New Geography contributor Bill Watkins writes that analysis of price and substitution effects implies that different California regions will be affected differently by a minimum wage increase.
Watkins notes that because wages are generally lower in Central California than in Coastal California, the minimum wage increase will be more impactful in Central California, amplifying both price and substitution effects relative to Coastal California. Watkins writes:
Central California is seemingly in perpetual recession. Even in good times, many Central California counties see double-digit unemployment. Colusa County’s unemployment rate was over 20 percent in the most recent data release. The region also sees disparate impacts from California’s high energy costs, water policies, and regulatory infrastructure, all of which hit them much harder.
Coastal Californians underestimate the economic differences between California’s regions. They are huge. California simultaneously has some of America’s wealthiest communities and some of its poorest. It’s important that we remember that California, with about 12 percent of America’s population, has 35 percent of the nation’s welfare recipients.
Read Watkins’ full commentary on New Geography >>