California - The Minimum Wage Lab Rat

[Ben]

On Monday, the Governor is going to sign a statewide $15/hr minimum wage bill. Incremental increases through 2022.

Currently, the major coastal population centers are already close to $15/hr. However, once you pop over the coastal range, cost of living gets closer to Nevada than to coastal CA, and small businesses there will likely not be able to absorb the higher costs, nor will consumers, when those costs are passed on. As I've always said, if you're going to control minimum wage (I'm a, "let the market decide" guy), you need to do it on a micro level, by city. You simply can't apply San Francisco wages to BFE Eastern CA.

My prediction, with CA having so many bleeding edge tech companies, is that by 2020, your average fast food restaurant is going to be staffed by 75% kiosks, 25% humans. Also we'll see a significant loss in what mom and pop places are left. It will also hurt non- big city people like building contractors, plumbers, etc., who can afford to hire $10/hr laborers and apprentices, but not $15/hr laborers and apprentices. Not to mention the potential laborers and apprentices who now can't find a job.

[wmenorr67]

Also how much more are they going to ask for before you can fully phase in $15/hour?

[roo_ster]

Steve Salier gave some thought to haw it might play out.

Will California be Able to Enforce a $15 Per Hour Minimum Wage?
http://www.unz.com/isteve/will-california-be-able-to-enforce-a-15-hour-minimum-wage/

Here’s a question that I haven’t seen discussed much. Everybody has an opinion on what the impacts of the law would be assuming it is implemented the way it says in the law it would be implemented; but I’m wondering more what sectors of the California economy will just ignore this new law the way they currently ignore many of the other laws and regulations?

How enforceable are high minimum wage laws, especially in contemporary California, a state where a huge fraction of small business employers these days aren’t from cultures where the concept of Rule of Law is highly valued?

California is an interesting example of corruption because the government isn’t all that corrupt relative to, say, Illinois, where the government tends to shake down honest businesses. California still has 1910 Progressive government structures that are more resistant to governmental corruption than Chicago. But California now seems to have a high level of private enterprise corruption, with businesses cheating the government over taxes and Medicare and each other via insurance fraud and the like.

So, it’s hard to say what will happen with a very high minimum wage.  Big companies will have to follow the law, but a huge fraction of small businessmen in California these days are Men in Gold Chains who think laws are only for chumps.

The rich use legal and accounting legerdemain to avoid taxation.  The poor stay under the radar.  Many sub-cultures collude to not pay taxes.  I suspect that regular middle class Americans will be the only ones taking it in the face.

[Hawkmoon]

You're missing the point. Certainly, the government of the Republic of California is smart enough to know that employers will almost certainly either start issuing falsified pay slips, or paying the minimum wage and then requiring the employees to give back a percentage as a requirement for keeping their jobs. The solution, of course, will be to add thousands of new auditors to the public payroll to gad about the state, checking the books and interviewing the employees.

These thousands of new state workers will be beholden to the administration for their jobs, so guess which way they (and their families) will probably vote?

[roo_ster]

You're missing the point. Certainly, the government of the Republic of California is smart enough to know that employers will almost certainly either start issuing falsified pay slips, or paying the minimum wage and then requiring the employees to give back a percentage as a requirement for keeping their jobs. The solution, of course, will be to add thousands of new auditors to the public payroll to gad about the state, checking the books and interviewing the employees.

These thousands of new state workers will be beholden to the administration for their jobs, so guess which way they (and their families) will probably vote?

I am constantly caught off-guard by not being cynical enough.

[Monkeyleg]

Instead of giving the cook an apron, the restaurant can required that he buy a new apron from them every week (to keep them clean) at a cost of $500.

[TechMan]

I don't know if this was posted before, maybe FB.
http://thefederalist.com/2016/03/29/70-tries-after-seattle-raised-its-minimum-wage-i-still-cant-find-a-job/

[TechMan]

Steve Salier gave some thought to haw it might play out.

Will California be Able to Enforce a $15 Per Hour Minimum Wage?
http://www.unz.com/isteve/will-california-be-able-to-enforce-a-15-hour-minimum-wage/

The rich use legal and accounting legerdemain to avoid taxation.  The poor stay under the radar.  Many sub-cultures collude to not pay taxes.  I suspect that regular middle class Americans will be the only ones taking it in the face.

