"Folks who work full time shouldn't have to live in poverty," Gloria said.
I don't think anyone works full time anymore. Obamacare took care of that. Plus, there are dozens of means-tested welfare programs available to the working poor. Earned Income Tax Credit. Section Eight housing allowance. SNAP. WIC. Free healthcare under Medi-Cal, and they get discounts on their utilities and telephone.
The "unintended" consequence of the state mandating a pay raise for this population, as seen in Seattle, is that these workers will ask to work fewer hours. So they can continue to qualify for their welfare entitlements! Restaurant employment in Seattle has declined since their minimum wage increase.
For balance, KPBS reached out to the San Diego Chamber of Commerce's Sean Karafin. He remarked that businesses will respond by "cutting benefits, cutting hours, or even cutting jobs."
What did Todd Gloria have to say to local businesses? "Well you know I met with and spoke to many small business owners when we crafted our city proposal."
It's possible that Gloria spoke to employers, but he doesn't understand them. Gloria has never worked in the private sector and had to worry about making payroll. Gloria mentioned how the state minimum wage went up in January and the unemployment rate went down. The reason the unemployment rate is so low is because the labor participation rate is so low. There is no real wage growth, which usually occurs at the tail end of an expansion.
What does this mean? Perhaps it means that California's next recession will be like the last one. California will experience more job losses than the national average and it will take longer for those jobs to come back.
One question Todd Gloria never gets asked, is what will raising the price of labor do to ease the tens of millions of Californians living in poverty?
Increasing the minimum wage is basically imposing a tax on employers. Take a taco shop with $100,000 in revenue. Their labor cost is probably around 40%, or $40,000. If you raise the minimum wage by fifty percent, then the taco shop must spend $60,000 in labor. But since they need to keep labor costs around 40%, if they don't cut staff, they will have to raise prices enough to make $150,000 in revenue.
Gloria told KPBS that the city's minimum wage hike is expected to "inject a quarter-billion dollars into the local economy." Todd Gloria counts rising prices as increasing demand. But does Gloria's forecasting factor in any layoffs or slower hiring in his model? Gloria ridicules those who don't see this magic increase in consumption. It is "never considered by those who reflexively oppose minimum wage increases."
It's interesting that opposition to minimum wage increases is portrayed as reflexive. Meaning, there is no thought involved, no principles involved, it's just an unconscious reaction.
Yes, Gloria, workers need higher wages because of increasing rents and utilities. Would rents be so high if there was less regulation on new construction? And why are utilities going up when energy prices are so low? Would that have anything to do with mandated renewable energy being so expensive?
Employers don't get a seat at the table. Low-income workers are sold a bill of goods that will come due next recession. They are subsidized so heavily that it makes rational sense to limit their income to under fifteen thousand a year.
And that kid who just wants a little spending money and on-the-job training will find no entry level jobs for them.
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