$15 minimum wage to cost California 400,000 jobs

California reached a deal on legislation to raise the state minimum wage across all businesses to $15 per hour by 2023, a move that could cost the state hundreds of thousands of jobs, according to a new report.

A study conducted by the Employment Policies Institute (EPI), which analyzed employment trends from 1990 through 2017, found that each 10% increase in the minimum wage in the Golden State has resulted in a corresponding 2% decline in employment for affected employees. The impact was larger, 5%, for lower-paid workers. By those estimates, the EPI projects that the pending $15 minimum wage hike would cost California 400,000 private sector jobs, with heavy losses in both the foodservice and retail sectors.

While the EPI acknowledges that real firms could “respond to higher minimum wages in ways that cause divergent effects,” it says “what is not in dispute” is that “rising minimum wage has depressed employment opportunities in the most heavily-impacted industries.”

As of January 1, California’s minimum wage will increase to $11 per hour from the current level of $10.50 per hour for businesses with 26 employees or more. From that point, it will be a $1 per year increase trajectory through 2022. Businesses with 25 employees or less will reach the $15 per hour threshold by 2023. …

Read the full article from Fox Business

New Year Brings Yet Another Minimum Wage Hike

Minimum wage1Just like earlier this year, because of the enactment of SB 3 (Leno) in 2016, California’s minimum wage is going up again. On January 1, 2018, the state’s minimum wage will be increased for all sizes of businesses as “small employers” will see their first wage hike in recent years.

Under prior state law, the minimum wage for all industries increased to $10 per hour on January 1, 2016. Pursuant to SB 3, the minimum wage for all industries will be increased to $15 per hour by January 1, 2022 for businesses employing 26 or more employees and by January 1, 2023 for businesses employing 25 or fewer employees (referred to as “small employers”).

The law does provide that the scheduled increases may be temporarily suspended by the Governor based upon him or her making certain determinations. Additionally, the law requires the Director of Finance, after the last scheduled minimum wage increase, to annually adjust the minimum wage under a specified formula. In the meantime, the wage will go up incrementally each year.

The following lists the scheduled minimum wage increases for any business that employs 26 or more employees:

* On January 1, 2018 to $11 per hour
* On January 1, 2019 to $12 per hour
* On January 1, 2020 to $13 per hour
* On January 1, 2021 to $14 per hour
* On January 1, 2022 to $15 per hour

The following lists the scheduled minimum wage increases for any business that employs 25 or fewer employees:

* On January 1, 2018 to $10.50 per hour
* On January 1, 2019 to $11 per hour
* On January 1, 2020 to $12 per hour
* On January 1, 2021 to $13 per hour
* On January 1, 2022 to $14 per hour
* On January 1, 2023 to $15 per hour

In February 2014, the Congressional Budget Office (CBO) issued a report regarding the impact of the proposal to raise the federal minimum wage to $10.10 an hour.  The conclusion was that, although some low-wage workers would receive a higher income through the increased minimum wage hike, “some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed, would probably fall slightly.”

To make matters worse here in California, these scheduled increases in the state’s minimum wage not only increase hourly employees’ wages, but also salaried employees’ compensation. In order for employees to qualify as “exempt” under any of the six exemptions in this state, they must meet the salary-basis test, which is two times the monthly minimum wage (as well as the duties test that is not impacted by the wage hike).

With the enactment of SB 3, there will be an increase of over $15,000 in wages per exempt employee in just a few short years. And, businesses will see their workers’ compensation premiums go up, as well as increased costs for uniform/tool reimbursements and overtime.

While the business community had argued that SB 3 should contain a regional minimum wage, this proposal was rejected. Some can appreciate that certain cities and counties in California may be able to afford an increased minimum wagebut other cities and counties are still struggling with high levels of unemployment. Employers in these areas will find it much more difficult to sustain such a dramatic increase in their labor costs.

Chris Micheli is a legislative advocate with the Sacramento governmental relations firm of Aprea & Micheli, Inc.

