California Gov. Signs Minimum Wage Hike: Admits It "Doesn’t Make Economic Sense" As Locals Flee For Texas

Tyler Durden's picture

As we discussed previously states such as California are saying to hell with economics in their efforts to appease their voting base. Yesterday, both New York and California signed legislation to raise the minimum wage to $15 an hour. New York will phase in the $6 an hour increase over three years, and California will phase in their $5 an hour increase over the next six years.

The irony of the situation, which will most certainly go under reported, is that even California’s Governor Brown knows that it’s not the right decision to make economically. Regarding the actual economic impact, California’s Governor Brown was quoted as saying that "economically, minimum wages may not make sense."

This is clear.

As we noted before, it is even clear to the locals businesses owners like the Marmalade Café which has seven locations. "First, you have to raise prices, otherwise you'll be out of business," owner Selwyn Yosslowitz told the Times. So higher prices for diners. That's "first." We imagine you can guess what's "second." "We will try to re-engineer the labor force," Yosslowitz said. "Maybe try to reduce the number of bus boys and ask servers to bus tables." In other words: "Maybe" we'll fire some folks and the people who keep their jobs will have to be more efficient. 

Yosslowitz also worries about the dynamic we've discussed over the course of documenting Wal-Mart's experience with wage hikes: namely that you have to preserve the wage hierarchy. You can't hike wages for the lowest paid workers and then expect those further up the pay ladder to be satisfied with what they made before. "The other big worry [is] that employees already making $15 an hour will demand a raise as well", Yosslowitz said. "It's a chain reaction."

Indeed, the problems with haphazard wage hikes are now readily apparent even to those who stand to benefit the most from the new legislation. Take Miguel Sanchez of Highland Park who works two jobs making tortillas. "It's good for workers, but I imagine this is not going to be good news for employers and small businesses," he says. "Will the cost of things go up?” he asks. “Are employers going to cut back hours because they can't afford it? I worry."

So even tortilla makers get it, but like Wal-Mart, "some folks" will need to actually see the layoffs before they'll concede that you can't cheat economic truisms and that's really a shame for the people who will lose their jobs in the meantime.

* * *

But back to CA Governor Brown who after that brief epipharny he quickly forgot about reality, and told the truth about why he was signing the legislation.

"Morally and socially and politically, they (minimum wages) make every sense because it binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way."

Ah yes, as long as you and your political party get votes in the upcoming elections, the actual impact on the people you claim to represent and care about is irrelevant – noted.

After all, this is what seems to get votes, and as we said previously: “Of course how much you earn and even whether or not you have a job at all only matters to the extent that "shit" costs money, which is why it might be a good idea to just go ahead and vote for "A Future To Believe In"

 

However, in perhaps the most poetic cause and effect scenario, once the people realize that items such as minimum wage actually do nothing but hurt their chances for gaining employment or starting a small business, they leave the state in droves.

Based on a study of IRS tax returns, over 250,000 California residents moved out of the state between 2013-2014.

It’s no better in the other "minimum wage hiking state", New York, where United Van Lines data shows that out of all of their relocation contracts, New York comes in second for "high outbound."

Now that higher minimum wages are a reality, we’re certain these numbers won’t get any better in future years.

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truthalwayswinsout's picture

Not only will a large number of people be fired but salaries for everyone upstream will have to double.

Of course, that is only for companies that cannot simply move out of state. 

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) truthalwayswinsout Apr 5, 2016 11:04 AM

I really like robots.  They are polite no matter my mood.  They speak English (Ebonics free English!).  They don't call me names for not thinking that their burger flipping job should have the same (or better) pay as a rocket scientist (yes, I am a rocket scientist).  And they do their jobs.

Thank you Jerry Brown!!!

Haus-Targaryen's picture

Minimum wage only appeals to stupid people.  

The_Dude's picture

And those that employ illegals,... They never worried about minimum wage laws in the first place.

Stuck on Zero's picture

A number of small business people I know hardly make $15/hr themselves. Now what are they going to do? Earn less? 

UnpatrioticHoarder's picture

A higher minimum wage drives higher productivity (i.e. value per unit of labor). A higher productivity economy is good.

Haus-Targaryen's picture

Define Value, and what "it" is compared against. 

