Business & Economy

Will California really lose 700,000 jobs because of $15 minimum wage?

Florida Governor Rick Scott (second from the right) speaks on a panel at the 2016 Milken Global Conference.
Florida Governor Rick Scott (second from the right) speaks on a panel at the 2016 Milken Global Conference.
Ben Bergman/KPCC

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Republican governors often come to California to try to lure companies away to their state, but now they have a new talking point; the state's $15 minimum wage that will take effect in 2022, which means the cost of labor in California will be significantly higher.

“The estimates are 700,000 people will lose their job over this,” Florida Governor Rick Scott told KPCC Monday before he spoke on a panel at the Milken Institute Global Conference in Beverly Hills. 

The same figure has been cited in an ad now running on Southern California radio called “Keep the Sunshine, Lose the Taxes.” The ad was made by a group called Enterprise Florida, Inc., a public-private partnership in Florida, which Scott heads up.

In the ad, a woman's voice says "700,000 – that’s how many California jobs will be lost thanks to the politicians raising the minimum wage." It continues, "Economists predict it will be too much for companies to afford, so they will do layoffs, replace people with computer kiosks and robots."

The 700,000 figure comes from a brief posting from the American Action Forum, which describes itself as a nonprofit that provides ideas for the "center right," by promoting free-market solutions and smaller government.

Ken Jacobs, an economist at the University of California, Berkeley, who has studied the minimum wage extensively, took issue with that statistic.

“The employment effect in the report come from cherry picking a single study with estimates that are way outside the mainstream of research on the minimum wage,” said Jacobs. "The most credible research studies to date have found no measurable effect of the minimum wage on employment.”

In 2014, more than 600 economists wrote a letter to President Obama and congressional leaders, urging them to increase the federal minimum wage, and they refuted any connection to job losses.

"In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market," the economists wrote.

Governor Scott wasn’t able to name any businesses he’s convinced to move to Florida on this trip, but he said he’s working on it.

"I'm talking to companies all day today," Scott said, without naming names. 

Scott also visited Los Angeles last year and came away with little to show for it.

It's rare for businesses to move to other states, according to a 2010 study from the Public Policy Institute of California. While it has certainly happened in recent years (for example when Toyota announced it was moving from Torrance to Texas back in 2014) the state has enjoyed strong job growth for consecutive years.

"In fact, relocation accounts for a smaller share of job gains and losses in California than in most other states, in part because most California businesses lie far from the border of neighboring states," the Pew study said.

California Governor Jerry Brown responded to Scott's visit Monday with a letter mocking Scott's visit. 

"I'm writing to welcome you back to California – a state that in the last year has added more jobs than Florida and Texas combined," Brown wrote. "If you're truly serious about Florida's economic well-being, it's time to stop the political stunts and start doing something about climate change."