This article was originally published by Fox and Hounds Daily

UC Berkeley takes issue with Seattle minimum wage study

Minimum wage fight for 15In 2013, to shore up support for a plan to rapidly increase Seattle’s minimum wage, city leaders agreed to let a team of University of Washington researchers have access to troves of confidential payroll information so they could evaluate whether the wage hikes were helping or hurting low-income hourly workers.

The decision came as similar debates were playing out in California over state leaders’ decision to phase in their own long-term minimum-wage hike, from $8 in 2014 to $15 in 2022, with businesses and some economists warning of unintended consequences.

In July 2016, as Seattle was on its way to raising the minimum wage from $9.47 in 2014 to $15 in 2017 – a 58 percent hike – the UW report came out and painted the effects of the 2015 increase to $11 as being minimal. This prompted sighs of relief from the business community and cheers from supporters of the wage hike plan. Most reviews of previous modest minimum wage hikes had similar results.

But the release of an updated report on Monday offered a much grimmer picture. It found that after the minimum wage reached $13-per-hour last year, employers began cutting low-wage jobs and limiting hours to such an extent that the average minimum-wage employee lost about $125 a month despite higher hourly pay. This has led both to I-told-you-sos from economists who had warned that huge wage hikes could backfire and to sharp attacks on the study, in California as well as the state of Washington.

“Their findings are not credible and drawing inferences from the report [is] unwarranted,” UC Berkeley economist Michael Reichtold the Los Angeles Times. Reich was co-author of a study of Seattle’s minimum-wage hike released last week by UC Berkeley’s Institute for Research on Labor and Employment that reached much more upbeat conclusions about the Seattle experiment.

Several economists cautioned against leaping to conclusions about a study that had not yet been peer-reviewed. They also warned of not disregarding past research that reached different conclusions and pointed out arguable shortcomings in the UW study’s methodology.

Economists see ‘shoot the messenger’ factor in reaction

But in some academic quarters, the reputation of the University of Washington researchers and the sheer volume of evidence they had on how Seattle labor markets were functioning produced strong defenses of the study – and criticism of those who were quick to trash the report.

“This strikes me as a study that is likely to influence people,” MIT economist David Autor told the Washington Post after reviewing its findings. He said he found it “sufficiently compelling in its design and statistical power that it can change minds.”

In a Facebook post shared far and wide on the popular Marginal Revolution website, Texas A&M economist Jonathan Meer praised the comprehensiveness of the research and joined Forbes magazine in knocking the credibility of the UC Berkeley labor center, saying its “previous work on the minimum wage is so consistently one-sided that you can set your watch by it, that unsurprisingly finds no effect.”

Meer also said it was no accident that the labor center and Seattle City Hall released the upbeat report before the downbeat report was released,  knowing it would get national attention.

“I find that whole affair abhorrent. Seattle politicians are so unwilling to accept reality that they’ll undermine their own researchers,” Meer wrote. “I don’t envy the backlash this team is going to face for daring to present results that will be seen as heresy. I know that so many people just desperately want to believe that the minimum wage is a free lunch. It’s not.”

Several California cities have raised or are in the process of raising their minimum wages even faster than the state, including Los Angeles and San Francisco. So far, these local efforts haven’t been evaluated with the thoroughness of the University of Washington’s survey of Seattle’s job market.

This piece was originally published by CalWatchdog.com

Top 10 Stupidest New Laws in California for 2017

california-flagI’m not in the habit of complaining at the outset of a column, but I’ve taken on a nearly impossible task — figuring out which, of the hundreds of new California laws about to go into effect, are the stupidest.

Don’t laugh. I’m serious.

It’s really, really hard to keep the list at 10 with hundreds of hare-brained schemes that became real laws.

After all, for far too long, the California Legislature has been a “conservative-free zone” — even though there were a handful of “Republicans” occupying seats and taking up space.

I’m going to list the new laws in order of their egregiousness to me, but I’m open to additions or wholesale re-ordering if you care to comment.

Given that Californians are facing 898 new laws going into effect on January 1st, 2017, there’s plenty to hate.

