Home > Uncategorized > Minimum Wage in CA to Reach $15/hr By 2022

Minimum Wage in CA to Reach $15/hr By 2022

UPDATE: Bill signed into law.

“Happy” Monday, dear readers!

Everybody loves the stories from old Greek mythology (as a side note, dear readers, I strongly recommend you look into Greek Myths – a wonderful production by Jim Henson of blessed memory).  One of the mythical characters that always struck a chord with your humble blogger is Cassandra, daughter of King Priam of Troy.  She was blessed with foreseeing the future, yet cursed in that no one would listen to her wise and learned counsel.  As the Trojans eagerly sought to bring the wooden horse within their gates, and as Cassandra urged them not to, she saw the doom of her city and her people, but was powerless to do anything about it.

Today’s blog post has to do with California’s new law, mandating a $15 per hour minimum wage by 2022.

As you probably know, your humble blogger is no fan of minimum wage.   Labor is expensive enough in California, and making it more expensive by statute just creates  a black market for labor and lifts automation and technology out of “cost prohibitive” while dropping workers out of “affordable.”  Your humble blogger came from rather humble beginnings, and worked his way up the ladder gaining valuable experience – a ladder which would have been missing its bottom rungs if a high minimum wage would have priced my empty bag of skills out of the job market.

But, as is typically the case, California does not listen to your humble blogger: much like the contemporaries of Cassandra, the wiser the words the less they are heard.

The California legislature has passed a $15.00/hr minimum wage, and Governor Brown has promised to sign it into law today.  The current minimum wage, $10.00 will go up to $15.00 per hour by 2022.

Senate Bill 3 – will have an affect on us all.  A worker earning $15 per hour 40 hours per week (without regard for overtime) is earning $600 per week, and would thus be entitled to $400 per week in temporary total disability benefits.  By contrast, right now, with the current minimum wage being at $10 per hour, the same worker would be earning $400 per week and entitled to $266.67 in temporary disability benefits.  The result is a 50% increase in the full-time employee’s TD rate.

As we know, every year, the TD minimum and maximum, even for workers that are not full-time employees, is set by the average weekly wages of all employees in California, and how much it increases each year (see Labor Code section 4453(a)(10)).  When the new minimum wage causes low-wage worker to be replaced with machines, and the average earnings of what is left of California’s work-force goes up by a spikey percentage, we can see the minimums and maximums of the TD rate go up as well.

Doom and gloom as it is, your humble blogger predicts that this, as one of California’s many efforts to make labor more expensive, this latest assault on business will result in more unemployment, more businesses leaving California, and more hardship for the very people such laws are presumably meant to help.

And on that cheerful note, my dear readers, your humble blogger wishes you a wonderful rest of the week.

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  1. Cloud Yeller
    April 4th, 2016 at 10:43 | #1

    “Doom and gloom as it is, your humble blogger predicts that this, as one of California’s many efforts to make labor more expensive, this latest assault on business will result in more unemployment, more businesses leaving California, and more hardship for the very people such laws are presumably meant to help.”

    I don’t know if it’s all doom and gloom. Most of the industries that pay minimum wages cannot leave CA.

    For instance, agriculture cannot take the soil to a different state. Same goes for retailers who have to be in CA to touch CA shoppers, the same with bars/restaurants.

    • Gregory Grinberg
      April 4th, 2016 at 10:54 | #2

      Hi Cloud Yeller, that’s a fair point, but if you’re a farmer in California perhaps you can would find it cheaper to grow crops in other states (or countries) and ship them in. You might also find it cheaper to replace your workers with automated ones. I’ve read news reports of Japanese companies experimenting with fully automated farms – from the pages of economics books and sci-fi straight into reality.

      Thanks for visiting the blog!

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