Conservatives have warned for decades that constantly raising the minimum wage is not
a magical solution — but it looks like California is about to learn that lesson the hard way.
Last year, Democrat Gov. Jerry Brown signed a law that raises California's minimum wage
to $15 per hour over the next few years.
The left cheered, but nothing comes for free.
A new study has found that the skyrocketing minimum wage will likely mean the loss of
400,000 jobs… and low-skilled sectors will be the hardest hit.
Yes, the same group of people that liberals claimed to want to help will be the ones hurt
the most by the law.
"The job loss is not spread evenly.
Slightly more than one-half of the job loss is projected to be in two industries: accommodation
and food services, and retail trade," explained a report from the Employment Policies Institute.
The study was run by two professors of economics, and looked at employment trends going back
to 1990.
After carefully studying the link between minimum wage hikes and employment, the economics
experts came to a startling conclusion.
"The EPI study found that for every ten percent minimum wage increase the state passed,
employment declined two percent," summarized Breitbart.
"California's minimum wage increase had a greater impact on lower-income workers,
where employment among that group decreased five percent."
The detailed study went beyond simply reporting that the law would hurt California, but also
warned other states to avoid falling into the same trap as the Golden State.
"California's rising minimum wage has depressed employment opportunities in the
most heavily-impacted industries," explained the study.
"The conclusions should give pause to states or localities interested in emulating California's
wage experiment."
It's common sense, which is probably why most liberals completely miss it: Businesses
don't have an unlimited stash of cash.
Otherwise, why not just make minimum wage $100 per hour tomorrow?
The answer, of course, is that it's not sustainable.
Forced pay increases must come from somewhere.
Often, the "somewhere" is low-skilled workers who are just getting started in a
profession.
For example, instead of hiring two high school workers for $7.50 an hour, a fast-food restaurant
might suddenly be able to afford only one new hire at $15… or, increasingly, they
turn to automation.
Every minimum wage change affects something else.
It often isn't sufficient to just give raises to low-level employees, because higher paid
workers then don't make as much by comparison.
Everyone demands more.
The cost of everything increases.
The entire pay scale shifts, and costs are saved by cutting jobs or passed on to customers
in the form of higher prices, basically negating minimum wage raise completely.
The result is inflation and lost jobs, and the cycle repeats itself.
Frustratingly, it looks like short-term schemes to garner votes is more important to politicians
in California than the actual well-being of the state's economy and its people.
The rest of America should pay close attention.
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