Just about a month ago California started the process of raising its minimum wage to $15 an hour, and while there’s been individual stories about the consequences, the entire state just received some really bad news.
As predicted, the increased minimum wage is putting pressure on businesses to cut their labor forces, reduce hours, and increase prices due to the sudden increase in operating costs, which has been well documented. However, one scenario that hasn’t been explored in great detail is a mass exodus of businesses that can’t operate with the artificially increased wages, which is playing out in California not even a month after it hiked the minimum wage.
Apparently business owners aren’t too fond of the government dictating what they should pay their employees, so rather than stick around and go bankrupt, they’re leaving the state for greener pastures.
Who’d have thought? (/sarc)
A report from the Daily Caller details the exodus California’s experiencing:
Now, businesses are already starting to leave the state in response to the upcoming increase.
“It’s been less than a month since California passed legislation to hike the minimum wage to $15 and disastrous impacts are already being felt,” America Rising Squared Communications Director Jeremy Adler said in a statement to The Daily Caller News Foundation. “Between companies leaving the state, employees being laid off and workers getting replaced by robotic automation, it’s clear that the economic consequences of this move will only serve to hurt workers and the private sector.”
Supporters of the minimum wage increase argue it could help lift people out of poverty. The opposition warns raising the minimum wage to $15 an hour could actually hurt the very people it’s supposed to help. Employers could be forced to cutback workforces or raise prices to overcome the added cost of labor.
California Composites, which makes airplane parts, announced Monday it will have to leave the state, reports KPCC. Five Loaves Two Fish Clothing’s owner told KOGO the new law will be devastating for her business.
Inland Empire Economist John Husing told the Los Angeles Daily News the increase will likely cause more businesses to automate. Low-skilled jobs like cashiers which have allowed young people to enter the workforce are starting to be done by touchscreen computers and machines.
So there you have it. Yet another consequence of short sighted decisions made to pander to a group of people demanding more money without putting in anymore effort.
Unfortunately, this is just the beginning for California. It’s only a matter of time before unemployment among youth, college students, and low-skilled employees skyrockets, and along with it, the expenditures by the state on welfare will skyrocket as well.