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California's minimum wage hike is good news for workers

As California is poised to raise the state's minimum wage to $15, the governor of Florida is launching an advertising campaign to attract businesses to move from California. The argument will be that they should move to Florida, where the minimum wage is $8.05.

The ads, of course, miss the point. Some complain that raising the minimum wage to $15 will cost jobs. The problem with that argument is that most of the jobs that are paid the minimum wage are unlikely to move. You can't just take a Subway or a Starbucks and move it from Los Angeles to Orlando.

Wage growth hasn't kept up with the cost of living

In 1980, the federal minimum wage was $3.10 and in 2016 dollars, that is equivalent of $8.96. With the current federal minimum wage at $7.25, any worker earning this wage is being paid less than they would have been earning 36 years ago.

Workers will benefit from higher wages

The reality is that this wage hike represents a genuine increase in purchasing power for people earning the minimum wage. And keep in mind that if the jobs were 40 hours per week, and many are not, workers would only earn a $31,000 gross salary. Considering the high cost of living in the Los Angeles area, most of this money will end up being spent on basic living expenses.

Ultimately, the minimum wage hike will result in cash infusion into the California economy. The additional economic activity could actually create a demand for more jobs. But those jobs won't be in Florida.

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