CA set for nation’s highest minimum wage

minimum wage raiseCalifornia will start the new year with a record-setting wage floor.

“On Jan. 1 California will have the highest minimum wage in the country,” as Capital Public Radio noted. “California workers earning minimum wage will get an extra dollar an hour at the beginning of the year. The state raised the rate from $8 to $9 in July 2014. Soon it will be $10 an hour.” Legislation hiking the wage was sponsored by Assemblyman Luis Alejo, D-Salinas. According to Alejo, the increase would result in about $2,000 more net dollars over a year’s time working 40 hours a week at the new minimum wage.

A few other added benefits passed into law were set to take effect at the same time. “Workers will also be able to use job-protected leave to address child-care or school emergencies as of New Year’s Day,” CBS reported. According to data from the federal Bureau of Labor Statistics, the channel noted, the new rules were expected to impact over 9 million California workers at or below the $7.25 federal minimum wage. (This year, legislators made one additional change to state labor law, the station noted, requiring “the cheerleaders and dance teams of professional sports organizations such as the Los Angeles Lakers to be classified as employees.”)

Faced with setbacks in Congress, Democrats nationwide increased pressure on state legislatures this year to hike their minimum wages. But in California, their push gained even more traction at the municipal level. “According to the UC Berkeley Labor Center, there are 29 cities and counties in the United States that have wage floors higher than their state’s minimum,” the Bakersfield Californian observed. “Fourteen of those local governments are in California.”

Local blowback

But some Golden State municipalities have balked. A new city leadership in Desert Hot Springs killed an ambitious minimum wage ordinance that “would have hiked the minimum wage for such employers to $10.20 per hour next year, with $1 increases in each of the following two years and jumps tied to the consumer price index after that,” as the Desert Sun reported. “Unions and franchisees would have been exempt,” it added — unlike Walmart, which signaled it would re-evaluate its long-time plans to add a franchise in town if the wage proposal went through.

The Southland’s economic situation has become a bone of political contention this election season, with Lt. Gov. Gavin Newsom taking heat for already pushing a $15 minimum wage statewide. “Labor markets in Imperial County, for example, already struggle to supply even more-experienced job-seekers with work,” wrote Michael Saltsman in a column for the Orange County Register. “The unemployment rate for all employees hovers around 22 percent. Across all occupations, the median hourly wage is $13.79. Even supporters of a higher minimum wage are uncomfortable with a wage floor that’s much higher than half of the median wage, which means $15 would be economic suicide for Imperial County.”

Replacing workers

Critics of dramatic increases in the state minimum have long contended that their impact includes cutbacks on hiring. “In an analysis of Los Angeles’ wage hike commissioned by the Los Angeles Chamber of Commerce, Beacon Economics argued the wage ordinance could lead to businesses employing fewer low-wage workers, resulting in a higher unemployment rate among unskilled workers,” as the Californian observed. But now, concerns about the outright replacement of workers by machines have been added to the mix. “Employer groups opposed to raising the minimum wage say labor costs are already driving decisions to replace human labor with technology,” KPCC reported. “They say higher minimum wages will accelerate automation trends in the workplace.”

Richard LoGuercio, president of an event rentals company in Van Nuys, told KPCC he was “just screwed” with the fast hike, although he supported gradual increases in the minimum wage. “After the minimum wage ordinance was approved, LoGuercio invested in a $150,000 industrial dishwasher he had been eyeing to save on utility costs,” the station recounted. “The machine will also allow him to stop paying six to eight people who earn $10 to $11 an hour washing dishes. LoGuercio expects to recoup his costs in nine months, and save a couple of hundred thousand dollars a year going forward.”

12 comments

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  1. Ronald
    Ronald 25 December, 2015, 05:46

    Support for raising the minimum wage buys votes, but will obviously increase costs everywhere. The unintended consequence of this movement will benefit the rich more than those on minimum wage via those Cost of Living Adjustments in the years ahead. Yes, the separation of the rich from the financially challenged continues to be perpetuated with the “traditional” COLA wage adjustments and over regulations on businesses.

    Cost Of Living Adjustments (COLA) to wages favors the well paid: A 3% COLA adjustment for someone making $100K= $3,000 more per year, but for someone making $20K=$600 per year. Is it fair to give a COLA adjustment to someone making the big bucks $2,400 more than the person making lower wages for “their” cost of groceries, housing, utilities, transportation, and health care? These higher wage folks are eating similar foods and using the same fuels for their cars as those making fewer wages.

    But wait, another 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. 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, and remain behind the eight-ball on the COLA wage adjustments that will benefit the rich more than those on minimum wage.

    Reply this comment
    • Bubba
      Bubba 25 December, 2015, 11:37

      These stupid libs who have never run a business don’t understand that as minimum wake goes up so does the employer’s matching taxes such Social Security.
      Those morons in Sacramento don’t realize that a Big Mac Combo will now cost $10.
      Gov. Cuomo raised the minimum wage for fast food workers by executive fiat despite protests from the industry.
      He like Moonbeam is just another out of touch born with a silver spoon in his mouth LIBERAL!

