cawacko
Well-known member
Pretty good article explaining how California will be a guinea pig for a high minimum wage in low cost areas.
California’s $15 Minimum Wage Makes A Lot Less Sense Outside Of Silicon Valley
Give credit to the “Fight for $15” movement to raise the minimum wage. When the union-backed campaign got started a few years ago, the minimum wage was low on the political agenda, and $15 an hour seemed laughable. Today, several cities, including Los Angeles and Seattle, have adopted $15 an hour ordinances (they will phase in over the next few years), and more look likely to do so. A headline like “California reaches deal on $15 minimum wage” now seems almost routine.
But make no mistake: California’s decision is a big deal. To date, nearly all the places that have adopted $15 minimum wages are big coastal cities where costs of living are high and most workers already earn well above $15 an hour. California’s proposed wage hike, which the state legislature approved Thursday and Gov. Jerry Brown is expected to sign next week, is different. It would apply to the whole state, including poorer cities like Fresno and sparsely populated rural areas in the northern and eastern parts of the state. (California’s current minimum wage of $10 an hour is already tied with Massachusetts for the highest of any state.)
Many economists, though by no means all, think $15 an hour is a reasonable wage floor in places like San Francisco, where the typical worker makes more than $26 an hour. But as The New York Times wrote this week, even many liberal economists worry that $15 could be too high in less affluent parts of the state, where businesses could struggle to offset higher labor costs by raising prices, and where far more workers and employers would be affected.
New data on the earnings of individual occupations, released Wednesday by the Bureau of Labor Statistics, shows just how much bigger the impact of the planned hike would be in some communities than in others. In San Francisco, most of the jobs that pay less than $15 an hour (or at least those that likely will in 2022, when the $15 wage is expected to take effect) are typical low-wage work: fast food cooks, dishwashers, manicurists, cashiers. But in Fresno, the list is much longer, and includes jobs that are often considered working- or even lower-middle-class: preschool teachers, nursing assistants, bank tellers.
It’s possible to quantify this by sorting jobs into categories: Occupations where at least 25 percent of workers earn less than the proposed minimum wage would be “significantly affected” by the hike. Occupations where half or more of workers earn less would be “highly affected.”1 Assuming wages rise 2 percent per year across the board — a rough estimate, but faster than they have risen in recent years either nationally or in California — then in 2022, about 40 percent of California workers will be in “significantly affected” occupations and 30 percent will be in “highly affected” ones. (Both figures are fairly typical of the U.S. overall.) But as the table below shows, there is huge regional variation. In San Francisco and San Jose, only about 10 to 15 percent of workers are in highly affected occupations. In the San Joaquin Valley area of Visalia-Porterville, that figure is close to 50 percent.
AREA*
SIGNIFICANTLY AFFECTED
HIGHLY AFFECTED
Visalia-Porterville 60.4% 48.7%
El Centro 65.6 48.3
Salinas 56.8 43.4
Madera 62.7 41.4
Fresno 54.3 41.1
Chico 52.5 40.3
Merced 54.2 39.2
San Luis Obispo 51.5 39.1
Eastern Sierra region 56.6 39.0
Bakersfield 49.1 38.7
Yuba City 55.8 38.3
Riverside-San Bernardino 52.8 38.0
Hanford 55.5 37.9
Redding 50.8 37.7
North Valley region 60.9 37.4
North Coast region 50.9 35.3
Modesto 53.8 34.8
Santa Cruz 45.9 34.8
Vallejo-Fairfield 44.1 33.8
Oxnard-Thousand Oaks 44.4 32.8
Mother Lode region 44.0 32.6
Santa Maria 46.4 32.2
San Diego 39.9 31.1
Statewide 41.8 30.8
Los Angeles 42.9 30.7
Napa 48.7 30.6
Anaheim 42.9 30.4
Sacramento 36.4 28.7
Stockton 49.8 28.5
Northern Mountains region 42.9 26.4
Santa Rosa 41.7 24.6
Oakland 32.9 19.6
San Rafael 32.8 17.4
San Jose 26.0 16.1
San Francisco 28.4 12.0
Share of occupations affected by $15 minimum wage in California
* Areas marked “region” are non-metropolitan areas. All others are metro areas or divisions; names have been shortened from the official census versions
Supporters of the California plan argue that even in somewhere like Fresno, it’s hard to get by on less than $15 an hour. That’s no doubt true. But as I wrote last year when LA raised its wage, $15 goes a lot further in some places than in others. The Bureau of Economic Analysis estimates that overall prices are more than 20 percent higher in the Bay Area than in Fresno; rents are almost double.
What does all this mean for workers and businesses? Nobody knows. Economists disagree about whether the minimum wage costs jobs, but most research has found that the negative effects, if they exist, are generally small. But that research has almost all been based on wages that are much lower — often the equivalent of around $9 or $10 in today’s dollars. The early evidence from Seattle and Los Angeles’ recent wage hikes has been fairly encouraging, but the data is still preliminary and, in any case, won’t reveal anything about the effect on lower-cost areas.
