Editorial: California outlaws more jobs

Last week, both houses of California’s Legislature rushed to jack up the state’s minimum wage to $15 an hour over the next six years. If Golden State lawmakers honestly assessed the ramifications of their decision, however, they would be forced to conclude that the hike will harm many of those it is intended to help.

The increase will be phased in starting next year, when the wage increases from $10 an hour to $10.50 an hour for businesses with 26 or more workers. Annual hikes after that will push the minimum to $15 by the end of 2022. Smaller businesses will have an additional year to implement each increase.

Spon after signing the new law, California Gov. Jerry Brown admitted that “economically, minimum wages may not make sense,” but rationalized that “morally, socially and politically they make every sense because it binds the community together to make sure parents can take care of their kids.”

The Freudian key word, here, is “politically.” As Bloomberg View columnist Megan McArdle pointed out recently, members of the professional class who live in larger, politically influential parts of state — San Francisco, for example — can afford to pay the higher costs for goods and services. Those who live and work in less-affluent and less-politically connected parts of the state such as Mariposa County? Not so much.

But even living in a wealthy area doesn’t automatically make residents and business owners immune to the costs associated with higher minimum wages. For example, when the Seattle City Council voted to raise that city’s minimum wage to $15 an hour in 2014, commercial property landlords reported that tenants were having second thoughts about renewing their leases. Some small business owners delayed planned expansion efforts, while others were forced to go out of business altogether.

As we’ve mentioned time and again, minimum wage jobs are, by definition, intended for the least-skilled members of the work force. The higher the minimum wage, the more people who are priced out of the employment market. These jobs are not intended to provide a living wage. They’re meant to provide initial work experience or supplemental income or to provide a wage floor for tipped positions.

While some of California’s low-skilled workers who are already employed will be helped by the bump in pay, others will lose their jobs. This group, as well as those currently out of work, will find it even more difficult to find employment. Ultimately, as Ms. McCardle aptly points out, the harm felt by those out of work will far outweigh the benefits enjoyed by those who still have jobs.

Simply put, Calfornia’s new law is a job killer that further bolsters the state’s reputation for hostility toward business. Nevada should view the Golden State’s move as the blueprint for what not to do when looking to maintain and, more importantly, expand employment and business opportunities for its residents.