Wage laws killing CA jobs

Wage laws killing CA jobs


SEIU fight for 15On the day before Christmas, the U.S. Department of Labor issued its weekly report on new unemployment claims. While 45 states reported declines, California was one of five states to report an increase.

California claims rose by 11,794. To put that figure into perspective, it was more than 2,500 percent higher than that of Massachusetts, the state with the second-biggest increase in weekly jobless claims.

The reality is the California job market is still not where it should be as the state enters the sixth year of its recovery from the Great Recession.

Below potential

In September, the UCLA Anderson Forecast issued a report in which it declared “the state remains below its potential in output and employment.” Jerry Nickelsburg, Anderson’s chief economist, estimated California was “about 1 million jobs shy” of where it would be were its economic recovery not so “painfully plodding.”

This week’s Department of Labor report on jobless claims provides a clue as to why California’s job creation is not nearly as robust as it should be; and why its 7.2 percent unemployment rate is tied for second-highest among the 50 states. It reported, “Layoffs in the service industry.”

Indeed, the restaurant industry, California’s second-largest private employer, has been besieged in 2014 by the Service Employees International Union, which has orchestrated fast-food “strikes” in cities throughout the state, demanding owners of such restaurants as McDonald’s, KFC and Taco Bell pay their workers $15 an hour, $6 more than the state minimum wage.

On another front, the state’s hotel industry, which generates $7.6 billion a year in state and local tax revenues, faces growing calls by groups like the Los Angeles Alliance for a New Economy to pay workers a so-called “living wage.” LAANE actually was successful this past October, when it mau-maued L.A.’s  City Council and Mayor Eric Garcetti to approve an ordinance mandating an hourly wage of $15.37 for hotels with 300 rooms or more.

Both SEIU and LAANE contend that increasing by as much as 66 percent the wages of lower-skilled, less-educated fast-food and hotel workers will have no effect whatsoever on employment within those service industries.

In fact, a paper published this month by the National Bureau of Economic Research suggests the SEIU’s so-called Fight for 15 campaign will prove disastrous to the very workers it is supposed to uplift.

In their rigorously researched paper, co-authors Jeffrey Clemens and Michael Wither, UC San Diego economics professors, found “increases in the minimum wage significantly reduced the employment of low-skilled workers” and “significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings.”

Extreme minimum wage increase

Similarly, a study this past June authored by John W. O’Neill, director of Penn State University’s School of Hospitality Management, concluded L.A.’s “extreme minimum wage increase” will result in job losses for 1,207 hotel food and beverage workers, as well as 187 housekeepers.

O’Neill also estimated a negative economic impact on California’s largest city of $255.4 million a year, not only from the job losses, but from reduced guest room revenues, reduced food and beverage revenue and lower hotel occupancy taxes, among other costs to the L.A. economy.

The layoffs in California’s service industry confirmed the U.S. Labor Department’s weekly report on unemployment claims may very well be a harbinger of things to come in 2015.


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  1. Ronald Stein
    Ronald Stein 29 December, 2014, 13:56

    Numbers don’t lie but liars can figure. Yes, our employment numbers are up, but those reporting those great numbers don’t bother highlighting that most are in the food service and hospitality sectors. The public focus is diverted to those not making enough on minimum wages, i.e., those in the food service and hospitality sectors, and the crusade is to RAISE the minimum wage! Rather than heal the wounds resulting from constant attacks on businesses that are driving out many high wage positions and driving up the costs for those that remain in California, the easy way out is to apply a “band aid” on the wound rather than heal the wound. But wait, the unintended consequence associated with the upcoming minimum wage increases will be a great way to incentivize kids to drop out of school. Imagine the carrot of a huge minimum wage of a $25 to 30,000 a year minimum wage as a reward for no higher education. These kids will also be netting more than those on fixed income Social Security. It may be better to stop beating up on businesses with over regulations, over taxation, and uncontrollable “fees” that are slight inconveniences to those making the big bucks, but the California financially challenged will continue to disproportionally pick up the costs “camouflaged” at businesses.

    Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 29 December, 2014, 17:01

    How can experts vary so much in their findings?

    We have no intention on giving voluntary increases in the rental yard.

    Due to conflicting information!

    Reply this comment
  3. ktg Oakland
    ktg Oakland 29 December, 2014, 21:18

    There may be some seasonal effects hidden in the ill-defined statistics cited. If people are lossing jobs a Taco Bell and getting jobs at restaurants in Silicon Valley that may not be so bad. Any author who makes a point using the phrase “2,500 per cent higher” is a statistics idiot.

    Reply this comment
  4. Hondo
    Hondo 30 December, 2014, 21:03

    Kalifornia has more economic assets going for it than any place on earth. Even our friendly liberal commenters have to agree to that. The whole notion that we are not in the top 5 in employment in the country is a crime, committed by the Democrats, who have done their best to destroy capitalism in this state. And the state is reaping the rewards of this insane incompetence. Worst unemployment rate, highest rates of poverty, highest income gaps, 47th and 48th in the country in the education 3 r’s ( reading, riting, and rithmatic)and pension debt that is beyond any hope of being funded, there-by guaranteeing epic social kaos in the not so far future. Just a little fracking would help fund those pensions. And create a bunch of well paying jobs too.

    Reply this comment
  5. Queeg
    Queeg 31 December, 2014, 12:26

    Hondo. You’re an out-of-state carpetbagger and unqualified to spread misinformation to the low quotient Doomers!

    Shame on you-

    Reply this comment
  6. Hondo
    Hondo 1 January, 2015, 18:52

    I win again. Instead of responding to the facts in my post, you just call me names. Once again, Kali has more economic assets going for it than any other place on earth. You certainly can’t blame the repubs for ruining the states economy.
    Bless you anyways. You are a worthy opponent when you stop calling people names and actually write a response.
    By the way, I was born in Covina Ca and grew up in La Puente and West Covina.

    Reply this comment

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