  1. Prop. 63: “2nd Amendment Nullification” Act.  Although various portions go into effect in various years — yes, they staggered implementation of this “critically needed reform,” some out to 2019 — this is the most sweeping assault on our long-cherished, God-given natural right as Americans to protect our lives and our freedom.  It requires you to pass a background check and pay for a permit to buy ammunition for the gun you may have just passed a background check to buy.  Yeah, that’ll stop criminals — who buy their guns and ammo in parking lots from other criminals. WooHoo! Next, it makes high-capacity magazine (any magazine that holds more than 10 rounds) illegal to possess — even if you bought it prior to the current ban and ownership was previously considered grandfathered.  This law should make it clear that the goal of the left is not “safety” — it’s control.
  2. SB880: “Bullet Button Ban.” For years, California Democrats have sought to ban a made-up classification of semi-auto rifles with “evil features” that they re-named “assault weapons” for propaganda purposes. Every year, California Democrats attempt to increase control over this “hated group” of guns — until they finally outright ban all semi-automatics.  This law will not do a single thing to further public safety, as the San Bernardino terrorist attack illustrated — determined mass murderers will simply ignore and work around all gun control laws — as if they are just words on paper. One last bit of irony: in a previous legislative session, this same bill was sponsored by none other than disgraced State Senator Leland Yee. If that name sounds familiar, you’re right. Leland Yee wanted to “protect” Californians from “assault weapons” on our streets — that is, until he was arrested for trafficking fully automatic weapons and rocket-propelled grenades in exchange for campaign contributions. He’s currently serving a five-year prison sentence.
  3. SB3: Minimum Wage Hike to $15/hour by 2020. As a result of a strong socialist push by unions and complicit governments — such as the union-controlled California legislature — businesses are looking to eliminate as many jobs as possible, investing in automation instead. When you combine this with unchecked illegal immigration — where you have an unlimited labor pool willing to work for sub-par wages under the table — the future for entry-level jobs and small business owners in California is bleak.
  4. AB1785 The “Hands Free” Law. This is another example of government gone wild. AB1785 prescribes driver behavior so severely that in and of itself, I believe it will cause more accidents — and more deaths. Not only must the phone be dash mounted — meaning you’ll have a permanent distraction right in front of you — but you may not text, take photos or video, or enter GPS destinations while driving. Fat chance of stopping those activities with a mere $20 fine. The bill does stipulate that “the only time a driver is allowed to touch the device is when he or she is activating or deactivating a “feature or function.” However, that process should only involve a “single swipe or tap of the driver’s finger,” according to the bill,” mynewsla.com reports. How about “hands off” my phone instead of an unenforceable “hands free” law?
  5. AB 1732: Single-User Restrooms. If you’ve ever had to go so badly that you used the opposite sex restroom at a gas station or Starbucks, then perhaps you think this law is needed. But do we really need another law regulating bathrooms? Some businesses have already put signs on their single-use restrooms designating use by either sex. And sometimes people just take it upon themselves. I can’t help but think this law is unnecessary and diminishes us as a society a little.
  6. SB 1383: Controlling Cow Flatulence. Not making this up. In spite of the fact that 53 California dairy farmers went bankrupt, moved out of state, or just closed down this year, the Marxist-Progressives are back at it again. Capture cow farts or suffer heavy fines.  CARB (CA Air Resources Board) suggests inserting a tube into the cow’s digestive system and venting into a backpack. Even liberals admit that laws like this, where government tries to control the uncontrollable, can have undesirable economic consequences. Lost jobs, lost industries, lost revenue. Stupid law.
  7. AB 857: Ghost Gun Ban.  Even if you manufacture your own gun — starting with an 80 percent receiver — that requires you to have special skills and tools to complete the machining, you must now register it and obtain a serial number from the California Department of Justice. The purpose of this law is simply to record your name and your firearm on a list for eventual confiscation. Once again, control — not public safety — is the goal.
  8. SB1322: Legalizing Child Prostitution. This law bars law enforcement from arresting sex workers who are under the age of 18 for soliciting or engaging in prostitution, or loitering with intent to do so. So teenage girls (and boys) in California will soon be free to have sex in exchange for money without fear of arrest or prosecution. Now that is nuts. I understand the idea of trying to not punish the victim, but certainly granting judges discretion is better than legalizing and therefor “green-lighting” behavior that is so harmful to the individual child.
  9. Prop. 57:  Early Release for so-called Non-Violent Criminals. This was Governor Jerry Brown’s baby — the crown jewel of his prison reform initiatives. Among those offenses he considers “non-violent”: rape of an unconscious person; human trafficking involving sex acts with minors; and assault with a deadly weapon. Blogger Felicia Wilson summed it up well (original emphasis): “Call me crazy, but shouldn’t a crime that includes the word rape or assault be considered, I don’t know … violent?”
  10. AB 2466: Felons Voting. Low-Level felons serving sentences outside of state prison get to keep their right to vote. Hmm. Wonder which party this could possibly help? Just like the “illegal alien vote,” Democrats will have the felon vote locked down. This is simply about protecting their power and making it permanent.

