Potential cost of California minimum wage? 900,000 (mostly millennial) jobs

The recent minimum wage increase in California could make its labor market like Europe’s: restrictive and difficult for the young and poor to advance.

“By 2023, the minimum wage across California will be $15 an hour. Adjusted for inflation, this will be higher than any statewide minimum wage in U.S. history,” James Sherk wrote in a Heritage Foundation issue brief. “It will also be higher than the national minimum wage of any country in the world. The real increase will be even greater in inland and rural areas that have lower costs of living. When fully implemented, this law will cover one-third of all employees in California.”

For workers on the margin who want to develop their skills and experience, but can’t dramatically boost profit for their employer, the increase is an effective prohibition to work.

The cumulative effect of the boost, according to Sherk, is the loss of 900,000 full-time-equivalent jobs. Higher prices, worker firings, and a shift toward labor-saving machines or processes could result.

“This increase has no historical precedent,” Sherk wrote.