![]() ![]() Among those getting raises, annual pay would increase 25.4 percent, or about $3,900 (in 2015 dollars) on average.Increasing the minimum wage to $15 would increase earnings for 5.26 million workers, or 38.0 percent of California’s workforce.Despite improving economic conditions, median real earnings in California were about the same in 2015 as their 2007 pre-recession level.As a result, California’s unemployment rate has fallen from its 2010 recession peak of 12.5 percent in 2010 to 5.3 percent in November 2016, close to the 2007 pre-recession annual rate (5.4 percent in November 2007). Indeed, California’s economic growth ranks as one of the highest rates among all fifty states. California has more than recovered from the Great Recession.We consider here the effects of a $15 minimum wage in a less affluent and lower costs of living area of the state. Many better-off and more expensive California cities have already examined the effects of higher minimum wages and enacted their own $15 laws. We pay special attention to Fresno County because it is one of the poorest areas in the state. We do so to simplify the presentation and to focus on the overall statewide impact by 2023. Our analysis does not incorporate recent laws that raise minimum wage in numerous California cities to $15 on a faster pace than the statewide policy. Other factors that may affect employment by 2023 are therefore outside the scope of our analysis. Our estimates compare employment numbers with the adopted policy to employment numbers if the policy had not been adopted. Our estimates of the effects of a $15 minimum wage are also based upon existing research on labor markets, business operations, and consumer markets. We also make use of the extensive research conducted by economists-including ourselves-in recent years on minimum wages, and upon research on related economic topics. Our data are drawn from the Census Bureau’s American Community Survey and from other Census and U.S. Source: UC Berkeley IRLE Minimum Wage Research Group The figure below provides a guide to the structure of our model.įigure 1. As we explain in the report, the main effects of minimum wages are made up of substitution, scale, and income effects. In doing so, we draw upon modern economic analyses of labor and product markets. We take into account how workers, businesses, and consumers are affected and respond to such a policy and we integrate these responses in a unified manner. Our analysis applies a new structural labor market model that we created specifically to analyze the effects of a $15 minimum wage. Here we take into account all of these often competing factors to assess the net effects of the policy. Advocates often argue that better-paid workers are less likely to quit and will be more productive, and that a minimum wage increase positively affects jobs and economic output as workers can increase their consumer spending. We present here an analysis of the pay and employment effects of the scheduled minimum wage increases to $15 by 2023 in California as a whole and in Fresno County, one of the poorest areas in the state.Ĭritics of minimum wage increases often cite factors that will reduce employment, such as automation or reduced sales, as firms raise prices to recoup their increased costs.
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