California Raised Minimum Precisely To Kill Minimum Wage Jobs

I began thinking about this a few weeks ago when every other tweet and article seemed to be about the issue of minimum wage and job-loss due to automation.

This is a well-covered issue and nearly all unintended consequences and unforeseen by-products have been thoroughly discussed. The way I see it, a state-wide $15 minimum wage can only end in fewer jobs and the state of California knows it. Essentially, some workers will get a raise but many will see their pay fall to $0. In the future, most of these jobs will not be available to those seeking them. Machines will be the job thieves of the next few decades.

Kevin Moloney/Getty Images

In this picture, I count 4 lost jobs per shift. A quick search will show that implementing these machines could cost a franchise between $120-$160k. A full-time worker making (the new) minimum wage will gross approximately $29,000/year, not taking into account payroll taxes, HR claims, etc. Given these preliminary numbers, it’s not hard for a franchise owner or corporation (in CA or NY) to take a closer look, decide to “upgrade” and potentially break even on the new technology before 2020 when the law will be in full force.

I believe minimum wage was raised to accelerate this transition.

Following the premise that higher wages equal fewer minimum wage jobs, the conclusion we reach is that more people will be unemployed and a surplus of time will be created among these same people.

This surplus of time creates an opportunity. States enacting these laws are creating a vehicle which can be used to elevate the level of education, the skills acquired, and means to adapt to a changing workforce by indirectly eliminating a meaningful percentage of minimum wage jobs. This outcome is in everyone’s best interest, especially the state’s.

Here’s why:

1. Optimistically, young people will stay in school longer, get college degrees, and go on to earn higher salaries which means more taxable income.
2. It could create more entrepreneurs who will create better jobs for a more educated and skilled workforce.
3. If 1 and 2 happen, it reduces the number of people on welfare.

We are in a position where we cannot allow the opposite of all of the above to happen.

It behooves our elected officials and communities to ensure we create the means to adapt to these changes. We need friendlier legislation to small business, education needs to become more affordable and accessible(and better, but that’s for another day), and finally, our citizens need to feel a sense of urgency.

I believe this law was passed with full knowledge of how the business community would respond and now it is up to each individual and the state to ensure that we continue making this transition towards a higher earning, more educated work force.

What do you think will happen when minimum wage is $15/hour?

UPDATE: 5/14/16

Wendy’s is putting self-serve kiosks in all locations in response to rising minimum wages laws.