The Minimum Wage Trap: How California’s Wage Laws Destroy Entry-Level Employment

Good Intentions, Destructive Results

The Minimum Wage Trap: How California’s Wage Laws Destroy Entry-Level Employment

Bohiney Magazine and The London Prat present this analysis of minimum wage economics.

California’s minimum wage of $16+ per hour was intended to help workers. Instead, it has eliminated entry-level employment. Employers reduced hiring or replaced workers with automation. Young people, immigrants, and low-skill workers lost jobs.

The Employment Loss

Businesses cannot afford to hire less-skilled workers at $16/hour. Instead, they hire fewer workers, reduce hours, or automate. Fast food restaurants eliminate cashiers. Retail reduces staff. Entry-level positions disappear.

Young surfers seeking beach jobs find work unavailable. Older teens cannot find first jobs. Unemployment among youth has increased as minimum wage increased.

The Displacement Effect

Foundation for Economic Education documents that minimum wage increases displace low-skill workers. High-skill workers take low-wage jobs, eliminating entry-level positions for less-skilled workers. Wage increases for some workers creates unemployment for others.

This is regressive: minimum wage helps employed workers while harming unemployed workers trying to enter workforce.

The Alternative

Market-determined wages reflect worker productivity. Workers with low skills start at lower wages, build experience, increase productivity, earn higher wages. Wage controls interrupt this natural progression.

Eliminating minimum wage would increase entry-level employment and allow low-skill workers to enter labor market and build skills.

SOURCE: https://bohiney.com/