A local employee union is attempting to mandate that the City of Anaheim raise the minimum wage to $18 an hour with incremental increases over the next few years, the highest in the nation. The Disneyland Resort is the primary target of this initiative but if implemented would affect all hospitality businesses, including restaurants and other small businesses within or adjacent to the resort district of the City of Anaheim.
Economics is at the heart of this issue. Let’s run the numbers. The current Federal minimum wage is $7.25 an hour. California’s minimum wage is $11.00 an hour which is 41% higher than the Federal minimum. The sponsors of this initiative want the Anaheim minimum wage to increase to $18.00 an hour or a 48% increase over California’s minimum wage for an overall increase of 89% over the Federal wage.
All business owners within the city would be taking on an increased payroll burden of 48%. In order to remain solvent the business would have to do one of the following. They would have to absorb the cost of the increase. Pass the amount of increase on to the consumer or eliminate the number of employees in order to decrease their payroll. At some point the business would suffer because they cannot compete with similar businesses located outside the city limits. Consumers would be paying upward to 50% more for products and services purchased from businesses within the City of Anaheim. Motels, hotels, restaurants, gas stations, gift shops, sporting events etc. would be impacted.
The cities of San Francisco and Seattle have experimented already with an increase in the minimum wage to $15 an hour with disastrous results. Entry level, non-skilled jobs were eliminated as many business chose to either relocate or close altogether. An employer who is forced to pay the inflated wage is going to opt for a more experienced and skilled individual over one who has lesser skills or no training whatsoever. The supporters of the initiative will state that an increase of this magnitude will have no effect on the price of consumer products. These are the same individuals who scream that California and the US agricultural industry need to retain thousands and thousands of low paid farm laborers in order to keep the prices of our oranges, grapes, avocados etc. from skyrocketing. The old “No Americans will do that job” battle cry.
Fairness is another battle cry from the supporters of this initiative. If the minimum wage is raised by 48% will current employees who are earning more than $18 per hour get a pay increase of that same amount? Will people on fixed incomes get a cost of living increase in their Social Security or pension checks in order to be able to afford this increase? I think you know the answer to those questions.
I believe, and history has shown, that arbitrarily inflating wages that cannot be sustained is bad for the economy and society. Doing so will diminish the work force and eliminate many businesses. Employers should treat their employees fairly and compensate the employee based on the individual’s knowledge, experience and skill. The employee should continue to strive in improving themselves in order to remain a valuable entity to their employer. Entitlement should not factor into setting wages nor should government be forced into doing the dirty work.
I urge all residents of Anaheim, and the surrounding communities, to keep this initiative off the ballot. It harms the people its intended to serve and will cost the city needed jobs and revenue for city services.