California does not have one state economy. It is a collection of very different regional economies. So why should it have one minimum wage?
I’m not arguing with the concept of a minimum wage per se. Governments can and should set floors, even for labor markets. And I’m not sure the policy deserves all the attention it gets. The minimum wage’s promoters (it’s a tool against income inequality) and detractors (it costs people jobs) greatly exaggerate their claims. An appropriate minimum wage helps the people whose wages it raises, but doesn’t much alter economic reality.
But the minimum wage should fit the labor market and cost-of-living structures of the places where it’s in place. And the sort of minimum wage increases being talked about in California — $12, suggests Ron Unz; $15, suggests labor – don’t fit the whole state.
In lower-cost parts of Californias, $15 is a healthy wage, and probably too high. It’s possible to see employers in the San Joaquin Valley hiring significantly fewer people. But in a place like Silicon Valley, where the cost of housing is high and the unemployment rate is low, a $15 minimum wage may not be high enough.
Gov. Brown has talked often about letting the proper level of government make decisions. So why not do this with the minimum wage? Require counties or (even better) regional bodies (workforce boards? Government association) to establish minimum wages in their regions. You’d be likely to get minimum wages that fit each regional economy – and you’d focus more attention on the fact that our economies are regional.
Some might worry about a race to the bottom, with lower-wage parts of California stealing business from higher-wage areas. That’s unlikely to happen, but if it did, it would be a good thing. Since the inland places where wages are low are also the places with some of the highest unemployment rates in California.