When California Democrats promised to take to the streets to defend the rights of convicted felons, illegal aliens and welfare recipients, they weren’t kidding. If only they were as serious about cracking down on immigration cheats and violent criminals as they are about penalizing law-abiding citizens and gun owners, California would have more jobs, less crime — and might be a place people want to come to instead of fleeing.

Tim Donnelly is a Former California State Assemblyman. FaceBook: https://www.facebook.com/tim.donnelly.12/ Twitter: @PatriotNotPol 

This piece was originally published by Breitbart.com/California

Quick and Dramatic Consequences of Minimum Wage Hike

Minimum wage fight for 15Confronted with an impending hike to $15 in the California minimum wage, businesses, labor advocates and political analysts have all begun to shift strategies and tactics. Given current trends, the combined impact could be a smaller, more unionized workforce — that doesn’t always see the benefits wage activists have promised.

The consequences will be quick and could be dramatic. “Most state raises over the past decade, when there have been any, ranged from 1 percent to 3 percent annually. The law Gov. Jerry Brown signed will increase bottom-rung pay roughly 10 percent per year starting in January,” as the Sacramento Bee reported.

Manufacturing flight

One immediate result of the hikes has already appeared in Southern California, where the garment industry faces an especially rough road. Sung Won Sohn, former director of apparel company Forever 21 and economist at Cal State Channel Islands, told the Los Angeles Times a veritable “exodus has begun,” with manufacturers already tempted to shift garment production overseas to retreat from the Golden State still further. “The garment industry is gradually shrinking and that trend will likely continue.”

“In the 1990s, as borders opened up, foreign competitors began snatching up business from Southland garment factories. Eventually, many big brands opted to leave the region in favor of cheaper locales. Guess Jeans, which epitomized a sexy California look, moved production to Mexico and South America. Just a few years ago, premium denim maker Hudson Jeans began shifting manufacturing to Mexico. Jeff Mirvis, owner of MGT Industries in Los Angeles, said outsourcing was necessary to keep up with low-cost rivals.”

The problem, particularly acute for business owners who can’t automate jobs as readily as, say, fast food restauranteurs, was encapsulated by Gov. Jerry Brown himself, who signed the $15 wage into law despite clear reservations about its economic wisdom. “Economically, minimum wages may not make sense,” he said, defending the law on moral and sociopolitical grounds. A high minimum wage, Brown claimed, “binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way.”

Incentives in tension

According to critics of the change, the tension involved in using poor economic choices to encourage good moral ones has driven labor unions themselves toward a predictable, if hypocritical, shift in their own policy objectives. Many of the same unions that agitated for a higher wage “have been quietly — and often successfully — lobbying cities to let employers who hire union workers pay them less than the mandated minimum,” as Quartz observed. “Unions say it gives them the flexibility to negotiate packages for their workers that supplant wages with health insurance and other benefits.

“Critics say that it’s a shrewd move by unions to drive up membership dues and ensure that their workers are the cheapest in town. The exemption gives cost-conscious employers little choice but to hire union, and workers who want jobs little choice but to join their local.”

At the same time, however, workers who have been rallied to the $15 cause have been swiftly pressed into service for pro-unionization demonstrations. “The demand from the original strikes in 2012 was $15 and a union,” said Mary Kay Henry, international president of the SEIU, according to the Times. “Underpaid workers in California are now on a path to $15, but we think the way we can make these jobs good jobs […] is through a union.”

