The Golden State's minimum-wage hike would hurt those on the margins.
California’s political leaders are taking a big gamble with other people’s lives with their $15-minimum-wage proposal. Millions of workers could benefit, but many others would be left behind.
The potential damage to California businesses is obvious — making low-margin and labor-intensive companies unprofitable, knocking down start-ups and established firms, lowering California’s national and global competitiveness, and discouraging investment. But everything is at risk for workers on the margin who cannot compete for $15-an-hour jobs at this point in their lives.
The main argument for increasing the minimum wage is to make work pay more and cut poverty. However, even with a high minimum wage and a strong safety net, California already has the worst poverty rate in the country.
And a $15 minimum wage would not address the main drivers of persistent poverty in this state — the high costs of housing and energy, and unequal access to quality education. A higher minimum wage will worsen the costs and not resolve the inequality.
The Public Policy Institute of California and the Stanford Center on Poverty and Inequality have created the California Poverty Measure (CPM), a device that considers local conditions like the cost of living and safety-net benefits when determining regional poverty levels. Measured with that tool, California’s poverty rate is a stunning 21.0 percent, largely because it is so expensive to live here.
RELATED: The Insidious Political Power of Minimum-Wage Laws
But what the CPM also shows is the great diversity of experiences in California’s 58 counties. The CPM suggests that, with their lower housing costs, some California counties, such as Kern and Fresno, have a lower incidence of poverty than the official rate would suggest. In San Francisco and Orange counties, there’s more. And that makes sense.
A $21,000-per-year income, which is what a full-time worker makes at $10 an hour, goes a lot farther in affordable San Bernardino than in Los Angeles, which is why San Bernardino’s population influx from L.A. is the largest of any county-to-county migration in the country. Across the state, rush-hour freeways are clogged with commuters traveling between the lower-cost inland places where they live and the higher-cost coastal cities where they work, while travel in the other direction is often a breeze. Low-income Californians have been migrating from the coast inland – and from California to other states – for years in search of opportunity.
#share#The diverse experiences within California, even among neighboring counties, illustrates another major fault of this ambitious proposal — its lack of flexibility. The $15 state minimum is the same in San Francisco as it is in lower-cost counties with a lower CPM poverty-threshold income, like Kern or Mariposa. The governor can delay implementation in the event of a downturn, and the increases for small businesses are delayed a year. But the proposal does not offer lower rates for young workers, tipped employees, apprentices, new workers, or any other variation to allow those who need time to learn skills on the job and prove their worth to a prospective employer.
RELATED: Raising the Minimum Wage Is the Perfect Way to Kill the Summer Job
Finding a job that will start off paying $15 per hour will be a challenge for young Californians who want to gain their footing, immigrants who are improving English-language skills, adults who have been out of the job market for some time, and those without college degrees or high-school diplomas. Those who are willing to work for less so they can keep a foot in the job market, receive benefits, or do less-lucrative work that they love are out of luck.
If advocates of a $15 minimum wage really want to help the workers who will be marginalized by this increase, they should instead propose reforms that would enable the affordable living that drew previous generations to arrive and succeed in the Golden State. Tackling reform of the state’s burdensome environmental laws, advocating for reduced and streamlined local land-use regulations to ease the housing shortage, reforming costly regulations on energy and utilities, and allowing more accountability and choice in the state’s school systems would be much more sustainable alternatives with broad-based benefits.
RELATED: Minimum-Wage Laws: Ruinous Compassion
And if advocates are truly eager to boost incomes, they could instead consider efforts to help make work pay. The most effective way would probably be to refine the state’s Earned Income Tax Credit (EITC), a pro-work program that helps California’s working families bridge into the federal EITC. These programs lift millions out of poverty and put families on the path to economic independence, all while reinforcing the idea that more work means more pay. Turning today’s lump-sum refundable credit into a monthly refund makes a lot of sense.
It’s easy to increase the minimum wage. But raising the minimum wage won’t solve the issues driving poverty and middle-class hardship in the Golden State.