The entire state of California has joined a growing list of American cities to recently adopt a minimum wage of $15 an hour (by 2022).California’s Governor Jerry Brown admitted after signing the law into effect that the minimum wage makes “little economic sense,” and even pro-minimum wage economist Alan Krueger thought $15 an hour was stretching things a bit far.
Anyone who denies that such a policy will cost jobs (and many of them) hasn’t been paying attention to the rest of the country. Plenty of states have already set their minimum wages above the federal minimum, and they experience higher levels of youth and low-skilled unemployment than those states which haven’t.
Let’s take Massachusetts as an example, which, as of January 2016 has become one of two states with a $10 minimum wage (the other currently being California, before the $15 an hour wage fully goes into effect). This was the second consecutive year where the minimum wage was raised by a $1.
And how did that turn out for Massachusetts? As MSN reported:The Bay State, which hiked its minimum wage from $8 to $9 at the start of 2015 and to $10 on the first day of 2016, is now mired in its longest stretch of net job losses since the recession in both the retail and the leisure and hospitality sectors, Labor Department data show.
Retail sector employment in February was down 2,200 from its post-recession peak of 354,100 in July, seasonally adjusted data show. In fact, retail employment is below its level in November 2014, before the first step of the state’s wage hike went into effect.
As previously mentioned, California currently has a $10 minimum wage. So how did that impact them before they even chose to raise it even more?While California also has a $10 minimum wage, a further hike to $11 an hour at the start of 2017 has long been anticipated by Massachusetts employers. By contrast, California quite suddenly and abruptly just voted to keep lifting its base wage, to $11 by 2018 and eventually to $15.
That means Massachusetts employers have had a longer time to weigh the consequences of a higher minimum wage and to begin adapting. Because of its early-mover status and its diverse economy and geography, Massachusetts may offer the best early evidence for assessing the experiment with high minimum wages.Anyone skeptical of the research any think tanks publish should know that the nonpartisan Congressional Budget Office has already studied what would happen if we adopted a minimum wage of $10.10 an hour nationally – a loss of between 500,000 and 1,000,000 jobs.
What does that mean $15 would do? I’d rather not try to find out.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]