Did you follow the rabbit hole on that page?  The Gluen cult link...http://takimag.com/article/the_shadowy_imam_of_the_poconos_steve_sailer/print#axzz44Ss6asNY  Which led me to another link: http://canadafreepress.com/article/a-visit-to-the-pennsylvania-fortress-of-the-worlds-most-dangerous-islamist

[roo_ster]

Did you follow the rabbit hole on that page?  The Gluen cult link...http://takimag.com/article/the_shadowy_imam_of_the_poconos_steve_sailer/print#axzz44Ss6asNY  Which led me to another link: http://canadafreepress.com/article/a-visit-to-the-pennsylvania-fortress-of-the-worlds-most-dangerous-islamist

Oh yeah.  Isnt that something?

[MechAg94]

I was thinking more about contracting out cleaning services and such instead of paying hourly.  Maybe just encouraging more businesses to pay cash for illegals rather than officially hire anyone. 

I seem to remember a relative that worked home construction type work.  He was paid directly without any taxes or other stuff deducted.  I assumed they had some sort of contractor arrangement. 

[Perd Hapley]

I was thinking more about contracting out cleaning services and such instead of paying hourly.  Maybe just encouraging more businesses to pay cash for illegals rather than officially hire anyone. 

I don't know about California, but most businesses here seem to already do that.

[MechAg94]

I don't know about California, but most businesses here seem to already do that.

Bad example maybe.  I am not sure if they could contract out more stuff.

[TechMan]

Oh yeah.  Isnt that something?

I'm flabbergasted.

[MillCreek]

http://www.seattletimes.com/business/economy/a-year-in-the-sky-is-not-falling-from-seattles-minimum-wage-hike/

The process continues in Seattle, and it will likely take a few years for the data to coalesce.  The local economists don't seem to agree with AEI reports on massive job loss, however.

And in related news: http://www.seattletimes.com/business/us-gains-215000-jobs-in-march-unemployment-rises-to-5-pct/  People are returning to the job market and workforce.

[p12]

Just shift hourly to a structured commission. % of daily profit.

[cordex]

http://www.seattletimes.com/business/economy/a-year-in-the-sky-is-not-falling-from-seattles-minimum-wage-hike/

The process continues in Seattle, and it will likely take a few years for the data to coalesce.  The local economists don't seem to agree with AEI reports on massive job loss, however.

Yes, Seattle is a perfect indicator of how a vastly larger and more economically varied entity like a state will fare under the same kind of law.

And in related news: http://www.seattletimes.com/business/us-gains-215000-jobs-in-march-unemployment-rises-to-5-pct/  People are returning to the job market and workforce.

I wonder how many times these numbers will be adjusted over the next few weeks.

[MillCreek]

Yes, Seattle is a perfect indicator of how a vastly larger and more economically varied entity like a state will fare under the same kind of law.

Sounds as if you have already made up your mind; I am reserving judgment until reliable data comes in.

[cordex]

Sounds as if you have already made up your mind; I am reserving judgment until reliable data comes in.

How do you come to that conclusion?

[Ben]

Sounds as if you have already made up your mind; I am reserving judgment until reliable data comes in.

You can't deny though, that Seattle is a microcosm. If it works in Seattle, it doesn't mean it will work in Eastern WA, where cost of living may be half. For that matter, it might work well in Seattle, but fail in Los Angeles, where the median income may be similar, but the demographics are much different.

Either way, in urban areas I'll still bet a goodly amount of money that between $15/hr and health care, that fast food, big box, and other establishments will go heavily into kiosks. They have already been shown to be cost effective and popular, so adding the bigger push factor will only create more.

Plus this still goes back to the fact that minimum wage jobs are not meant to be careers. There's a bigger picture we have to address regarding people wanting to make burger flipping a career, or being too uneducated or motivated to advance past it. As I have mentioned before, someone with energy and aptitude can go from being a greeter at Walmart to making greater than the median national salary in Walmart management.

In the interest of discussion, I did find it interesting to hear today that minimum wage jobs are only 4% of overall employment in the US.

[MillCreek]

^^^I agree with everything you have said, but will the data bear this out?  Either in a test bed like Seattle or an entire state like California? I also think the conclusions that may be able to be drawn from Seattle are limited since the mandate stops at the city limits, at least for now.  But again, the data will tell the tale.

I am most concerned with the impact on business owners, some of which do not have much ability to raise prices accordingly to cover the mandated minimums. 

[zahc]

I have a relative that started flipping burgers at Wendy's and eventually ended up a regional manager for a big chunk of the US.

[RoadKingLarry]

I have a relative that started flipping burgers at Wendy's and eventually ended up a regional manager for a big chunk of the US.

That's nice.

[roo_ster]

I'm flabbergasted.

In other countries, the term "conspiracy theory" translates as "politics."