An unfortunate fact of life in California is that every year, new attacks on business emerge from the State Capitol. There is plenty of evidence that demonstrates the damage this mentality has on our state and its working class. We have been recognized as the worst state for business for ten consecutive years by CEO Magazine and maintain one of the highest unemployment rates in the nation. United Way of California recently said that 31% of the state’s households struggle each month to meet basic needs. Yet, we see no change in Democrats’ willingness to impose new burdens on businesses.
In fact, new laws that negatively affect our job climate are so common that the California Chamber of Commerce releases an annual list of “Job Killer” proposals, which highlights the worst bills making their way through the Legislature.
Two bills that would increase energy costs and the minimum wage are particularly concerning for me as a small business owner who has spent years dealing with the impact of newly passed laws that make it harder to run my business.
Affordable energy is critical for a growing economy because its cost affects just about every business and consumer. Despite the fact Californians already pay the nation’s highest gas prices at $1 more per gallon than the national average (according to triple AAA on 7/29), and have some of the highest electricity rates, there is legislation dangerously close to becoming law that will only drive prices higher.
The legislation, known as Senate Bill 350, would require California by 2030 to reduce its gasoline use by 50% and would mandate that 50% of electricity supplies come from renewable sources. If we think costs are high now, these new mandates would add billions in costs to consumers per year for gas and electricity.
In addition to squeezing families’ budgets, businesses would be some of the hardest hit. Industries like manufacturing, construction and countless others that provide good-paying middle class jobs will be placed at a huge competitive disadvantage with other states. This will continue to drive thousands of jobs out of the state and many others will be lost or diverted to other states with lower costs.
It is unrealistic to think that we can reduce gasoline consumption by 50% in the next 15 years. There is no viable technology to replace gasoline-fueled cars on a large scale in that timeframe. The only feasible approach is to make driving prohibitively expensive for the working and middle class. The damage this proposed law would do to California’s economy would be catastrophic, yet the State Legislature seems undeterred and is close to sending the bill to Governor Brown for final approval.
If rising energy costs were not daunting enough, a new minimum wage increase has also been proposed. Senate Bill 3 would increase the minimum wage by another $3 over the next two years despite an increase to $10 per hour that’s set to begin in 2016.
Despite these efforts to theoretically help low-income workers, countless studies have shown that increasing the minimum wage often results in job losses and an increase in prices to offset the impact of wage increases. State leaders must begin to understand that the government cannot regulate its way to prosperity, as laws like these reduce the number of workers businesses can afford to hire in addition to raising costs for consumers. If California wants to reduce its high rate of poverty, the best way is to make sure every worker can find a good-paying job. Making energy more expensive and squeezing businesses with minimum wage increases among countless other government-imposed burdens will surely not help us reach this goal.