California political leaders have agreed on a deal that will lead to imposing a $15 minimum wage statewide, not only in San Francisco and San Jose, where the median wage is expected by 2022 to be $34-37, but also in Fresno and Chico, where the projected median wage in that year is around $20. [Noam Scheiber and Ian Lovett, New York Times]
Cities with high real estate prices are typically better able to withstand minimum wage increases than cities with low prices, because wages represent a smaller fraction of a business’s overall cost in those cities and therefore have a smaller effect on the bottom line….
Craig Scharton, the owner of a farm-to-table restaurant called Peeve’s Public House in downtown Fresno, said he was still smarting from a recent increase in the minimum wage from $9 to $10 an hour. He said the increase had forced him to close on Mondays and Tuesdays and played a role in reducing his staffing to a dozen today from 18 two and a half years ago.
Mr. Scharton was at a loss to explain how he would absorb the new increase. “We’re trying our best to revitalize downtown,” he said. “This just kind of kicks our legs out from under us.”
More: Scott Shackford/Reason, Preston Cooper/Economics 21, Charles Hughes/Cato, Timothy Lee/Vox, Ira Stoll (role of Berkeley “radical economist” Michael Reich).
2 Comments
Both sides of the minimum wage debate make testable hypotheses.
So let the States be the laboratory. Should be instructive for all to watch.
Need some way though to make it scientifically rigorous. Without a good control group, changes in fortune of the general economy will also drive the results.
Here is an example of a natural experiment. http://www.npr.org/sections/money/2014/08/28/343430393/a-mall-with-two-minimum-wages
[…] legislative analyst projects that raising the state’s minimum wage to $15 an hour, as a pending deal among political bigwigs would do, would cost taxpayers $3.6 billion more a year in government pay […]