Conversely, the white paper highlights that one of the anticipated issues stemming from a hike in the minimum wage is the possibility of job losses.
Since labor is a significant expense of doing company, a number of economists and business leaders contend that companies will eventually have to reduce employment in order to remain profitable.
Los Angeles-based Beacon Economics has entered the war, releasing a new analysis that suggests that California’s recent increases to the minimum wage may be the primary cause of the state’s jobless rate rising to the highest in the country.
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As of January 1, 2024, all employers in California are required to pay a minimum wage of $16 per hour. On April 1, fast-food companies were mandated to pay a minimum wage of $20 per hour; on June 1, healthcare facilities had to pay a higher salary, ranging from $18 to $23.
The analysis highlights that the present unemployment effect is particularly harmful to some of California’s most vulnerable citizens: its kids. Of the state’s newly unemployed over the previous year and a half, 90% are under the age of 35, with teenagers being the hardest hit demographic.
Co-author of the new report and founding partner of Beacon Economics Christopher Thornberg stated, “This loss of youth work opportunity carries with it real long-run harm.”
“Younger workers are not only deprived of an essential source of income, but they are also deprived of work experience, which has been scientifically demonstrated to increase the likelihood of long-term success.”
The research concedes that policies are necessary to ease the burden on low-income households in expensive California, but it contends that these measures fall short of expectations and, taken too far, can seriously affect some of the state’s most vulnerable citizens.
According to the authors, better policy alternatives include more training for lower-skilled adults, early childhood education, and the Earned Income Tax Credit.