Gov. Brown admits $15 minimum wage makes no sense, signs bill anyway
By Eric Boehm / Watchdog.org
Economically, a $15 minimum wage doesn’t make much sense for many parts of California.
Even Gov. Jerry Brown, who on Monday signed a bill to increase California’s minimum wage to that level, knows that.
In what could go down as one of the most honest moments in political history, Brown told reporters that raising the minimum wage was more about culture and politics than about economics.
“Economically, minimum wages may not make sense,” Brown says in a video posted online by the Sacramento Bee newspaper. “But morally, and socially and politically, they make every sense because it binds the community together.”
The bill Brown signed into law Monday will raise the state’s minimum wage to $15 per hour by 2022, with a series of annual increases beginning next year. The passage of the minimum wage bill through the state legislature means Californians won’t get to vote on the idea this November.
But Brown is right about the economic logic of a $15 minimum wage. As Watchdog reported last week, it makes little sense for a state as large and diverse as California to have a minimum wage set that high.
Even in parts of the state with more jobs and a higher cost of living, like San Jose or Los Angeles, recent increases to the minimum wage have caused employers to cut jobs or avoid hiring.
A survey of San Jose businesses in 2013 found that 42 percent had cut staff in the months after the city’s minimum wage increased to $10 per hour, while 45 percent reported cutting back hours and 66 percent said they raised prices.
In Los Angeles, which last year raised its minimum wage to $15 per hour, officials surveyed 1,000 businesses and found 96 percent of them planned to raise their prices to make up for increased labor costs.
“Many prices will increase, including those that lower-income households commonly face,” concluded the economists who did the survey of L.A. businesses last year. “Wages will rise for those in minimum wage jobs that remain employed; employment opportunities for those at the bottom of the skills ladder will be diminished.”… read more here
READ MORE: The economic consequences of California’s $15 minimum wage plan
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