In an added twist, some economists defending the wage hikes have raised the question of whether subsequent job losses are a price worth paying. Gov. Brown, in fact, has referred favorably to that view. “We understand that this can be difficult,” he said, as the Washington Post recalled. “But the fact is that there’s a principle called the living family wage, which is a doctrine that has been around for a long time, since probably before the 1900s, which is that you can’t expect someone to work if the wages for that work can’t support a family.”

California’s Economically Illiterate Legislature

Minimum Wage chartCalifornia’s minimum wage is set to rise to $15/hour over the next six years. While this topic has been beat to death, it is seldom pointed out that the inflation-adjusted minimum wage, based on 78 years of precedent, at most should only be around $10 per hour. A recent UnionWatch post “Raise the Minimum Wage, or Lower the Cost of Living?” proved this using CPI data. As can be seen, only once, in 1968, did the minimum wage in 2015 dollars exceed $10/hour.

A lot of things have happened since 1968, of course. To name just two, the earned income tax credit didn’t arrive until 1975, and the Affordable Care Act, offering health insurance to low-income participants at give-away rates, didn’t arrive until 2010. Needless to say these programs make it easier to survive on minimum wage.

The point of this isn’t to suggest workers shouldn’t earn more money, or to argue about whether or not we should have a minimum wage. The point is that the minimum wage, at $15 an hour, has no historical justification. And because of this, the unintended consequences are more severe. Like never before, this minimum wage increase will kill small businesses and it will kill entry level jobs.

There’s another point missing from the debate over the minimum wage. It is an indictment of the members of California’s state Legislature, because collectively, they have a simplistic, ideologically driven view of economics that is divorced from reality. Their naive enthusiasm is harming the working families they claim they want to protect. California’s legislators, nearly all of them coerced and controlled by government unions and seduced by extreme environmentalists, have enacted policies that deny upward mobility to working people.

These policies only begin with an excessive minimum wage hike that is going to reward large corporate franchises and drive small emerging companies out of business. They extend to the unaffordable cost of housing, caused by misguided “urban containment” policies in what is one of the most spacious developed regions on earth. They extend to the high cost of electricity and natural gas, elevated by policies inspired by a futile wish to set an example to the rest of the world – regardless of their regressive impact. They extend to a pension system built by an alliance of government unions and powerful financial interests that guarantees retirement benefits to government employees that are literally five to ten times more generous than Social Security, paid for by taxpayers, teetering on the abyss of insolvency. The list goes on.

Legislator business experienceHere’s part of the reason why: California’s legislators do not have experience running a business. Most of them have never worked in the private sector. A 2014 UnionWatch post “How Labor Money Undermines the Financial Literacy of California’s Legislators” documents, based on biographical analysis, the level of business experience in California’s 2014 state legislature. In all, 56 percent of them have NO experience in business – having spent their entire careers in government or nonprofits. Of the majority democrats, 76 percent of them have NO experience in business. The 2016 class of legislators is unlikely to be any different.

Understanding that you can’t raise the minimum wage without killing entry level jobs is a basic economic concept. So is the fact that if you make it nearly impossible to develop land or energy, prices will rise for those commodities. And it isn’t much of a leap to realize that when you do this, you are hurting the most vulnerable members of society.

More sinister, and perhaps harder to grasp, upper division stuff, is the fact that every time you add a regulation, you further empower the monopolistic corporate special interests who are supposedly the bad guys you’re fighting. Every time you lower interest rates to stimulate spending, you invite people of limited means to go further into debt, and you decimate the savings accounts of people unwilling or unable to gamble their modest fortunes in a volatile stock market. And every time you raise pay and pension benefits for government workers, you create deficits, pouring additional billions into the pockets of bond underwriters, and you redirect the money into the hands of the pension funds and their investment bankers.