UnpatrioticHoarder's picture

the value of the output of the unit of labor, typically 1 hour of labor

UnpatrioticHoarder's picture

the robots are coming for your jobs anyhow, best prepare for it sooner rather than later

Bumpo's picture

Jerry Brown sounds like voting for Trump might not be a bad idea

zeronetwork's picture

$15 is good enough for a bug infested roof and a twice a day greasy food for a person. Basically things haven't changed since slavery. Before master used to provide these now you find food and roof and they give you $15 an hour.

daveO's picture

...And get taxed by the slave master state every step of the way.

O'Care should have woken up the dumbest sheeple-slaves. Yet, some are still voting for snake oil salesman Sanders, who is promising even more slavery. Sheeple-slaves didn't get to vote way back then. Hence, things were better.

MagicHandPuppet's picture

Hahaha... California communists are gonna give Venezuela a run for their money!  This should be entertaining!

38BWD22's picture

 

 

The scary thing (if you in California) is that the voters elected these clowns.

ejmoosa's picture

...and more than once for the same clowns.

techpriest's picture

Because the sane and semi-sane people left.

I'd rather we keep the remainder *in* California. I don't want to see that bankrupt culture coming to Texas.

NidStyles's picture

Good lord, people still using the unit of labor argument nearly 200 years after it was proven to be complete and utter fucking nonsense.

0b1knob's picture

< Fleeing taxes into Texas.

< Fleeing frying pan into the fire.

TahoeBilly2012's picture

I see, so a 50% wage increase over the coming 5 years as global deflation rages on....I think I get it.

Son of Loki's picture

I don't see people from Irvine or Laguna Niguel moving to Texas. When I was visiting [Viking] relatives in Laguna, most neighbors were either [very wealthy] Chinese or Iranians [aka, Persians] and none of they had/has ANY desire to relocate from that paradise to Texas.

enforcer92677's picture

My family and I will be relocating from Laguna Niguel to south of Dallas in the next 2 years.  A lot of the folks that are leaving have lived here for a very long time (decades) or more than 1 generation.  The folks that love it here or plan to stay are making so much money they don't care.  But us working middle class folk will disappear from CA over the coming years.  It will be just the poor and the rich with no one in between.

McCormick No. 9's picture

Wow! Now, I can make 15 dollars an hour!

Huh? I have to get a job first?

Hey! Where's my EBT card????

StychoKiller's picture

$15/hr * 40hrs/wk * 52 wks < $1,000,000 Shotgun shack in kalifornia.

All Risk No Reward's picture

The Debt-Money Monopolist dElites aren't trying to help the poor by raising minimum wages, rather, they are trying to destroy small businesses not tied to government.

"Every man has two reasons for doing something: The good reason and the real reason."
~Debt-Money Monopolist JP Morgan

Nikki Alexis's picture

Look at all the smiling, liberal DOLTS behind Brown.  Pathetic.

buzzkillb's picture

Unit of labor = 1
Business no longer there = 0

1 * 0 = peddling fiction 

Herd Redirection Committee's picture

What's the US minimum wage, in silver/gold again?

 

zeronetwork's picture

Minimum wage hike will be an excuse for an unavoidable inflation on the way.

All Risk No Reward's picture

No way... not gonna happen anytime soon.

The hike is the bigs tied to government waging war on the small businesses not tied to government.

Any benefit to any ordinary person is unavoidable "collateral damage" to the agenda of the Debt-Money Monopolists.

economicmorphine's picture

The really scary thing is that these voters are like cockroaches and once the light is turned on them and they figure out they screwed up, they'll leave California in search of other states to wreck.

Theosebes Goodfellow's picture

My lady's house goes on the market here in SoCal the 1st of May. (Ironic, huh.) Hopefully the market will hold together long enough for it to sell. Then, it's Arizona for us. Came here in '78, but it's time to go.

OldPhart's picture

Bear in mind that the 'voters' are heavily infesting the shore lines of the State.  Go fifty miles inland and it changes dramatically.

jus_lite_reading's picture

Yes. The irony is that they LOVE to stay on the slave plantation! Keep voting Democrat and Liberal! Your plantation massters love you too! LMAO

Mr. Universe's picture

Why shouldn't they? You can get a drivers license, free room and board, education, health care, taxi service, just keep voting for those Dems and all the Bond measures too. Everything is awesome, and if you buy that I've got a high speed railway going to nowhere that I'm selling cheap. Centrally located and only two times over budget so far, nothing has been built and if it is , the technology is ancient. So you got that going for you, which is nice.  Not enough boondoggles for the public good?  How about a 60 billion dollar Delta water project including giant tunnels to ship more water South? I believe Disney is in negotiation to provide a Water Park along the route "Moonbeam Jerry Brown's Shakedown Splashdown Water Park and Co." Yes, let's all be taken for another ride on "Donald Duck's The Big Flush".

buzzkillb's picture

You forgot the vaporware electric cars, while rolling blackouts are coming soon this Summer to SoCal. What could go wrong?

