California’s plan to raise the minimum wage to $15 per hour could cause the state to lose 400,000 jobs, according to a study released Thursday.
The study from the Employment Policies Institute (EPI) conducted an analysis of employment trends from 1990 through 2017 and found that California’s minimum wage hike could trigger the loss of 400,000 private-sector jobs by the time it goes into effect in 2022.
“The job loss is not spread evenly. Slightly more than one-half of the job loss is projected to be in two industries: accommodation and food services, and retail trade,” the report states.
The EPI study found that for every ten percent minimum wage increase the state passed, employment declined two percent. California’s minimum wage increase had a greater impact on lower-income workers, where employment among that group decreased five percent.
The projected job losses represented 4.1 percent of employment in the 31 California counties in this study.
California Gov. Jerry Brown, a Democrat, signed a $15 minimum wage law in April 2016 that would increase the minimum wage in the state to $15 an hour by 2022.
Under the law, the minimum wage would increase to $11 per hour from $10.50 per hour by January 1, 2018, for businesses employing 26 or more people. After 2018, the minimum wage would increase $1 per year until it reaches $15 per hour in 2022.
The $15 minimum wage would go into effect for businesses with 25 or fewer employees by 2023.
Even though the minimum wage increase is not fully implemented, businesses and workers are already seeing job losses as a result of these policies.
Just more than a week after Brown signed the minimum wage hike into law, the clothing company American Apparel laid off 500 workers and announced that manufacturing of more complex pieces of clothing could be outsourced to third-party contractors.