They were warned. They wouldn’t listen. But they should have. A university study confirms what so many of us already knew — and what several other studies have corroborated: Minimum wage hikes kill jobs.
Scholars at the University of California, Riverside, looked at the labor market and found that job growth in the state’s “vibrant” restaurant sector has not kept up with growth in the overall industry.
Data analysis suggests that while the restaurant industry in California has grown significantly as the minimum wage has increased, employment in the industry has grown more slowly than it would have without minimum wage hikes. The slower employment is nevertheless real for those workers who may have found a career in the industry.
It will get worse. When the economy slows, expect the industry to start shedding workers.
And when the next recession arrives, the higher real minimum wage could increase overall job losses within the economy and lead to a higher unemployment rate than would have been the case without the minimum wage increases.
Other key findings from the study include:
- Hiking the minimum wage has a greater impact in lower-income communities than higher-income communities. This is probably because restaurants in high-income areas can more easily pass on the additional costs to customers.
- The full-service industry in high-income communities added 55,421 jobs from 2013 to 2017. The study’s model suggests it would have created 9,453 more jobs over that period if the minimum wage increased at the rate of inflation rather than at the pace determined by lawmakers.
- The full-service industry in low-income communities added 7,018 jobs over the period 2013-2017. But it would have added 9,327 jobs instead, about 33 percent more, if the minimum wage grew at the rate inflation, instead of at the rate set by lawmakers.
- Though researchers expect that even as the minimum wage keeps growing, 63,000 new jobs are expected to be created in the sector from 2017 to 2022. However, this is 30,000 fewer jobs “than might otherwise be the case.”
- Over the period 2013-2022, the number of new jobs in the full-service industry could have grown by 160,000, but instead the growth will be only 120,000.
Minimum wage in California is $12 an hour and is on schedule to hit $15 an hour in 2022, which the study points out is 50 percent higher in real terms than in 2012. Lawmakers were warned the minimum-wage hikes would backfire when they passed them in 2016. But they would not listen. They’re not listening still. Perhaps they never will.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.