California has reached a deal which will raise the state minimum wage to $15 an hour over the next few years. It’s likely to be formally announced by Jerry Brown later today. Such a deal raises such hopes, doesn’t it? All those poorly paid workers in Los Angeles and San Francisco will be able to pay their way in life. And yet there’s always that nagging doubt that such price fixing might turn around and bite us. And we actually do have proof of this: a report about what a $15 minimum wage will do to employment in Los Angeles City. This is not, by the way, a report by some from market fundamentalist like myself. This is from Michael Reich et al at Berkeley, stout supporters of a rise to $15. And yet even their report states that the net effect will be fewer jobs. And that’s after they play rather fast and loose with one of the major effects they are thinking of.
There’s also the problem that not all of California is all that rich so the towns of the Central Valley are going to have a much harder time. This simply isn’t going to work out well.