Report: California wage increase could lead to 400,000 jobs lost


On Jan. 1, minimum wage in California will rise to $11 per hour for businesses with 26 or more employees, and $10.50 per hour for businesses with 25 employees or less. It’s a 50-cent raise over 2017’s numbers.

The increase is part of a multi-year plan to grow the state’s minimum wage to $15 per hour in an effort to pay residents a living wage.

The Employment Policies Institute, a non-profit American think tank that conducts research on employment issues, published a study titled, “California Dreamin’ of Higher Wages: Evaluating the Golden State’s 30-Year Minimum Wage Experiment” on Dec. 14, that evaluates the state’s past and future minimum wage trends.

“Doctors David Macpherson of Trinity University and William Even of Miami University measure the effects of California’s historical and projected minimum wage increases and conclude that 400,000 jobs will be lost in California by the time the $15 minimum wage is fully phased in by 2022, with a majority of losses occurring in the accommodation and food services as well as retail trade industries,” said Michael Saltsman, managing director of EPI.

Macpherson and Even looked at state minimum wage trends dating back to 1990, as well as took an economic look at the future under the current minimum wage increase plan.

“The economists’ preferred model shows that past minimum wage increases in California have caused a measurable decrease in employment among affected employees. Specifically, they find 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,” stated the report.

Local businesses have agreed cuts will have to be made to accommodate the higher wages. In a story published by the Central Valley Business Journal last week, Lisa Espinola, owner of Glitz in downtown Turlock, said she eventually would raise prices to make up the difference. Tony Vice, owner of Fleet Feet, said he won’t raise prices and supports the wage hike, but will be downgrading his space and tightly managing employee hours to make it work.


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