Over the past 30 years, minimum-wage increases have reduced employment, a new study shows, and now, based on past data, a new $15 statewide minimum wage will cost the Golden State at least 400,000 jobs.
Commissioned by the nonprofit Employment Policies Institute, the study by David Macpherson of Trinity University and William Even of Miami University measured the impact of minimum-wage increases in California from 1990 to the present.
The economists found that a 10 percent increase in the minimum wage would cause a nearly 5 percent reduction in employment in an industry where one-half of workers earn wages close to the minimum.
Nearly half of the observed job loss occurs in food-service and retail industries.
In an industry with an average share of lower-wage workers, their findings imply that each 10 percent increase in California’s minimum wage has reduced employment for affected employees by 2 percent.
Applying their data to the state’s upcoming $15 minimum wage, they estimate that by 2022, approximately 400,000 jobs will be lost as a consequence.
The economists point out their estimate is conservative, because it measures the impact of California’s state minimum wage but does not account for job loss in counties that had insufficient data.
Last year, California Democratic Gov. Jerry Brown signed a bill into law that incrementally raises the state’s minimum wage from $10 an hour to $15 by 2023, with subsequent rises pegged to inflation.
“Whether the real-time response of an economy will mitigate or exacerbate the effects of raising the minimum wage is an open question,” the executive summary states.
“What is not in dispute, based on this study, is that California’s rising minimum wage has depressed employment opportunities in the most heavily-impacted industries.
“The conclusions should give pause to states or localities interested in emulating California’s wage experiment.”