California Senate passes $13 minimum wage, jobs flee in terror

June 1, 2014
"But at least we won the election! Obama!!"

“But at least they raised the minimum wage!”

Perhaps they didn’t want to be left behind by their progressive friends in Seattle, but the California State Senate last Wednesday passed a bill that would raise the minimum wage to $13 per hour by 2017. From the legislative analyst’s summary:

SB 935, as amended, Leno. Minimum wage: annual adjustment.

Existing law requires that, on and after July 1, 2014, the minimum wage for all industries be not less than $9 per hour. Existing law further increases the minimum wage, on and after January 1, 2016, to not less than $10 per hour.

This bill would increase the minimum wage, on and after January 1, 2015, to not less than $11 per hour, on and after January 1, 2016, to not less than $12 per hour, and on and after January 1, 2017, to not less than $13 per hour. The bill would require the automatic adjustment of the minimum wage annually thereafter, to maintain employee purchasing power diminished by the rate of inflation during the previous year. The adjustment would be calculated using the California Consumer Price Index, as specified. The bill would prohibit the Industrial Welfare Commission (IWC) from reducing the minimum wage and from adjusting the minimum wage if the average percentage of inflation for the previous year was negative. The bill would require the IWC to publicize the automatically adjusted minimum wage.

The bill would provide that its provisions not be construed to preclude the IWC from increasing the minimum wage to an amount greater than the calculation would provide or to preclude or supersede an increase of the minimum wage that is greater than the state minimum wage by any local government or tribal government.
The bill would apply to all industries, including public and private employment.

(h/t California Political Review)

“Leno” is Senator Mark Leno, whose district includes, naturally, San Francisco. You can kind of guess his politics. (He also backed a bill allowing children to have more than two parents. Yes, you read that right.) He’s also a prime example of Thomas Sowell’s observation about politicians who don’t have to suffer the consequences of decisions they impose on others. In this case, causing the cost of labor to skyrocket forces business owners to decide whether to pass on the cost to consumers, cut workers’ hours or whole jobs, or go out of business. As the head of CKE Restaurants told CNBC, people are doing all three:

CKE Restaurants’ roots began in California roughly seven decades ago, but you won’t see the parent company of Carl’s Jr. and Hardee’s expanding there much anymore.

What’s causing what company CEO Andy Puzder describes as “very little growth” in the state?

In part it’s because “the minimum wage is so high so it’s harder to come up with profitable business models,” Puzder said in an interview. The state’s minimum wage is set to rise to $9 in July, making it among the nation’s highest, and $10 by January 2016.

In cities in other states where the minimum wage has gone up considerably, Puzder said “franchisees are closing locations” after riding out lease expirations.

If the federal minimum hourly pay shoots up to $10.10 from the current $7.25—as many lawmakers and President Barack Obama are advocating—Puzder predicts fewer entry-level jobs will be created. If this happens, CKE would also create fewer positions, he forecast.

A recent nonpartisan Congressional Budget Office study also predicted mass job losses, estimating that a hike to $10.10 could result in a loss of about half a million jobs by late 2016, even as it lifted many above the poverty line.

(h/t California Political Review)

For some reason, I don’t think those who lose their jobs because of the wage increase will see themselves as “lifted out of poverty.”

Minimum-wage jobs are not meant to be lifelong careers. For people just entering the labor market, they’re ways to acquire skills needed to move on to better-paying jobs. For others, they’re a means to bring in additional, supplementary income into the household. The pro-increase arguments distort facts and wrap them in myth, all to disguise what is really a wealth redistribution program.

CKE’s Puzder goes on to relate how, when minimum wage increases are combined with the added expenses imposed by Obamacare, franchisees have chosen not to open new restaurants or have even closed locations, meaning these are jobs lost. But they do it because they can get a better return on their investment money elsewhere, such as by putting it in bonds.

It’s called economic common sense, something Senator Leno and his colleagues are woefully lacking in.

PS: SB 935 has now gone to the Assembly, and I will be shocked if it doesn’t pass. It’s frightening to think we have to rely on Governor Brown to be the sane one in the room and veto this bill when it shows up on his desk.

(Crossposted at Sister Toldjah)


The Bizarro legislature

January 30, 2010

Remember Bizarro World? The planet on which every Earthman had a weird duplicate, and these duplicates would do the opposite of whatever was the intelligent, sensible thing to do? A people for whom doing the dumb thing was doing the right thing?

That’s the California legislature.