For economists, then, California’s hike is exciting, a valuable test of the effects of a big wage hike. But for the workers and businesses that will be the guinea pigs, it could be a nerve-wracking experiment. The higher wage could bring up standards of living, inject more money into the economy and turn out to be a win-win for workers and businesses. Or it could lead to lost jobs and higher prices, ultimately hurting the very workers it was designed to help. Or perhaps both. There will almost certainly be both winners and losers, but no one knows how many of each, or whether the benefits will prove worth the cost.
http://fivethirtyeight.com/features...-outside-of-silicon-valley/?ex_cid=538twitter
California’s $15 Minimum Wage Makes A Lot Less Sense Outside Of Silicon Valley
Give credit to the “Fight for $15” movement to raise the minimum wage. When the union-backed campaign got started a few years ago, the minimum wage was low on the political agenda, and $15 an hour seemed laughable. Today, several cities, including Los Angeles and Seattle, have adopted $15 an hour ordinances (they will phase in over the next few years), and more look likely to do so. A headline like “California reaches deal on $15 minimum wage” now seems almost routine.
But make no mistake: California’s decision is a big deal. To date, nearly all the places that have adopted $15 minimum wages are big coastal cities where costs of living are high and most workers already earn well above $15 an hour. California’s proposed wage hike, which the state legislature approved Thursday and Gov. Jerry Brown is expected to sign next week, is different. It would apply to the whole state, including poorer cities like Fresno and sparsely populated rural areas in the northern and eastern parts of the state. (California’s current minimum wage of $10 an hour is already tied with Massachusetts for the highest of any state.)
Many economists, though by no means all, think $15 an hour is a reasonable wage floor in places like San Francisco, where the typical worker makes more than $26 an hour. But as The New York Times wrote this week, even many liberal economists worry that $15 could be too high in less affluent parts of the state, where businesses could struggle to offset higher labor costs by raising prices, and where far more workers and employers would be affected.
New data on the earnings of individual occupations, released Wednesday by the Bureau of Labor Statistics, shows just how much bigger the impact of the planned hike would be in some communities than in others. In San Francisco, most of the jobs that pay less than $15 an hour (or at least those that likely will in 2022, when the $15 wage is expected to take effect) are typical low-wage work: fast food cooks, dishwashers, manicurists, cashiers. But in Fresno, the list is much longer, and includes jobs that are often considered working- or even lower-middle-class: preschool teachers, nursing assistants, bank tellers.
It’s possible to quantify this by sorting jobs into categories: Occupations where at least 25 percent of workers earn less than the proposed minimum wage would be “significantly affected” by the hike. Occupations where half or more of workers earn less would be “highly affected.”1 Assuming wages rise 2 percent per year across the board — a rough estimate, but faster than they have risen in recent years either nationally or in California — then in 2022, about 40 percent of California workers will be in “significantly affected” occupations and 30 percent will be in “highly affected” ones. (Both figures are fairly typical of the U.S. overall.) But as the table below shows, there is huge regional variation. In San Francisco and San Jose, only about 10 to 15 percent of workers are in highly affected occupations. In the San Joaquin Valley area of Visalia-Porterville, that figure is close to 50 percent.
AREA*
SIGNIFICANTLY AFFECTED
HIGHLY AFFECTED
Visalia-Porterville 60.4% 48.7%
El Centro 65.6 48.3
Salinas 56.8 43.4
Madera 62.7 41.4
Fresno 54.3 41.1
Chico 52.5 40.3
Merced 54.2 39.2
San Luis Obispo 51.5 39.1
Eastern Sierra region 56.6 39.0
Bakersfield 49.1 38.7
Yuba City 55.8 38.3
Riverside-San Bernardino 52.8 38.0
Hanford 55.5 37.9
Redding 50.8 37.7
North Valley region 60.9 37.4
North Coast region 50.9 35.3
Modesto 53.8 34.8
Santa Cruz 45.9 34.8
Vallejo-Fairfield 44.1 33.8
Oxnard-Thousand Oaks 44.4 32.8
Mother Lode region 44.0 32.6
Santa Maria 46.4 32.2
San Diego 39.9 31.1
Statewide 41.8 30.8
Los Angeles 42.9 30.7
Napa 48.7 30.6
Anaheim 42.9 30.4
Sacramento 36.4 28.7
Stockton 49.8 28.5
Northern Mountains region 42.9 26.4
Santa Rosa 41.7 24.6
Oakland 32.9 19.6
San Rafael 32.8 17.4
San Jose 26.0 16.1
San Francisco 28.4 12.0
Share of occupations affected by $15 minimum wage in California
* Areas marked “region” are non-metropolitan areas. All others are metro areas or divisions; names have been shortened from the official census versions
Supporters of the California plan argue that even in somewhere like Fresno, it’s hard to get by on less than $15 an hour. That’s no doubt true. But as I wrote last year when LA raised its wage, $15 goes a lot further in some places than in others. The Bureau of Economic Analysis estimates that overall prices are more than 20 percent higher in the Bay Area than in Fresno; rents are almost double.
What does all this mean for workers and businesses? Nobody knows. Economists disagree about whether the minimum wage costs jobs, but most research has found that the negative effects, if they exist, are generally small. But that research has almost all been based on wages that are much lower — often the equivalent of around $9 or $10 in today’s dollars. The early evidence from Seattle and Los Angeles’ recent wage hikes has been fairly encouraging, but the data is still preliminary and, in any case, won’t reveal anything about the effect on lower-cost areas.
For economists, then, California’s hike is exciting, a valuable test of the effects of a big wage hike. But for the workers and businesses that will be the guinea pigs, it could be a nerve-wracking experiment. The higher wage could bring up standards of living, inject more money into the economy and turn out to be a win-win for workers and businesses. Or it could lead to lost jobs and higher prices, ultimately hurting the very workers it was designed to help. Or perhaps both. There will almost certainly be both winners and losers, but no one knows how many of each, or whether the benefits will prove worth the cost.
http://fivethirtyeight.com/features...-outside-of-silicon-valley/?ex_cid=538twitter
