The California Chamber of Commerce estimates that increasing the minimum wage will add $2 billion in labor costs while discouraging businesses from coming to California. Raising the minimum wage has another effect, as well: It creates a greater incentive for California businesses to hire illegal immigrants. Illegal immigrants provide a deep source of labor for any business unable or unwilling to hire Americans at the minimum wage standard. And so more and more illegal immigrants cross the border to find jobs and/or take advantage of California's generous social safety net. The economic burden on citizens of the state of California continues to grow. Is this the economic revivification Gov. Schwarzenegger promised when he took office?
It is especially strange that Gov. Schwarzenegger chooses to focus on the minimum wage issue now. Yes, his approval ratings are low. But the Democrat-dominated legislature has even lower approval ratings -- after the November special election, Californians disapproved of the legislature by an 80-20 margin. Capitulating to a legislature with basement-level approval ratings isn't only a bad policy move, it's a bad political move.
But fear motivates liberal Republicans to do strange things. Faced with the prospect of an uphill battle, Gov. Schwarzenegger is retreating rather than advancing. In that September 2003 Wall Street Journal editorial, Schwarzenegger criticized then-Gov. Gray Davis, stating: "Mr. Davis says he wants jobs, but he has done everything possible to chase away job creators. Thanks to the economic policies of this administration, for the first time in California history, more native-born Americans are leaving this state than are moving here. No one would confuse the destructive economic policies of Gov. Davis and Lt. Gov. Cruz Bustamante with the pro-growth ideas of Milton Friedman or Adam Smith."
Well, Gov. Schwarzenegger, no one would confuse adding additional wage regulations with the axioms of Friedman or Smith, either.