So California has just raised its minimum wage to be $15/hr in a couple of years. And already small biz owners are really concerned that the risk they took (and in many cases, HUGE risks, relatively speaking) will be wiped out by Government fiat (as opposed to real competition in the marketplace – after all, who can compete against a taxpayer fueled Leviathan?). And I do ask (even though I’m almost a century late) “WHY should government, driving by the Statist politicians, unions, and special interests, be interfering with the relationship between an employer and employee? After all, how is that any different than their mantra that no one should get in between you and your doctor?
Oh right – Obamacare. Sorry – lost my head there for a moment. While we are about to see some $15/hr fast food employees that are not economically worth that, we are also going to see a whole lot of those workers learn that the real minimum wage is $0/hr. And this story shows that even manufacturing jobs are not immune to this Government distortion in California (reformatted, emphasis mine):
Ahead of $15 minimum wage, 1 company leaves California for Texas
California’s $15 minimum wage does not go into effect until 2022, but one Santa Fe Springs-based manufacturing company has already decided to leave the state this year to take advantage of cheaper wages in Texas. “This is the last thing I want to do, but I don’t see that I have a choice,” said Fred Donnelly, president of California Composites, which makes parts for commercial airplanes. Donnelly, who has lived in California for almost seven decades, said he is moving his company out of California because of its “dysfunctional” worker’s compensation system, excessive state and local regulations and the forthcoming $15 minimum wage.
He says his employees make on average a little less than $15 an hour now – so he would have to give them all a big raise. He said he can’t afford to do that because his company is locked into long-term contracts with customers where the price is already set. “If I were to stay, it would probably make me a nonprofit within a couple years or so,” said Donnelly.
That’s being PC -he really means he’d be out of business. Kaput. And all of his employees would be $0/hr employees. Just because some politicians think that they are immune to the basic laws of economics – and that the private sector will just sit and take it.
Donnelly only expects about 15 of his 45 workers to make the move to Fort Worth. “They’re distressed about it,” he said. “A number have volunteered to go, but for others it’s not possible.” Donnelly said he plans to hire an additional 30-35 workers in Fort Worth once the company relocates starting in June and renames itself Calcomp.
And gee – look what happens when Government is assistive and not adversarial; when it wants you to succeed instead of treating you like a serf ATM machine: shut up and pay up:
He says he has been treated much more warmly by Fort Worth than government agencies in California. “They are actively working with us to provide everything we need to provide a manufacturing business there,” Donnelly said. “They seem to want manufacturing companies, as opposed to my take in California is, they would just assume not have me here, especially as a manufacturing company.” Donnelly expects other businesses to relocate too, given the increasingly high cost of doing business in California. “I’ve talked to some of our suppliers and other people in the business – in particular owners that are in small manufacturing – and they’re thinking about it.”
You don’t think that Government regulation of businesses doesn’t make a difference? That thinking that a State can regulate businesses with no downside to its economy? Dig this:
Airplane parts manufacturers have been leaving Southern California steadily over the years. Employment is down 40 percent since 2004, according to the Los Angeles Economic Development Corporation. Employment in higher-tech aerospace manufacturing was up 64 percent over the same period.
So others are moving. It shows that when a State so hates its companies, they will leave. The company I work for did exactly that – they left CA with a lot of high paying jobs – and went to Texas. Saved a lot of money in taxes, the workers save a lot of money in taxes, a lower cost of living, and far less traffic. And Texas has an economy that has now diversified itself from the boom / busts of the energy industry.
So States that think they have totally captured their companies and then lace all kinds of government netting to tie them down are learning some lessons. Oh, I don’t think California has really learned its lesson yet – Silicon Valley and Hollywood mask a lot this migration. However, having a highly Progressive tax system there, it won’t take many of those at the top end to leave before it begins to have its budget impact and they start to go “Uh-oh”.
But by then, it may be too late. But until then, watching this from the opposite coast, makes for interesting reading about the smug Progressives who think they are Masters of the Universe(s) – and can’t see the impending storm coming right at them.