Sunday, May 19, 2024


 IS THE APRIL  1ST NEW CALIFORNIA MINIMUM WAGE A POLITICAL BURNT OFFERNG, as the saying, "Be careful what you wish for, rings loudly, like a Sunday church bell harbinger of tribulations, heralding in a new time, day or era? Some may find themselves both benefits challenged and in the unemployment line. 

According to, Richard B. McKenzie,  professor of economics emeritus in the Merage Business School at the University of California, whose article, California Dreaming: The effects of California's "Fast Food" minimum wage, ' Faced with an above-market minimum wage, employers will be pressed to offset the money-wage hike with savings in labor costs that can come with replacement of covered workers by uncovered “non-human workers”—kiosk order takers and “burger bots.” These “tech workers” have an enviable market-wage advantage over their human competitors: Their legal California minimum wage is hard to beat: $0.00!'

Furthermore, McKenzie states that the rise in wages will mean losses of benefits, as many minimum-wage workers belong to multiple welfare programs, and cites agreeably with economist Craig Richardson by saying, this leaves ' covered minimum-wage workers facing higher marginal tax rates that are higher than the marginal income tax rates paid by the rich—even higher than 100 percent (which means that some covered minimum-wage California workers on welfare will lose more in benefits than the money they gain from the $4 increase in their minimum wage), an unseen consequence that hardly their incentives to continue working. '

Interestingly enough, McKenzie states, as all California companies were already, in order to operate effectively, forced to pay more than required, the anticipated impact of this new wage increase is likely to do more harm than good--- many minimum wage earners were already getting more than $16, or more before the new mandate went into effect.

In Conclusion, McKenzie hypothesizes a political motivation for the April 1st wage increase mandate as he said, ' Nevertheless, many state politicians continue to favor minimum wage increases. The reasons are not as clear as may be thought: “Politicians want to help poor workers” or “They have simply not appreciated the economics of the minimum wage in competitive markets.” These are not inconsequential points, but they seem too obvious and facile for my academic proclivities. I am inclined to believe that both proponents and opponents of minimum-wage hikes find the political forces behind minimum-wage hikes more powerful than the economic forces. But that is hardly a comfortable admission.'


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