California Dives Into the Unknown With $15 Minimum Wage

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San Francisco and Los Angeles have already passed laws raising their minimum wages to $15 per hour. Now, in a victory for labor activists who were getting ready to put a $15 minimum wage on the ballot, the state is getting ready to  follow suit:

According to a document obtained by The Times, the negotiated deal would boost California’s statewide minimum wage from $10 an hour to $10.50 on Jan. 1, 2017, with a 50-cent increase in 2018 and then $1-per-year increases through 2022. Businesses with fewer than 25 employees would have an extra year to comply, delaying their workers receiving a $15 hourly wage until 2023.

Future statewide minimum wage increases would be linked to inflation, but a governor would have the power to temporarily block some of the initial increases in the event of an economic downturn.

This would genuinely be terra incognita. The chart on the right shows the California minimum wage over the past 40 years, adjusted for inflation. An increase to $11 per hour in 2018 would return the state to slightly above its historical high point. Beyond that, however, the minimum wage goes far higher than it’s ever been.

What effect will that have, especially in lower-wage areas outside the big cities? There’s no telling. It won’t be Armageddon, but it might not be entirely benign either. Small increases in the minimum wage seem to have little or no effect on employment, but this increase isn’t small, and it unquestionably gets us beyond merely catching up with past erosion in the minimum wage. A statewide minimum of $15 would be a brand new thing.

Kansas recently tried out full-bore right-wing economics, and it’s pretty much been a disaster. Now liberals are getting their chance in California. Come back in a decade and we’ll find out if left-wing economics does any better.

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