Killtruck's picture

"A higher minimum wage drives higher productivity (i.e. value per unit of labor). A higher productivity economy is good."

REALLY?! it's THAT simple?! Holy shit, guys! Minimum wage is now $100 an hour for everyone! Productivity to the Mooooon, Alice!

...except you're dealing with people, you ignorant fucking cunt. You can't use your little Econ 101 textbook to solve their problems.   

tenpanhandle's picture

Actually what is being said is true.  After the layoffs, the people left working gotta cover the work that laid off employee(s) use to do.  Voila, higher productivity per unit of labor.

WOAR's picture

Have you ever heard of "the Law of Diminishing Returns?"

Lost My Shorts's picture

From what I heard, a fucking ignorant cunt can indeed make $100 per hour, and some of them are quite efficient.  What was your point?

Seriously, you gotta give Gov. Moonbeam some credit.  Raise your minimum wage; and all your unemployable riff-raff depart for Texas (please please please).  That sounds like a feature, not a bug.

California is way over-populated.  Send some to Texas, in particular the unskillable and whining Republicans who operate small businesses that depend on low-skilled riff raff who simultaneously soak up tax dollars for their Medical, Section 8, SNAP etc.  Here, let me buy you a map, and I will highlight the road to Texas.

29.5's picture

If moonbeam wants the unemployable to depart for other lands, all he needs to do is sign a bill that eliminates a minumum wage.

piliage's picture

California is way over-populated

Gosh, and I wonder why that is? Could it be an open door policy and a Faustian bargain to pack left-wing voter roles (Dems) and keep wages down (Repub)?

Perhaps?

The population of CA has doubled since I was born there. If you want to keep your Free Shit Army and force the real jobs to Nevada and Texas, good luck with that you moron.

Everytime I go back to California, I'm amazed at how much dumber and poorer it is.

 

 

Hal n back's picture

this all proves it is not what you say but how you say it, unless you are going against the mainstream which in that case what you say is going to be wrong and how you say it is going to be wrong

The Saint's picture

We are going to see California become the robot innovation capital of the U.S.  A lot of meanial jobs are going to be eliminated in this accelerated robot revolution. 

Thank you Jerry (Doesn't Have A Brain) Brown and the liberal California legislature.  All of the Mexicans in California may have to move out of state to find a job.

daveO's picture

If they move to Az or Tx, those states will turn Democrat too. The cancer spreads.

NidStyles's picture

Nope, we convert them here in AZ. They either stay near Mexico, or they convert.

nofluer's picture

Disagree. The key is the bottom line. Robots are expensive to maintain, expensive to program, and inflexible. Happy Jose the latino shelf stocker does not have those problems. ANd you can't "lay off" a robot. You buys your ticket and owns your robot... and pays property taxes on it.

ejmoosa's picture

Bingo!  Profits matter most.

And do not be fooled.  A government is fine with a robot.  You will pay sales taxes and property taxes on it.  It will consume power, so there are more taxes there, and they have no children and require no government services...

 

I used to be responsible for 4 IBM 3800 Laser Printers we leased.  The property taxes per year?  More than 30k.

Try and collect that from four minimum wage employees.

chubbar's picture

Yeah, well if it was my store I'd get the robots and pay the gov't withholding on 4 minimum wage employee's. Fuck the irs.

Miffed Microbiologist's picture

I think it depends on the complexity of the task it is performing. Our DNA/
RNA extractors and processors in the PCR lab break down frequently. If the patient serum is too viscous they can fault when a microbiologist hand pippetting can adjust. There environment must be perfect for them to operate smoothly which is difficult to achieve. Plus the maintenance is frequent.

I'm not sure if a burger making machine would be a simple process. Variation in tomato slices could be its downfall. I'm skeptical until I see one in action.

Miffed