California recently voted to raise its state-wide minimum wage to $15 per hour over the next several years, and it’s apparent that legislators didn’t think their decision all of the way through. After the University of California at Berkeley learned of the artificially increased wages, they made an absolutely devastating announcement.
UC Berkeley already face financial troubles prior to the state assembly jacking up its wages, and now it’s going to be forced to cut hundreds of jobs in order to remain solvent in the coming years. A report from Townhall detailed what’s happening at the school, and it’s exactly what those of us arguing against the wage hikes said would happen.
The $15 minimum wage hike in California has sent financially troubled UC Berkeley into decision making mode, and “the people who clean buildings, who work in food services or health clinics,” says Todd Stenhouse, will be the ones without a job.
Stenhouse, a spokesman for the American Federation of StateChancellor, also said “There’s a very clear need for those front-line services. But the question is whether there really is a need to hemorrhage resources on executives.”
Ouch. Some 500 employees, or 6 percent of the school’s workforce, is going to be laid off to account for the massive increase in labor costs. The area of employment hardest hit by the layoffs, ironically, is going to residential student services – the very people tasked with taking care of the students who have been fighting to “raise the wage.”
Unfortunately, this is the frightening reality that many Californians are going to be facing in the future as other businesses scramble to keep costs low. The lesson here is that arbitrarily deciding that a position is worth $15 per hour doesn’t make the position worth $15 per hour in the free market, which also means that businesses aren’t going to pay it either.