Posted by Curt on 13 April, 2017 at 9:39 am. 2 comments already!


Eric Boehm:

California is hiking the statewide minimum wage to $15 per hour by 2023, and San Diego is getting a head start on the higher wage mandate—and, maybe, the consequences of it.

Rather than inch upward from $10 per hour to $10.25 per hour in January 2016, as the rest of the state was doing, San Diego jumped its minimum wage to $11.50 per hour. In the year and three months since then, the number of food service jobs in San Diego has dropped sharply, with perhaps as many as 4,000 jobs lost, or never created in the first place.

“If job growth in the restaurant sector had just kept pace with the state’s performance … the industry could have created 5,200 jobs instead of the 1,300 that took place,” Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University, told Dan McSwain, a columnist with the The San Diego Union-Tribune.

Economists say the restaurant industry is a good barometer for the consequences of minimum wage increases because those businesses rely heavily on low wage workers, operate on small margins, and have high rates of turnover (that is, restaurants tend to pop-up quickly in some areas and go bust just as quickly in others).

That seems to be what’s happening in San Diego. While the growth of food service jobs in California has slowed since the higher wage mandates went into effect in 2016, McSwain reports, those jobs have actually dipped into negative growth within the borders of San Diego.

“San Diego’s head start, which places many of its employers at a temporary disadvantage, makes the city a test bed for competing theories about whether the overall economy is harmed or helped by large increases to wage floors,” McSwain writes.

So far, that test is going about as you’d expect. Restaurateurs are raising menu prices and laying off workers to keep revenue ahead of expenses. McSwain’s whole piece is worth a read as it does a fantastic job of breaking down the arcane economic math into real world consequences for small business owners and their employees.

San Diego might be the latest real life test case for the consequences of hiking the minimum wage, but it’s hardly alone. Thanks to progressive activists, we’re getting a real life economics experiment on a grand scale. In addition to Washington, D.C., local officials in Seattle, Los Angeles and New York have approved laws mandating $15 per hour. Whole states are following suit, with measures already passed in California, New York and Oregon.

It’s no secret what will happen after these laws take effect.

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