California is making waves for its plan to phase in a $15 per hour state-wide minimum wage by 2022. If it passes the legislature and gets signed into law – both likely scenarios – California would have the highest state-wide mandated minimum wage.
Economists, analysts, politicians, and organizers on every side are quarter-backing this law. The implications would be a game-changer and not for the good as history and economics tell us. Boosting the lowest wages by 50 percent from the current $10 per hour level increases the cost of each full-time minimum wage worker by $10,000 each year or more.
Sometimes economists focus on the labor cost increases to employers, but the real harm is to a low-income worker who needs opportunity, but won’t get it. Think about a teenage worker or young worker with big future dreams just trying to get their start in hospitality or a recent immigrant who finally gets the chance to leave the hardships of their country for opportunity in America and sees washing dishes in a restaurant as the path to one day owning her own business.
These aren’t just hypothetical scenarios but the experience of a top Washington, D.C., chef who has prepared meals for congressmen, powerful people, and celebrities. Mirta Gutierrez, executive chef of the famed political hot spot Tortilla Coast, explains in the Washington Post that if this city had had a $15 minimum wage when she got started after leaving the poverty of Argentina, she could never have risen to creating culinary delights for President Obama:
After arriving in Washington, I learned at a job fair that an Angelo & Maxie’s restaurant was opening and hiring 300 people. I met the chef, and in very broken English I asked for an opportunity to prove myself. He agreed, reluctantly, to hire me as a dishwasher at $5.50 an hour. It was 2001. I watched everything, took mental notes and looked for every opportunity to try something new in the back of the house.
One day, I learned how to open clams. Before long I was preparing shrimp scampi and other dishes. On the job, I learned English — and everything about the kitchen and food prep. One day, I asked my boss about the business end of running a restaurant. He was stunned that I had a background in accounting. “Numbers are numbers,” I explained to him.
I am an immigrant who started at the bottom with nothing. I became an executive chef who understands the kitchen and an accountant who understands the numbers of running a business.
As a poor immigrant, would a $15 minimum wage have helped me? Absolutely not. No restaurant owner would hire someone without experience, skills or English at such a high wage. I would never have made it to that first rung on the career ladder.
Weighing the pros and cons of such a dramatic minimum wage increase cannot and shouldn’t leave out the story of the individual. Progressives pushing for $15 per hour lead with the stories, because they don’t have the data to back up their claims that minimum wage increases would have no or little impact on hiring or employment.
In fact, most don’t know what will happen, which makes everyone nervous as a Vox reporter explains:
When I set out to interview economists about the effects of California's minimum wage hike, I was expecting some strong disagreements. Instead, I found a broad consensus: California's hike is so large — and would result in a minimum wage so high — that no one really knows what will happen. None of the three economists I interviewed was willing to make a prediction about how the new law would affect employment in California.
The most surprising admission comes from Obama economic advisor and progressive economist Alan Krueger who said "A $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences…”, furthermore, "beyond international experience, and could well be counterproductive."
Let's hope clear heads will win out and stop the inevitable harm to workers like Mirta. Instead of apologizing for the hardship of unintended consequences, California ought to reconsider this move and think of other ways to get more money in the pockets of Californians. Here’s an easy and quick way: lower taxes.