UC Analysis Finds California’s $15 Minimum Wage May Help The Poorest Counties

BERKELEY (CBS SF) — California’s minimum wage is set to reach $15 by 2023 and a new analysis suggests it could help millions of people, including in one of the state’s poorest counties.

An analysis by researchers at the University of California at Berkeley’s Institute for Research on Labor and Employment released this week states that the policy is likely to “generate a significant increase in earnings for about 5.26 million workers in California while creating a small price increase borne by all consumers.”

That means raises for about 38 percent of the state’s workforce. By 2023, a minimum wage worker will see an increase of about $3,900 to their yearly income, according to the analysis.

Critics of an increased minimum wage, including President-elect Donald Trump and his nominee for Labor Secretary, the fast-food magnate Andrew Puzder, argue that an increased minimum wage threatens to reduce employment.

But the new analysis released by UC Berkeley researchers — based on a new minimum wage model they designed — argues that while the higher minimum wage does indeed induce some automation and slightly higher prices, it would also lead to increased worker productivity.

Additionally, the analysis found that the minimum wage increase reduces employee turnover, thus reducing employers’ costs. It would also increase worker purchasing power, thereby stimulating consumer demand, their analysis finds.

The researchers note the largest price increases for consumers would be at restaurants, where prices would likely increase by slightly more than 5 percent by 2023 in order for employers to meet payroll costs.

The researchers paid special attention to Fresno County, one of the poorest counties in the state. In that county, the researchers found the policy would have a small but “positive effect on employment.”

Fresno County has a large agricultural workforce and the legislation was opposed by the Greater Fresno Area Chamber of Commerce, as well as the Agricultural Council of California, the Western Growers Association, and the California Farm Bureau Federation, among other groups.

The bill was co-sponsored by SEIU, Western Center on Law and Poverty and the United Food and Commercial Workers.

Following the passage of the legislation this past summer, the non-profit advocacy group Farmworker Justice, released a statement saying, “We at Farmworker Justice hope that the worker organizing that led California and New York to increase their minimum wages will help pave the way for a federal minimum wage increase as well as improvements in other states.”

The UC researchers state that, based on their analysis, the minimum wage increase in California will have its intended consequence: “improving incomes for low-wage workers.”

But they note that any effects on overall economic growth and employment “are likely to be small” but that the net impact of the policy will be a positive one.

By Hannah Albarazi – Follow her on Twitter: @hannahalbarazi.

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