Driving pedal-to-the-metal for that cliff, the state senate voted to approve legislation earlier passed by the Appropriations Committee to create a single-payer universal health-care system:

The 22-14 vote was nearly party-line, with one Democrat, Sen. Lou Correa, D-Santa Ana, voting no. It now moves to the Assembly.

The proposal would create the California Health System, which would be funded by pooling all federal and state money California currently spends on health care and a yet-to-be-determined payroll tax. It is anticipated to cost about $200 billion a year. All state residents would be provided health care and people could buy private health care to cover services not offered through the state plan.

Why do I describe this as something out of Bizarro World? Because the state will run out of cash in less than three months:

State Controller John Chiang issued a stern warning Friday about California’s cash reserves, telling legislative leaders and Gov. Arnold Schwarzenegger they must act on nearly $9 billion in budget cuts the governor is seeking by March — or the state will run out of cash to pay its bills.

Without making those cuts — which Chiang says will pump $1.3 billion into the state’s checking account — California would be broke by April 1, no fooling.

So, in a time of severe recession with unemployment and under-employment pushing 20%, state revenues crashing, and the treasury almost empty, Senate Democrats want to create a $200 billion entitlement (and we know that’s the low end) and tax even more an already over-taxed population.

Only in Bizarro World could this be considered a bright idea.

(hat tip: Michelle Malkin)


California aims for the cliff

January 23, 2010

Remember that final scene in Thelma & Louise, when Geena Davis and Susan Sarandon drive their car over the cliff in an act of suicide? The camera freezes with the car in mid-air, and we’re treated to a series of the two women’s happiest moments on their road to death:

That’s the California Legislature, which, in the midst of a severe recession, high unemployment, and budget deficits the size of the Central Valley, wants to revive plans for a state universal health-care plan:

Democrats resurrect single-payer health care bill

With federal health care reform on life support, California Democrats on Thursday resurrected a $200 billion-a-year state-based single-payer health insurance bill.

The Senate Appropriations Committee voted 6-3 on party lines and without comment to lift from suspense the dead file, Senate Bill 810 by Sen. Mark Leno, D-San Francisco.

It calls for merging the state’s public and private health insurance systems into a single California-run agency. All Californians would be eligible for insurance coverage with the poor receiving subsidized benefits.

The bill does not spell out how California would pay for a program that would cost more than twice the state’s $85 billion general fund. That would be left up to an appointed panel and ultimately, voters.

(Summary article from which the headline was taken here.)

Of course the bill doesn’t specify how this mess would be paid for; if Senator Leno and his social-democratic colleagues were honest with the public, they would admit that the only way to pay for this plan would be through new taxes and borrowing. But they can’t, because the mood of the California public is dead-set against any new taxes and debt: just last year, Propositions 1A-1F, which would have imposed a raft of new taxes in a vain attempt to plug our budget deficit, were rejected by overwhelming majorities of the voters. There’s no way the public would agree to the astronomical and economy-killing costs attendant on a single-payer “Cal-Care plan.”

And don’t think the costs the costs wouldn’t skyrocket from the “mere” $170 billion estimated in the article. Three states already have universal-coverage plans: Maine, Massachusetts, and Tennessee. All three are train wrecks. Failures. They do not control costs, because capping price is not the same as controlling costs. In Maine’s case, the program became so expensive that they had to limit enrollment, undercutting the whole raison d’etre of a single-payer system. Massachusetts is considering capping reimbursements to providers, which will inevitably lead to fewer providers taking “public” patients and longer waiting times to see doctors who do. Tennessee experienced companies ending their private health programs and putting their people on TennCare because it cost them less, but it had the unintended consequence of vastly increasing the burden on the state budget.

Leno’s plan is bizarre as a matter of politics, too. Survey after survey shows that nationalized health care is unpopular with the public, and that majority is growing. Once people realize what single-payer care means in terms of increased government interference in and control over their health care choices, most don’t want it. Surveys of Bay Staters who voted for Scott Brown in the recent special election revealed that opposition to ObamaCare was the single most important issue for most of them. And that was in a state even more liberal than California.

Think about the so-called tea-party protests of the spring and summer. Recall the angry town hall meetings when citizens told their lords and masters public servants they didn’t want ObamaCare. Witness how the Democrats have been killed in three straight elections since then, all because of opposition to nationalized health care and fiscal lunacy.

And yet the progressives in the legislature think that, somehow, California Democrats’ experience will be different?

Go ahead, Louise. Hit the gas. Just don’t take us over the cliff with you.


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