Well, we have completed our response to minimum wage increases in California. As a review, California is raising its minimum wage from $8 to $10 (or 25%) in two steps starting this July 1. I will confess that in some of these cases the causes are complex, and are not just due to minimum wage changes but also other creeping California regulatory issues (particularly the first two).
- Suspended operation and closed on large campground in Ventura County that employed about 25 people
- Suspended investment / expansion plans at two other campgrounds
- Raised prices everywhere else, on average adding $3 to a $20 camping fee. (this is inevitable when wages are increased 25% in a business where more than half the costs are tied to wages and margins are around 5%)
The only reason I take the time to write this is that I think this tends to demonstrate that 1) minimum wage increases can have a real economic impact and 2) just looking at job losses after the date the wage takes effect can miss most of this economic impact.
To this latter point, a lot of the impact is not necessarily job losses. We see lost investment, which perhaps means fewer jobs in the future but there is no way to measure that. We see price increases, which affects consumers and disposable income. And we see some job losses, but note that the job losses were 6 months before the law goes into effect.
We are left with a certainty that the minimum wage had a real economic effect but a suspicion that, at least in this case, that effect would not be measured.
By the way, there may also be a lesson here for those who believe that the entire problem in the economy is one of not enough aggregate demand. In the last month I walked away from a million dollars a year of demand, because it was impossible to serve profitably, in large part due to regulatory issues.