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Would a $12 Minimum Wage in California Hurt Poor People?

David Callahan

Next November, Californians will decide whether to raise the state's minimum wage to $12 an hour -- which would be the highest level of any state and not so far from the $15 an hour goal often mentioned by labor activists.

Surprisingly, this proposal is getting on the ballot courtesy of a wealthy Californian businessman Ron Unz. (Yes, the same Ron Unz who earlier led a campaign to eliminate bilingual education in California.) Why does Unz want such a big hike? One reason is that he's a conservative who doesn't think that corporations should be leeching off taxpayers by paying workers so little money that they end up on public assistance -- a subsidy we've been talking up here for months. Unz told the New York Times:

“There are so many very low-wage workers, and we pay for huge social welfare programs for them,” he said in an interview. “This would save something on the order of tens of billions of dollars. Doesn’t it make more sense for employers to pay their workers than the government?”
But Unz's other motive, apparently, is to curb illegal immigration. Unz has argued that California's sweatshops -- which pull in lots of poor illegal immigrants -- would be devastated by a higher minimum wage. Unz wrote in 2011:
The automatic rejoinder to proposals for hiking the minimum wage is that “jobs will be lost.” But in today’s America a huge fraction of jobs at or near the minimum wage are held by immigrants, often illegal ones. Eliminating those jobs is a central goal of the plan, a feature not a bug.
Bruce Barlett explores the interesting history in today's Times of using the minimum wage to drive undesirables out of the labor market. But whatever Unz's motives, unions are sure to get behind the Unz measure.
 
However, if Unz is right -- if a higher minimum wage does make these jobs more desirable to a higher caliber worker -- that raises important questions about how the least skilled workers will fare if the ballot initiative succeeds. If college grads are suddenly lining up for jobs flipping burgers because they pay a lot more, where does that leave high school dropouts? Not in a good place perhaps. 
 
On the other hand, in a strong economy, college grads won't be lining up for these jobs. And one way to get the economy going is to stimulate demand by putting more money in the pockets of low-wage workers.