New Study Finds $15 Wage Will Cost 400k California Jobs By 2022
Miami, Trinity University Economists Draw Their Conclusions From Government Data Covering Three Decades Of State Wage Increases
Publication Date: December 2017
Topics: Minimum Wage
WASHINGTON D.C. — Today, the Employment Policies Institute (EPI) released a new study by Drs. David Macpherson of Trinity University and William Even of Miami University measuring the effects of California’s minimum wage increases over the past three decades. Using a variety of empirical models, the economists conclude that each 10 percent increase in the state’s minimum wage causes a nearly five-percent reduction in California industries with a larger percentage of lower-paid employees. Based on California’s historical experience, they project 400,000 jobs will be lost in the state by the time the $15 minimum wage is fully phased in by 2022.
Read the full study here.
The economists find that this job loss will be concentrated in two industries: accommodation and food services as well as retail trade, which account for nearly half of the observed job loss. The 400,000 lost jobs represents roughly a 4.1 percent reduction in projected state employment. These findings should be considered conservative because the study measures the impact of California’s state minimum wage but does not cover the impact of a rising minimum wage for certain counties where data availability was limited.
The study is in-line with recent economic and empirical minimum wage research. A 2015 Federal Reserve Bank of San Francisco review of economic research found minimum wage increases have been more harmful to low wage employment than previously thought. Earlier this year, researchers at Harvard Business School and Mathematica Policy Research looked at San Francisco’s $15 minimum wage and found restaurant closures associated with the increase in labor costs.
EPI has been chronicling specific stories of minimum wage consequences on its website Facesof15.com.
Employment Policies Institute Managing Director Michael Saltsman released the following statement:
California has positioned itself as a ‘leader’ on new mandates, but this so-called leadership comes at a cost for small businesses and the people they employ. This study furthers the economic consensus that California’s $15 minimum wage will have real consequences for the people it’s trying to help.
The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding employment growth. In particular, EPI focuses on issues that affect entry-level employment. EPI receives support from restaurants, foundations, and individuals.