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$15 minimum wage studies predict bleak future for California, Seattle

A woman stands outside the building where California Governor Jerry Brown signed a bill hiking California’s minimum wage to $15 by 2023 in Los Angeles, California, in April 2016. (REUTERS/Lucy Nicholson)
A woman stands outside the building where California Governor Jerry Brown signed a bill hiking California’s minimum wage to $15 by 2023 in Los Angeles, California, in April 2016. (REUTERS/Lucy Nicholson)

California became the first state to increase its minimum wage to $15 an hour, but that could mean the loss of hundreds of thousands of jobs, a report warned last week.

The $15 minimum wage has become a leading issue on the left in recent years. Seattle was followed by dozens of cities and a couple of states when it first enacted the policy in June 2014.

But alongside the victories is a fierce political debate on whether the policy actually helps — with some arguing it could hurt the very people it’s meant to benefit.

Those in support of the policy believe it could help low-wage workers escape poverty, which could result in a general boost to the economy. Critics contest that raising the minimum wage increases the costs of labor, which could limit job opportunities.

In Iowa, five counties — Linn, Johnson, Polk, Wapello and Lee — raised the minimum wage before the Iowa Legislature voted earlier this year to bar cities and counties from setting minimum wages higher than the statewide $7.25 hourly floor. The legislation holds the state has the sole authority in setting business and employment standards in Iowa.

California and New York became the first states to enact the $15 minimum wage within hours of each other in April 2016. Both laws are designed to phase in the policy over a handful of years to mitigate economic problems.

The Employment Policies Institute, a conservative research nonprofit, predicted California could lose 400,000 jobs when the policy goes fully into effect by 2022.

“The job loss is not spread evenly,” the report stated. “Slightly more than one-half of the job loss is projected to be in two industries: accommodation and food services, and retail trade.”

Trinity University professor David Macpherson and Miami University professor William Even conducted the study, which also compared different counties and past minimum wage trends in the state.

They projected California’s most populous counties will see the largest number of workers losing their jobs, while smaller counties will see a larger percentage of their workforce decline.

Economists and other experts have come to various conclusions on what the impact actually will be.

Some have suggested the potential downsides will be marginal compared to the benefits, while others have found the negative impact could be severe, especially for young and low-skilled workers.

The Fight for $15 movement has been at the forefront of the debate since it started in 2012. The Service Employees International Union has been the primary financial backer of the movement over the years.

The University of Washington reignited the minimum wage debate June 26 when it found the increase could hurt workers in Seattle. The city is scheduled to reach $15 an hour at the start of next year, with the law including a phase-in period.

The study found workers are having their hours reduced at a rate that exceeds the increased wages.

The University of California, Berkeley, released a report this month that found the citywide increase helped to increase wages while having little impact on employment.

Seattle city officials asked for both studies to examine the impact the policy was having while it is being phased in.

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