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Advantages of raising the minimum wage in california

Effects of a $15 Minimum Wage in California and Fresno

Critics of minimum wage increases often cite factors that will reduce employment, such as automation or reduced sales, as firms raise prices to recoup their increased costs. Advocates often argue that better-paid workers are less likely to quit and will be more productive, and that a minimum wage increase positively affects jobs and economic output as workers can increase their consumer spending.

Here we take into account all of these often competing factors to assess the net effects of the policy. We take into account how workers, businesses, and consumers are affected and respond to such a policy and we integrate these responses in a unified manner.

  • The state minimum will reach that level for large employers in 2021;
  • Every business is part of a community, and paying a decent, livable wage should be a basic tenet of responsible business ownership.

In doing so, we draw upon modern economic analyses of labor and product markets. As we explain in the report, the main effects of minimum wages are made up of substitution, scale, and income effects. The figure below provides a guide to the structure of our model.

The Pros and Cons of Raising the Minimum Wage: A Look At California

Bureau of Labor Statistics datasets. We also make use of the extensive research conducted by economists—including ourselves—in recent years on minimum wages, and upon research on related economic topics. Our estimates compare employment numbers with the adopted policy to employment numbers if the policy had not been adopted. Other factors that may affect employment by 2023 are therefore outside the scope of our analysis.

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We do so to simplify the presentation and to focus on the overall statewide impact by 2023. We pay special attention to Fresno County because it is one of the poorest areas in the state. Economic context California has more than recovered from the Great Recession.

  1. Other factors that may affect employment by 2023 are therefore outside the scope of our analysis. By James Rufus Koren Dec 28, 2017 12.
  2. Detractors, however, argue that these pay increases place too much strain on employers, discouraging business growth and leading to potential job loss as company-owners look to labor alternatives, such as automation.
  3. Detractors, however, argue that these pay increases place too much strain on employers, discouraging business growth and leading to potential job loss as company-owners look to labor alternatives, such as automation.
  4. Like all forecasts, our results may differ if other economic conditions change.

Despite improving economic conditions, median real earnings in California were about the same in 2015 as their 2007 pre-recession level. Among those getting raises, annual pay would increase 25. Latinos comprise 55 percent of workers getting increases. Workers who would get pay increases are less-educated than the overall workforce, but almost half 47.

The Golden State

Workers getting increases are disproportionately employed in part-time jobs and are less likely to have health insurance through their employer. Effects on businesses and consumers Three industries account for almost 40 percent of the private sector workers who would be getting increases in California: Total wage costs would increase by 15. Employee turnover reduction, automation, and increases in worker productivity would offset some of these payroll cost increases.

Businesses could absorb the remaining payroll cost increases by increasing prices by 0. This price increase is well below the annual inflation rate of 1.

Research shows $15 California minimum wage has big impact on pay, none on jobs

Price increases in restaurants would be 5. The consumers who would pay these increased prices range across the entire income distribution. Net effect on employment in California Using past trends on population and employment, we project that state employment without the minimum wage increases will grow 1.

Minimum wage increase benefits all of us in California

Our estimate projects a very small increase in employment growth relative to what would occur without the minimum wage increase. This slightly higher job growth would add 13,980 more jobs by 2023, raising employment by 0.

Like all forecasts, our results may differ if other economic conditions change. Our estimates for Fresno County project larger wage and cost effects and a close to zero but positive effect on employment. How can such a major improvement in living standards occur without adverse employment effects? The answer is that minimum wage increases generate both negative and positive employment effects.

Pros and Cons of Raising Minimum Wage

A higher minimum wage induces some automation, as well as increased worker productivity and slightly higher prices; these are the negative effects. These are the positive effects.

California minimum-wage workers get a 50-cent raise starting next week as pay heads toward $15

As it turns out, these negative and positive effects on employment largely offset each other, in both California and in Fresno County.