      Reply this comment
    • MrSubtle
      MrSubtle 26 December, 2015, 13:23

      Getting enmeshed into arguments of who benefits and who does’t ignores the only really important issue at hand here as far as I am concerned, which is the question “What makes these morons think they can tell us how much we can pay or be paid anyway?”. The businesses aren’t owned by them. The jobs will not be performed by them. The income will not be spent by them. They isn’t make the investments, they don’t have any skin in the game at all, and they presume to set our wage rates. Just who do they think they are?

      Reply this comment
  2. Richard Rider
    Richard Rider 25 December, 2015, 07:55

    Many ‘permanent’ minimum wage workers actually make $12-$30+ an hour
    by Richard Rider

    One aspect that is overlooked in the “minimum wage” brouhaha is that a significant segment of those who STAY at the minimum wage level (not just start, but STAY) actually make $12-$30+ an hour. That’s because, especially in states such as CA, a full minimum wage must be paid to ALL employees — including “tip” employees. Waiters, busboys, valets, hotel room cleaners, casino employees, etc. make much — often MOST — of their living off tips.

    In most other states, these job categories often can be paid a reduced minimum wage — understanding that their total compensation includes tips. Not so in California.
    http://www.dol.gov/whd/state/tipped.htm

    In most other states, the “minimum wage” requirement can be met by tips collected. Again, not so in California. It’s minimum wage PLUS tips.
    http://www.dir.ca.gov/dlse/FAQ_MinimumWage.htm

    And because these employees make so much in tips, they will NEVER be paid more than the mandated minimum wage. Nor should they be. Most decent “tip” jobs are coveted positions. As long as many qualified people seek these job openings, no employer is going to pay higher than the required minimum wage.

    For others in straight wage jobs who start out at the minimum wage, about 2/3 receive pay raises by the end of the year (assuming they work out as new employees, gaining “soft skills” that make them reliable workers). Among the 2/3 who get a pay increase that first year, the median average salary gain for such workers is 24%.

    The closer to full-time the entry worker is, the better the chances that they will develop skills quicker and receive raises faster. Minimum wage is seldom a permanent compensation position — except for “tip” employees and some part-timers.
    http://www.heritage.org/research/reports/2014/01/most-minimum-wage-jobs-lead-to-better-paying-opportunities

    In California, being a waiter, bartender, valet or casino dealer can be a surprisingly desirable job — as more and more college grads are discovering. This results in a “misallocation of labor” — overqualified people holding semi-skilled jobs (okay, dealing IS a skilled job!). This distortion also “crowds out” job opportunities for folks who normally would qualify for such employment, increasing long term unemployment among the less educated.

    A higher minimum wage will only increase this distortion.

    Reply this comment
  3. Dyspeptic
    Dyspeptic 25 December, 2015, 12:52

    What makes minimum wage hikes so politically irresistible is that DemocRats who support these policies know it’s a win-win for them politically. They can buy votes with money transferred from employers and customers to unskilled workers. Whatever increased unemployment occurs is just an excuse to expand welfare benefits. So DemocRats get votes from beneficiaries of artificially higher wages and they get votes from beneficiaries of expanded welfare benefits. And they get all of this at the expense of groups they hate, i.e. taxpayers and employers.

    As an aside I thinks it’s noteworthy that the owner of the event rentals company, James LoGuercio says that he supports minimum wage increases, then he admits to spending $150,000 on a machine that puts eight dishwashers out of work. And this guy probably doesn’t even see the rational disconnect there. This is what economic rationalists are up against. A profoundly ignorant and hypocritical employer class that supports higher minimum wages while at the same time doing everything it can to avoid paying those higher wages, thus completely negating any net social benefits that higher minimum wages are supposed to create.

    Reply this comment
    • Sean
      Sean 26 December, 2015, 03:57

      The higher minimum wage favors established businesses. Automation reduces employment but also increases capital requirements to stay competitive. This keeps new start ups out of the market and forces marginal players out of business. The end result is less competition. Mr. LoGuercio sees a competitive advantage in capital investment and is taking advantage of the new rules.

      Reply this comment
    • Teddy
      Teddy 28 December, 2015, 06:32

      Dysphoric–

      “DemocRats” ? — Are you 9 years old?

      Reply this comment
  4. Art
    Art 25 December, 2015, 16:49

    Hiking the minimum wage to $15 is a bad move statewide. Rural areas will be affected. There will be less jobs though the minimum wage workers will see benefits. However people already earning $15 an hour will suffer as businesses will hike prices. At best, prices adjust and we are no better off. The question remains is whether those earning $15 will get raises or not.

    Reply this comment
  5. josil
    josil 25 December, 2015, 17:22

    Raise the minimum wage and, as a business, I will lower the hours of employees so that the financials of the business remain constant. Who loses? Well, (1) the employee (fewer hours) and (2) the government (lower tax revenue. Who wins? The welfare bureaucracy, to the extent that more employees fall below the “poverty level”.

    Reply this comment
  6. CSUFMPH
    CSUFMPH 26 December, 2015, 22:39

    I cannot believe how stupid the California State Legislature is. Watch for increased unemployment as a result. I, for one, WAS contemplating hiring some employees as my company is growing rapidly. I am now going to throw the brakes on those plans and possible focus my efforts on expanding outside the State of California.

    Reply this comment
  7. Ulysses Uhaul
    Ulysses Uhaul 27 December, 2015, 13:19

    Pity. Little guy gets some meat off the bone.

    Reply this comment

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