KQED: UC Berkeley Study Predicts Positive Economic Benefit From California’s Minimum Wage Increases

By Sam Harnett
KQED, January 13, 2017

Are minimum wage increases good for the economy on the whole or bad? ...

A new study by UC Berkeley’s Institute for Research on Labor and Employment crunches the numbers for a bunch of these factors to try to predict the impacts of California’s rising minimum wage, which will gradually increase to $15 per hour over the next six years. The study’s authors came to two major conclusions: The state’s higher wages will lead to large increases in pay for workers, and they will not result in major job losses. ...

The study does back up what CEO Bill Phelps is noticing at his fast-food chain, Wetzel’s Pretzels.

Phelps says the minimum wage increases have been great for his business because low-wage workers have more money to spend to buy pretzels. Sure, Phelps says the company has increased prices slightly, but he says any fall in demand for his products because of rising prices has been far outweighed by the extra business.

(You can read more here about what the CEO and franchise owners of Wetzel’s Pretzels are seeing happen at their stores.)

[Study co-author Michael] Reich said more than 5 million Californians will receive a raise through the state’s incremental increases in the minimum wage. ... Reich and his colleagues calculated that price increases will generally be small and not have a major impact on sales. “A 99-cent burger might go up by a nickel if the minimum wage goes up from $10 to $15 over a five- or six-year period,” Reich said.

This is the kind of small price increase that’s happening at Wetzel’s Pretzels, and CEO Bill Phelps says it has not hampered the sales bump that happens each time the state raises the minimum wage. ...

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Copyright 2017 KQED


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