Minimum Wage Increases Kick In; Start Watching for Winners and Losers

Minimum Wage Increases Kick In; Start Watching for Winners and Losers - Hit & Run : Reason.com
"2017 ushered in minimum wage increases in 19 states, some more reasonable than others, and some of which are just the start of a series of massive jumps.

There will undoubtedly be "winners" and "losers" in these government-ordered increases, those who see actual raises vs. those who find jobs harder and harder to come by. 
And it's going to be a challenge to evaluate what truly happened. 
We are seeing increased automation of low-level low-skilled service jobs. 
Jacking up the minimum wage is going to increase the speed by which it happens, but it would be foolish to think it wouldn't eventually come regardless.

Houman Salem, who owns a small fashion house in the San Fernando Valley out in Los Angeles, took to the op-ed pages of the Los Angeles Times to explain why he's packing up and moving out of California. Los Angeles famously decided to eventually jack up its minimum wages to $15 per hour and the entire state followed suit.

Salem's commentary is particularly interesting because he writes about wages as a piece of a larger regulatory burden that affects his ability to do business. He explains that the minimum wage increase is the straw that broke the camel's back because of how difficult California makes it to operate a business:

Here's what the math looks like: I pay my employees $10.50 an hour, plus productivity bonuses. In addition, I pay payroll taxes and one of the highest worker compensation rates in the state. Even still, I could likely absorb a minimum wage as high as $11.50 an hour. But a $15-an-hour wage for my employees translates into $18.90 in costs for me — or just under $40,000 a year per full-time employee.

When the $15 minimum wage is fully phased in, my company would be losing in excess of $200,000 a year (and far more if my workforce grows as anticipated). That may be a drop in the bucket for large corporations, but a small business cannot absorb such losses. I could try to charge more to offset that cost, but my customers —the companies that are looking for someone to produce their clothing line — wouldn't pay it. The result would be layoffs.

...Salem's warning is a reminder that many of the states with the highest minimum wages also have the most oppressive regulatory atmospheres to do business...