Commentary: Minimum-wage proposal could increase unemployment, hurt economy

California is still recovering from an economic recession. Now is the worst time to make it harder to hire new employees. Current legislation would do just that.

Senate Bill 3, by Sens. Mark Leno (D-San Francisco) and Connie Leyva (D-Chino), would not only increase the minimum wage to an all-time high of $13 by 2017, but would then take the issue out of debate and discussion by the Legislature by adjusting it upward, as triggered by increases in the Consumer Price Index (a frequently used measure of inflation).

An increase of this magnitude has not been contemplated in previous studies of the minimum wage or its impact on the economy.

I, like many Californians, earned minimum wage in my first job as a teenager. As an adult, I recognize the risks my first employer took by offering me my first job when I had no skills or experience. The skills and work habits I learned as a teenager helped me in each job I have held and significantly molded me into who I am today.

It appears these days that fewer people are working during their teenage years because it is too expensive to hire them. What is the consequence of so many young people not getting work experience before they graduate from high school or college?

The upward pressure on the minimum wage prices out many young people from employment, because there is no motivation to hire someone for his or her first job when it would cost as much as hiring someone with more experience.

I still believe that America is a land of opportunity where individuals can work toward the goal of a better life for themselves and their families. This automatic minimum-wage increase would have detrimental effects on the private and public sectors.

Many think that the only jobs impacted by a minimum-wage increase are minimum-wage jobs. However, there would be a series of impacts because of union contracts and state law.

The governor’s Department of Finance has outlined a dozen departments and programs whose personnel costs would be increased by this bill. They suggest that the costs to state agencies would increase by about $5 billion over the next three years if SB 3 is passed.

That would be an almost $400 million increase this year, almost $1 billion next year, and $3.4 billion in the year after. Half of that $5 billion would come from the general fund to pay for those increased salaries.

The private sector is also impacted beyond those with minimum-wage jobs because so many private unions have contracted wages based on the minimum wage. That means that when the minimum wage increases, those working under the contracts of these unions see their wages go up.

In addition, the increased costs from these contracts will lead to employee layoffs. So while some employees may benefit from a higher wage, a much higher number of employees will have to be let go.

I believe this bill will hurt the California economy in perpetuity. I encourage voters to reach out to state elected officials and the governor and voice their opinions on SB 3.

We need to work on growing our economy so that all of California benefits.

Assemblyman MATTHEW HARPER serves Assembly District 74, which includes Costa Mesa, Newport Beach, Huntington Beach, Irvine, Laguna Beach and Laguna Woods.