Please ensure Javascript is enabled for purposes of website accessibility
Reform Misguided Laws, Don’t Raise Minimum Wage, to Address California’s High Cost of Living
GV-Wire-1
By gvwire
Published 3 years ago on
December 22, 2021

Share

 

California isn’t yet finished hiking the minimum wage from the last bill that increased it to $15 an hour starting in 2023 for all businesses, and now comes another proposal to move it to $18. Imagine the response from companies struggling to keep up with current payrolls when they hear about the plan. They’ll be ordering robot catalogs.

Should the Living Wage Act of 2022 garner enough signatures, it will appear on the ballot next November. ​​If it gains voter approval, the state minimum wage will eventually reach at least $18 an hour for all businesses by 2026, and possibly as much as $20 an hour through cost-of-living adjustments. The incremental increases would begin in 2023, giving businesses no break in handing out mandatory yearly wage boosts.

Portrait of Kerry Jackson, a fellow with the Center for California Reform at the Pacific Research Institute

Kerry Jackson

Opinion

To get an idea of how climbing wage floors impact everyday life, keep an eye on those fast-food receipts. Turns out they’re a reliable indicator of price trends.

“Our data imply that McDonald’s restaurants pass through the higher costs of minimum wage increases in the form of higher prices of the Big Mac sandwich,” say the authors of an independent research paper published earlier this year. “The pay levels in McDonald’s restaurants, the largest U.S. franchise chain, are powerfully affected by minimum wage legislation.”

Few Alternatives to Price Hikes

It’s not just the Big Mac or the Quarter Pounder that will cost more under an ever-increasing minimum wage. So will a Whopper, a meatball marinara sandwich from Subway and a loaf of bread and a gallon of milk. Any product that has to pass through a supply chain in which minimum-wage workers are employed is in line for a price hike.

Of course businesses that are required by law to pay employees wages higher than the market rate have choices. They don’t have to pass along their additional payroll costs to customers in the form of higher prices. Nevertheless, the extra costs have to be absorbed somewhere. In many cases, cutting staff or putting off planned hires are the only options available.

Businesses could, as well, choose to employ non-human “workers.” Several California supermarkets, for instance, are testing machines to replace the flesh-and-blood mortals who monitor inventory. Brad Bogolea, chief executive of Simbe, the company that makes the scanning robots, says the minimum wage in this state “is going to turn many of these grocers over their heads.” The fast-food industry is already further up the labor-saving road, using robots to flip hamburgers, cook French fries, and bake pizza. Touch-screen kiosks for placing orders are not uncommon in restaurants.

Unsustainable Costs for Small Businesses

Yes, small-business owners could choose to live with lower profits. But a decline in revenues of as little as $9,000 a year – a figure an average small company could expect to lose due to higher wages – “is unsustainable for many small businesses,” says Pacific Research Institute Senior Fellow Wayne Winegarden. “Consequently, without making some type of change, the minimum wage increase could drive many small businesses into bankruptcy. Rising bankruptcies and declining profitability worsens the incentives for entrepreneurship, a major driver of the economy and productivity.”

According to the Los Angeles Times, the “main reason” initiative proponent Joseph Sanberg and others “are advocating for an $18 an hour minimum wage” is this state’s extreme cost of living, which is perpetually one of the five highest in the country. Apparently they didn’t stop for even a moment to consider that increasing wages by law could drive that cost of living even higher. As economists have demonstrated, higher wages typically result in price increases. Economists call the process “wage push inflation.”

Minimum Wage Hikes Not Worker-Friendly

California’s high cost of living won’t be eased by higher wages but by reforms and repeals that roll back the policies that have made this state such a painfully expensive place to live in. Steep housing costs, expensive energy, and punitive taxes are all caused by public policies that need to be reconsidered. Taxes and unaffordable housing costs alone produce a nearly 20% net income deficit when compared to other states.

Despite incessant claims that higher pay forced by government directives is exactly what wage earners need, the truth is the opposite: Minimum-wage hikes are simply not worker-friendly. They cost jobs, erase employment opportunities, and force prices higher. Constantly raising the wage floor will do nothing but make California more unlivable than it has become in the last two decades.