And at the graduate level, in that rarefied space where sound-bites (that perform so well in Sacramento) just echo meaninglessly in the vast alpine air, consider this:  The impact of artificially elevating the cost of living creates an asset economy, so pension funds and rich people alike can ride the bubble for one more year, while ordinary folks endure servitude to their $700,000 mortgages. It doesn’t take an economist, however, to know this can’t last. It just takes horse sense. That too, appears to be in short supply in Sacramento.

Could it be that if California’s Legislature were committed to lowering the cost-of-living via policies that encouraged competitive development of natural resources including land and energy, maybe they wouldn’t have to bestow such lavish benefits on government workers, nor the crumbs of minimum wage increases to private workers?

*   *   *

Ed Ring is the president of the California Policy Center.

California’s New $15 Minimum Wage Will Accelerate Automation

Minimum wage1California’s Legislature last week voted overwhelmingly to automate most of the Golden State’s fast-food restaurants, supermarkets, and mid-sized retail chains by 2022. No, that wasn’t the stated intent of Senate Bill 3, which sailed through the Assembly and Senate on mostly party-line votes and after little debate. But that will be the likely effect of the law, which is supposed to phase in a $15 hourly minimum wage starting in January.

Governor Jerry Brown signed the bill in Los Angeles on Monday, one week to the day after unveiling the wage proposal at a Sacramento press event where he was surrounded by the Democratic elected leaders and labor union bosses who helped put it together. “I’m hoping that what happens in California will not stay in California, but spread all across the country,” Brown said. “It’s a matter of economic justice. It makes sense.” Assemblyman Sebastian Ridley-Thomas, a Los Angeles Democrat, echoed Brown during Thursday’s floor debate. “This is an argument about economic justice,” he said. “Justice is not something that can be negotiated or compromised.”

As it happens, the bill was the product of several months of extensive negotiation and compromise, almost all behind the scenes and without a word of input from California’s many industry lobbying groups, or from the leadership of the state’s largely irrelevant Republican Party. The law’s most immediate practical effect will be to end a pair of union-backed initiative drives that appeared headed for November’s general election ballot. The Service Employees International Union had been agitating for a measure that not only would have imposed the $15 minimum wage sooner, but would have done so without regard to the state’s fiscal outlook or economic circumstances. Brown, ever the cautious progressive, thought the union’s proposal went too far, too fast.

Under Brown’s plan, California’s hourly minimum wage would increase to $10.50 in 2017 for businesses with 26 or more employees, followed by $11 in 2018, and another dollar each year, arriving at the magic $15 in 2022. After that, the law would let the wage continue to rise with inflation. Smaller businesses would have an extra year to implement the annual raises. Brown insisted on a provision allowing the governor temporarily to suspend the wage hikes in the event of an economic downturn or a large state budget deficit. But the legislation provides a limited window for action: the governor must make his decision in September; the wage hike takes effect the following January. And, the truth is, these emergency provisions are almost always for show. AB32 — California’s ill-named Global Warming Solutions Act of 2006 — included a similar escape hatch, which neither then-governor Arnold Schwarzenegger nor Brown ever considered using during the recession, or during any one of the state’s multibillion-dollar budget crises. They opted instead for budget gimmickry and tax increases. One result? California’s high-skill, high-wage manufacturing sector has never recovered. In February, it experienced its worst contraction since 2009.

Advocates, including the labor-backed Fight for $15 Coalition and Senate president pro tem Kevin de León, say the raise will benefit as many as 6.5 million workers, or upward of 43 percent of the state’s workforce. Mainly, though, the $15 minimum wage will be a boon for California’s public-sector unions. The state Department of Finance estimates that the wage hike will cost taxpayers at least $3.6 billion a year by 2023, owing to a raise (and new benefits) for in-home health-care workers. But the cost likely will be even higher than that, as many public employees—teachers, most notably—must contractually be paid at least double the minimum wage or receive overtime pay.

Businesses have the most to lose. “I think very few business people will lobby against this bill, because then they will just be cutting their own throat,” Brown said at his press conference the other day. And he was right—the business lobby didn’t put up much of a fight, and its reasonable objections were scoffed at. California is a diverse state. What might appear economically feasible along the wealthier coast may not be such a good idea in some of the poorer inland areas, which have never quite come back from the recession.

