doing will hurt the low wage worker the most.
You mean most “Fox news economists”
You mean the number one rated “Fox news economists”.
Never owned or managed a business have you?
…help some workers cope with the state’s crushing cost of living but also deprive other low-wage earners of jobs…
Sounds a lot like Hillary’s recent promise/threat to hard-working voters in coal country:
“I’m the only candidate which has a policy about how bring economic opportunity using clean, renewable energy as the key into coal country. Because we’re gonna put a lot of coal miners and coal companies out of business.”
Republicans use the “it will cost jobs” for every solution they don’t like: environmental protection, climate change solutions, minimum wage hikes, tax increases, unions, labor laws, business regulation, Obamacare, and on and on and on. Maybe the country, and especially republican-fox-new-watchers, should start looking at the economy in California and its job growth. I guarantee, that the 15 minimum wage will not hurt job growth in California.
Just WHAT do you think is incentivizing the production of McDonald’s ordering kiosks?
“Bennigan’s CEO Paul Mangiamele said in a recent interview that McDonald’s kiosks — as well as self-service technologies at other chains like Panera and TGI Fridays — are a direct response to rising labor costs and calls for a higher minimum wage.”
So much for your guarantee.
Only a fool would guarantee that the $15 minimum wage will not hurt job growth in California. Let’s just wait and see. Republican-fox-new-watchers may just be right.
Really mtf1953? What do you base your guarantee on? Certainly not the facts. Why don’t you scrutinize a real-life example and not rely your inane political rhetoric?
https://pjmedia.com/trending/2016/02/20/seattle-worst-job-losses-since-recession-after-15-wage-law-goes-into-effect/
Mtf1956, You guarantee?? Are you a used car salesperson or a politician? That would be a bad bet and you may want to find an insurance policy to cover your “guarantee”.
mtf1953 – You sound just like the utterly dysfunctional bureaucrats in California. They haven’t got a clue how a business works, bury them with excessive regulations, taxes, red tape and now higher minimum wage.
Seattle bureaucrats were shocked when they found out job numbers went down by around 700 where the $15 MW took effect. Employers cut costs by reducing the number of workers. Employers are responding by working to increase automation in their facilities to reduce operational costs. San Francisco already has an automated restaurant and Carl’s Jr is working on a similar concept. Only an utterly clueless bureaucrat thinks raising the pay for minimal skilled to no skilled employees is a good idea. Now watch the job numbers fall.
http://www.forbes.com/sites/timworstall/2016/02/19/seattles-15-minimum-wage-jobs-down-unemployment-up-this-isnt-working-is-it/#63d666b83712
California’s crushing cost of living is entirely due to the utter incompetency of elected bureaucrats/government agencies, and their penchant for excessive rules, regulations, red tape, kow towing to special interest groups. These obtuse bureaucrats actually think they are “Visionary.”
A long time ago, CalPERS, the state pension agency, lied to everyone when they said there was so much money in the pension fund that pensions could be doubled at no cost to tax payers. Within years state pensions are tens of billions short.
Excessive environmental regulations now mean it can take over a year and tens of thousands of dollars to clear out a few non endemic plants/trees growing in and clogging concrete lined storm drains. Meantime during heavy rains these drains can flood surrounding land, costing cities/state hundreds of thousands in damages to property owners.
California uses a special winter and summer blend of gasoline which is supposed to reduce smog, other pollutants. As written in many reports, this formula is decades out of date and fails to consider the main source of pollution reduction is progress in cleaner automotive engines. (Not VW) Effectively this is a useless tax on all drivers, total waste of money.
Sad to say Hawaii is well on the failed path of Nanny State California. Nei bureaucrats doing everything they can to lower the quality of living, increase the cost.
A lot of unskilled people will not have jobs. Those who do will have to work for it.
Newton’s Third Law of Motion. “For every action, there is an equal and opposite reaction.”
What this correlates to is as minimum wages increase, small business employers will decrease their employees to maintain monetary gains with a smaller work force.
Small businesses will have to increase costs of doing business by extending costs back to their customers.
A short term fix to the minimum wage earner. A long term problem to the small business owners.
Could we get a Krugman link please?
Krugman is running out of other people’s money. Born loser.
Looks like the UHaul index is about to increase further. Renting a 20-foot truck one way from San Francisco to San Antonio, Texas, for example, costs $1,693. Going in the other direction, however, costs only $983 for the same truck. Explanation for you liberal progressives: Higher demand increases prices.
Minimum wage jobs were never meant to be an amount you can support yourself on. They are jobs for high school and college kids to make some extra money. If you want a decent wage you need to have a real trade or an education. Plan your life better people.
Public schools were created to equalize the playing field so to speak for the have and have nots. Public schools are funded by THE REAL TAX PAYERS but many of those in the have nots take/took public schools for granted–because they see their parents dependent on government hand outs and “appear” to be just doing fine–and they ended up wtih these dead end low paying jobs. Now they are demanding to have the same pay as those who went on to college and received college degrees, If the bleeding heart put a term limits for those on social programs, this would not happen. Social programs were created as a crutch to those are down and out but not to be craddle to grave way of life. The reason we have rising homelessness is because craddle to grave section 8 hoggers. Seven years on section 8, should be enough to get anyone out of that situation and make it on their own in THE REAL WORLD. If you can’t make yourself a better person in that time, then you don’t deserrve to breath the same air as those that are footing the bill for these social programs—>THE REAL TAX PAYERS.
Businesses will have to innovate new ways to sustain growth and profits. You cannot just work harder you must work smarter and new standards must be set from bottom to top. I would restructure and create a pay scale for merit increases as well as provide perks to retain top producers. If you are sub standard you are out before the next pay period for sure. This must be made crystal clear. Government thinks this is the answer to our economic woes but it will make hiring that much more selective and limited by the numbers.
wage hike going to make life easier? perhaps. but services and goods in relation to the wage hike will increase.
Its a natural domino effect. Prices just got to go up to support this.