Gov. Brown admits $15 minimum wage makes no sense, signs bill anyway – Eric Boehm

“Economically, minimum wages may not make sense,” Brown says in a video posted online by the Sacramento Bee newspaper. “But morally, and socially and politically, they make every sense because it binds the community together.”

The bill Brown signed into law Monday will raise the state’s minimum wage to $15 per hour by 2022, with a series of annual increases beginning next year. The passage of the minimum wage bill through the state legislature means Californians won’t get to vote on the idea this November.

But Brown is right about the economic logic of a $15 minimum wage. As Watchdog reported last week, it makes little sense for a state as large and diverse as California to have a minimum wage set that high.

Even in parts of the state with more jobs and a higher cost of living, like San Jose or Los Angeles, recent increases to the minimum wage have caused employers to cut jobs or avoid hiring.

A survey of San Jose businesses in 2013 found that 42 percent had cut staff in the months after the city’s minimum wage increased to $10 per hour, while 45 percent reported cutting back hours and 66 percent said they raised prices.

In Los Angeles, which last year raised its minimum wage to $15 per hour, officials surveyed 1,000 businesses and found 96 percent of them planned to raise their prices to make up for increased labor costs.

“Many prices will increase, including those that lower-income households commonly face,” concluded the economists who did the survey of L.A. businesses last year. “Wages will rise for those in minimum wage jobs that remain employed; employment opportunities for those at the bottom of the skills ladder will be diminished.”

READ MORE: The economic consequences of California’s $15 minimum wage plan

In the more rural, economically struggling parts of the state — like the 13 counties where unemployment rates are already north of 10 percent — a $15 minimum wage is only going to make things worse.

“Fifteen dollars an hour may work in places like San Francisco or Los Angeles, but it could have very different economic effects in some of the very rural areas in the state,” said Gabe Horwitz, vice president of economic policy for Third Way, of California’s proposal.

Brown’s comments make it clear his administration is aware of those potential costs, which fall more heavily on anyone who is already struggling to find a job in California’s poorest counties.

The governor says the minimum wage is not just about economics, but also about morality and politics.

“Work is not just an economic equation,” Brown said. “Work is part of living in a moral community and a worker is worthy is his or her hire and to be worthy means they can support a family.”

Just like how there are no “moral victories” in sports, there’s little to be said for “moral communities” Brown intends to create with a higher minimum wage that will make it harder for people to find work.

The only conclusion, then, is that Brown is putting politics first.