Will a $15 per-hour wage really help workers in San Francisco? As the city began phasing in its own $15 minimum wage law last year, locals were shocked to discover the law of unintended consequences. Business owners who supported the city’s ordinance have found themselves raising prices, cutting hours, or in a few notable cases, shutting down altogether. “If you can only raise prices so much,” one political consultant with the Los Angeles Area Chamber of Commerce told the L.A. Times this week, “you’re going to be forced to cut hours, cut employees, change your business model and frankly, automate.”

That — and maybe relocate your corporate headquarters to Tennessee while you’re at it. Last month, Andy Puzder, chief executive officer of CKE Restaurants (owners of the Carl’s Jr. and Hardee’s fast-food chains), announced that the company would leave Santa Barbara for the more accommodating tax and regulatory climes of Nashville. But Puzder’s greater sin, at least judging from the scorn and ridicule he garnered online, was his unapologetic view of how best to boost his company’s bottom line in the years ahead: robots all the way down. “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,” he told Business Insider. If labor is the biggest expense on the ledger, then that’s the likeliest target for cuts. “With government driving up the cost of labor, it’s driving down the number of jobs,” Puzder said. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

In fact, Puzder wasn’t saying anything particularly new or novel. Automation is coming, no matter what. Fast-food kiosks are commonplace in Europe, where labor costs are even more prohibitively expensive than here, with McDonald’s leading the way. But it isn’t just the corporate monoliths that are embracing automation. Smart start-ups are making automation hip. Puzder was overjoyed with Eatsa, a new restaurant chain with locations in Los Angeles and San Francisco that is almost completely automated. Customers order from a screen in the front of the restaurant. A small crew in the kitchen assembles the meals in the back. “The entire process requires zero human interaction between customers and workers.”

Brown may be right that California will lead the way for the rest of the nation. But progress isn’t a $15 per-hour minimum wage. It’s an automat in San Francisco.

The Horror Movie of Capitol Lawmaking

Photo courtesy Franco Folini, flickr

Photo courtesy Franco Folini, flickr

The state Capitol building in Sacramento is a popular destination for school groups. The kids tour the historic legislative chambers, while adults explain how laws are made.

A more accurate tour of how laws are made can be found on Netflix. Look for the 1931 horror classic “Frankenstein.”

There you’ll get a good look at how it’s really done. Peek into the laboratory as the mad scientist pieces together grisly remains from the local graveyard, while the villagers assemble outside with pitchforks and torches.

Consider, for example, the $15 minimum wage law.

On the Saturday night before Easter, word escaped from Dr. Frankenstein’s lab that Gov. Jerry Brown had made a deal with labor union leaders and state lawmakers to ratchet up California’s minimum wage to $15 an hour and beyond.

In January, Brown warned that a minimum wage hike of that magnitude would “put a lot of poor people out of work” and would be too costly for taxpayers. The state is an employer, too, and those wage hikes would add $4 billion to the annual budget by 2021.

But everything changed because of an unfortunate accident in the laboratory in 2014 that caused the state’s beloved initiative process to mutate. When the smoke cleared, initiatives could no longer appear on the June ballot, but were pushed into a November crowd scene. And suddenly new initiatives were born with a cord around their necks. This allowed their sponsors to yank them back if a deal for similar legislation could be reached in time.

In the latest experiment, two of Dr. Frankenstein’s trusted assistants, the Service Employees International Union state council and SEIU-United Healthcare Workers West, created competing $15 minimum wage initiatives. The unions hired costly consultants to qualify the measures for the ballot, paying $3 or $4 for each voter signature on the petitions. In earlier years, signatures could be had for a dollar or two, but the crowded field for November pushed prices up.

On March 22, the health care workers union announced that their initiative had qualified for the ballot with 423,236 signatures. They put Gov. Brown on notice that unless he signed a state law to raise the minimum wage to $15, they were taking it to the voters.

Four days later, the pre-Easter deal was announced.

Work in the laboratory commenced immediately on a long-buried minimum wage bill that had passed the state Senate in 2015. With a few spare parts grafted in place, the Assembly Appropriations Committee passed it in 90 minutes and sent it to the Assembly floor. Within 24 hours, the creature was passed by the Assembly and state Senate and sent to the governor’s desk.

