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Costs and Consequences of Minimum Wage Hike

Friday April 8th, 2016   •   Posted by K. Lloyd Billingsley at 5:22am PDT   •  

BusyCoffeeShop_MLCalifornia is hiking the minimum wage to $15 an hour by 2022, and governor Jerry Brown is hailing the boost as a matter of “economic justice.” As Dan Walters of the Sacramento Bee recalls, Brown had previously resisted this move and argued for a hike to $13 an hour. But then, “Brown not only agreed to the wage boost he had opposed, but essentially claimed ownership,” which reminded Walters of Brown’s classic flip-flop on Proposition 13, the 1978 measure that limited government’s power to increase property taxes.

Walters’ colleague Jon Ortiz examines what the hike to $15 will mean for government employees and taxpayers. With those at the bottom making more by government mandate, government employee unions are certain to press for raises. The ripple effect of higher minimum wages, one government union spokesman told Ortiz, “should flow all the way up the ladder.” Raising government pay, Ortiz observes, “increases cost to taxpayers.” The initial boost to $10.50 on January 1 will boost the state payroll by $6 million. The $15 figure in 2022 will raise the payroll by $235 million. Taxpayers will foot the bill and the unintended consequences extend to the workers themselves.

By hiking the minimum wage to $15, the state, in effect, paints itself into a corner. “If higher wages are law,” Mr. Ortiz notes, “there’s just one way to hold costs: fewer wage earners.” That is what opponents of the wage hike had been arguing all along. Those workers left on the short end, in government or the private sector, may find it hard to see the wage hike as a matter of economic justice. Low-income workers with children, meanwhile, may face additional hardship.

Last year Oakland hiked the minimum wage to $12.23 on the grounds that it would help the poor. But as Mary Theroux documented, “working poor parents will now be scrambling to find good, affordable child care.” Minimum wage hikes, as Abigail R. Hall Blanco contended, can indeed wind up a “nightmare.”

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April 2016