09/28/2022

California’s Minimum Wage Hike Debate…Or Debacle?

A few weeks ago Governor Jerry Brown suddenly, and seemingly without warning, reached a deal with union groups under which California’s minimum wage will be sharply raised to $15 per hour by 2022. The measure was quickly rubber-stamped by the state legislature and puts California firmly on a path to one of the highest wage floors in the nation.

The complete lack of public debate over this policy decision harkens back to the smoke-filled rooms of old-time power politics, where the public had little say over what actually happened in the halls of power. And in the rush to shove this measure forward without any deliberation, the state is now forced to bear a policy that will, in all likelihood, do more harm than good to the very people the state is trying to, in theory, help.

Supporters of the new law predict large benefits for the state’s low-income population. Detractors are convinced that California’s economy has just signed its own death warrant. The truth is somewhat more mundane: While the increase will cause a net decline in employment in the state, the drop will be small overall. It will put a damper on California’s economic growth but it probably won’t have any worse impact than the effects of the mounting housing shortage. The strong drivers of economic growth in the state will ensure that California remains on the forefront of national trends. Reasonable supporters might argue that we can accept a minor loss in growth momentum in order to gain an ostensibly more fair society.

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