About the Author

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

RELATED TOPICS:

DON'T MISS

Fashion Fair’s Forever 21 to Close. ‘Still a Ways to Go,’ Says Employee

DON'T MISS

Who Runs Elon Musk’s DOGE? Not Musk, the White House Says.

DON'T MISS

New Self-Pollinating Almond Tree Could Be Huge for a Big Fresno Cash Crop

DON'T MISS

Madera County Secures First Fentanyl-Related Homicide Conviction

DON'T MISS

Musk Team Seeks Access to IRS System With Taxpayers’ Records

DON'T MISS

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

DON'T MISS

Fresno Weather Forecast: Pretty as a Postcard

DON'T MISS

Kennedy Says ‘Nothing’ Off-Limits in Scrutinizing Chronic Disease

DON'T MISS

Judge Declines to Immediately Block Elon Musk or DOGE From Federal Data or Layoffs

DON'T MISS

NBA Playoff Race Heats Up as All-Star Break Ends

UP NEXT

California’s Aging Population Will Test Whether Its Demography Is Destiny

UP NEXT

CA Schools Still Fall Behind Despite Big Increases in Spending

UP NEXT

Editorials of The Times: Now Is Not the Time to Tune Out

UP NEXT

Look Past Elon Musk’s Chaos. There’s Something More Sinister at Work.

UP NEXT

The Deadly Truth: Record Number of Journalists Killed in 2024

UP NEXT

Will ‘Too Many Cooks’ Complicate LA’s Recovery From Deadly Fires?

UP NEXT

I Miss the Old Kanye, Not This Antisemitic Crashout

UP NEXT

This Isn’t the Donald Trump America Elected

UP NEXT

Trump Targets Troubled CA Bullet Train Project. Will He Kill It, Too?

UP NEXT

CA School Test Scores Trail Those of States Newsom Considers Culturally Backward

Madera County Secures First Fentanyl-Related Homicide Conviction

7 hours ago

Musk Team Seeks Access to IRS System With Taxpayers’ Records

7 hours ago

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

7 hours ago

Fresno Weather Forecast: Pretty as a Postcard

8 hours ago

Kennedy Says ‘Nothing’ Off-Limits in Scrutinizing Chronic Disease

8 hours ago

Judge Declines to Immediately Block Elon Musk or DOGE From Federal Data or Layoffs

8 hours ago

NBA Playoff Race Heats Up as All-Star Break Ends

8 hours ago

NASCAR’s Jeff Gordon Talks ‘Days of Thunder’ Sequel With Tom Cruise

8 hours ago

Adames Joins Giants, Excited to Team Up With Gold Glover Chapman

8 hours ago

Leonard Peltier Released After Biden Commuted Sentence in FBI Agents’ Killings

9 hours ago

Fashion Fair’s Forever 21 to Close. ‘Still a Ways to Go,’ Says Employee

Signs hung throughout fast-fashion clothing store Forever 21 show discounts ranging from 10% to 40% off the “entire store.” And,...

4 hours ago

4 hours ago

Fashion Fair’s Forever 21 to Close. ‘Still a Ways to Go,’ Says Employee

6 hours ago

Who Runs Elon Musk’s DOGE? Not Musk, the White House Says.

6 hours ago

New Self-Pollinating Almond Tree Could Be Huge for a Big Fresno Cash Crop

Fentanyl M30 Pills
7 hours ago

Madera County Secures First Fentanyl-Related Homicide Conviction

7 hours ago

Musk Team Seeks Access to IRS System With Taxpayers’ Records

FILE — Steve Bannon speaks to reporters outside State Supreme Court in Manhattan, Feb. 11, 2025. Stephen Bannon, a top adviser during President Trump’s first term and a key figure among his supporters, said Elon Musk wants to “play-act as God” as part of his push to overhaul the federal government. (Jefferson Siegel/The New York Times)
7 hours ago

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

8 hours ago

Fresno Weather Forecast: Pretty as a Postcard

8 hours ago

Kennedy Says ‘Nothing’ Off-Limits in Scrutinizing Chronic Disease

Help continue the work that gets you the news that matters most.

Search

Send this to a friend