Welcome to the Machines. California’s new $15 minimum wage will accelerate automation. Ben Boychuk
California’s legislature on Thursday voted overwhelmingly to automate most of the Golden State’s fast-food restaurants, supermarkets, and mid-sized retail chains by 2022. No, that wasn’t the stated intent of Senate Bill 3, which sailed through the Assembly and Senate on mostly party-line votes and after little debate. But that will be the likely effect of the law, which is supposed to phase in a $15 hourly minimum wage starting in January.
Governor Jerry Brown is set to sign the bill in Los Angeles on Monday, one week to the day after unveiling the wage proposal at a Sacramento press event where he was surrounded by the Democratic elected leaders and labor union bosses who helped put it together. “I’m hoping that what happens in California will not stay in California, but spread all across the country,” Brown said. “It’s a matter of economic justice. It makes sense.” Assemblyman Sebastian Ridley-Thomas, a Los Angeles Democrat, echoed Brown during Thursday’s floor debate. “This is an argument about economic justice,” he said. “Justice is not something that can be negotiated or compromised.”
As it happens, the bill was the product of several months of extensive negotiation and compromise, almost all behind the scenes and without a word of input from California’s many industry lobbying groups, or from the leadership of the state’s largely irrelevant Republican Party. The law’s most immediate practical effect will be to end a pair of union-backed initiative drives that appeared headed for November’s general election ballot. The Service Employees International Union had been agitating for a measure that not only would have imposed the $15 minimum wage sooner, but would have done so without regard to the state’s fiscal outlook or economic circumstances. Brown, ever the cautious progressive, thought the union’s proposal went too far, too fast.
Under Brown’s plan, California’s hourly minimum wage would increase to $10.50 in 2017 for businesses with 26 or more employees, followed by $11 in 2018, and another dollar each year, arriving at the magic $15 in 2022. After that, the law would let the wage continue to rise with inflation. Smaller businesses would have an extra year to implement the annual raises. Brown insisted on a provision allowing the governor temporarily to suspend the wage hikes in the event of an economic downturn or a large state budget deficit. But the legislation provides a limited window for action: the governor must make his decision in September; the wage hike takes effect the following January. And, the truth is, these emergency provisions are almost always for show. AB 32—California’s ill-named Global Warming Solutions Act of 2006—included a similar escape hatch, which neither then-governor Arnold Schwarzenegger nor Brown ever considered using during the recession, or during any one of the state’s multibillion-dollar budget crises. They opted instead for budget gimmickry and tax increases. One result? California’s high-skill, high-wage manufacturing sector has never recovered. In February, it experienced its worst contraction since 2009.