Soon the thing will be fully electrified and walking around California. You’ll feel it taking extra money out of your pocket every time you shop, eat or pick up dry cleaning.

Out in the streets of the village, the California Restaurant Association and other business groups are massing and angry. They could storm the laboratory and steal the antidote. It’s in the tall cabinet, in a bottle labeled “Referendum.”

The business community could gather signatures for a referendum to repeal the law.

But then the unions could gather signatures for “Bride of Minimum Wage.”

Ballot fights cost many millions of dollars for advertising, but initiatives are inexpensive bargaining chips now that they can be withdrawn after they qualify.

It’s all cooked up secretly in the laboratory or in the back room of the local inn, where sometimes the villagers and their torches win a few concessions.

And that’s how laws are made in California.

Bwaa-ha-ha-ha-ha.

Jerry Brown signs $15 minimum wage in California

As reported by the Sacramento Bee:

Gov. Jerry Brown, casting a living wage as a moral imperative while questioning its economic rationale, signed legislation Monday raising California’s mandatory minimum to $15 an hour by 2022, acting within hours of a similar bill signing in New York.

The bill’s enactment comes one week after Brown, Democratic lawmakers and labor leaders announced an agreement on the wage increase, averting a brawl on the November ballot.

In adopting the measure, California joined New York as the first states in the nation to enact a plan to raise their statewide minimums to $15. New York Gov. Andrew Cuomo signed his state’s legislation and was cheered by labor unions at a rally moments before Brown spoke in California.

Brown, a fiscal moderate, had previously expressed reservations about a wage increase. But amid growing concern about income inequality …

Pause Mechanism Does Not Ease Discomfort Over Minimum Wage Hike

Minimum WageAs Governor Jerry Brown signs the new minimum wage increase law this morning, many in the business community are studying the proposed temporary pause mechanism built into the bill that is supposed to reassure businesses. It does not.

The mechanism is power in the hands of a governor to pause the minimum wage increase during economic downturns. There are two scenarios in which a governor can hit the pause button.

It is important to note that this power granted the governor is optional. Even in a recession political pressure could prevent the governor from pulling the trigger.

The first trigger is pulled when nonfarm employment for a 3 or 6 month period declines and sales and use tax has dropped over a 12-month period compared to a previous year, all these measurements to be taken at the end of the budget year in June.

The second trigger is based on state budget projections. If the Department of Finance projects a deficit in the then-current fiscal year or in either of the following two fiscal years the governor can pause the minimum wage increase. The budget trigger can be used a maximum of two times.

According to a quick review by the California Business Roundtable’s Center for Jobs & the Economy, this trigger power, which the business group labels an “Off-Ramp” provision, if it had existed during recent past recessions, would have complicated economic conditions as California was trying to pull itself out of a recession. The analysis says the minimum wage increase would have resumed after the pause while unemployment was still high.

From the Roundtable’s Center for Jobs & the Economy brief examining the last two recessions:

The 2001 Recession—

Most of the country went through a relatively short 2001 recession, but in California it was extended due to Silicon Valley being the epicenter of the dot.com bust and spiking energy prices as a result of the state’s regulatory and other energy policy decisions.  While the triggers would have provided a one-year delay in 2002, the minimum wage would have continued its annual increase as unemployment continued to rapidly rise from an average of 5.4% in 2001 to a peak of 7.3% in 2003.

The 2007 Recession– 

The minimum wage increases would have resumed in 2012 when unemployment still averaged 10.4% or even earlier in 2011 when unemployment averaged 11.7%. Most importantly, the minimum wage increases would have kicked back in during the critically important 5-year recovery period where California slowly struggled to regain the two million jobs lost throughout the state.

The brief also noted how the resumption of the minimum wage could put California at a disadvantage with other states: “the state will then resume raising its wage level above other states just as the recovery begins—a time when competitive factors will be particularly crucial to how quickly the state can restores its economy.”

For the full Center for Jobs & the Economy brief go here.

Originally published by Fox and Hounds Daily