Florida agency's misleading attack on California's minimum wage hike

Florida Gov. Rick Scott is not on board with the minimum wage increase in the sunny, oceanside state — of California.

As Scott toured the West Coast for the second time attempting to attract businesses, Enterprise Florida (the state’s public-private economic development arm) ran radio ads in San Francisco and Los Angeles attacking California’s $15 wage and trumpeting Florida’s superior job prospects.

"Seven hundred thousand. That’s how many California jobs will be lost thanks to the politicians raising the minimum wage," the ad says, as the Miami Herald reports. "Ready to leave California? Go to Florida instead — no state income tax, and Gov. Scott has cut regulations. Now Florida is adding 1 million jobs, not losing them."

California Gov. Jerry Brown didn’t take this lying down, penning a letter welcoming Scott back to California, "a state that in the last year has added more jobs than Florida and Texas combined," and not-so-subtly suggested Scott worry about more pressing matters back home.

"Rick, a fact you’d like to ignore: California is the 7th largest economic power in the world. We’re competing with nations like Brazil and France, not states like Florida," Brown wrote on May 2. "If you’re truly serious about Florida’s economic well-being, it’s time to stop the silly political stunts and start doing something about climate change – two words you won’t even let state officials say. The threat is real and so too will be the devastating impacts."

Here, we’ll look at Scott’s claim that California will lose almost as many jobs as Florida will gain.

The ad is comparing California's projected employment with Florida's past performance — an apples-to-oranges comparison. It also distorts what the 700,000 jobs-lost figure actually refers to. Even with the wage hike, California is expected to gain more jobs than Florida over the next decade, albeit not as many as without it. Furthermore, all the economists we spoke with cautioned against pinning a figure to the minimum wage hike’s impact on employment in California.

All that glitters in Golden State jobs

A spokesperson for Scott cited a post by American Action Forum, a self-described center-right policy institute, as the source of the 700,000 lost jobs. But the figure doesn’t refer to a decline in the total number jobs in the state, as the ad suggests. Rather, it’s the difference between the number of jobs that California could have gained without and with the wage hike.

California will gradually increase the current $10 hourly minimum wage to $15 by 2022. According to the institute's labor market policy director, Ben Gitis, that will lead to a 3.5 percent decrease in employment growth or about 692,235 jobs by 2026 that could have been added if the wage did not increase.

Gitis walked us through his math. He used the California Employment Development Department’s latest 10-year forecast, which projects that the state will add 14.9 percent or 2.3 million more jobs from 2012 to 2022.

Gitis then calculated the impact of the minimum wage hike; he concluded that California would see its projected 2026 jobs numbers reduced by 3.5 percent.

In other words, California would have added about 3.4 million new jobs from 2012 to 2026 without the hike, but 2.7 million with it. So the state isn’t so much "losing" 700,000 jobs as "forgoing" them, said Jeremy West, an economist at the Massachusetts Institute of Technology who co-authored the Journal of Human Resources study Gitis used for his calculations.

Bright employment outlook in Sunshine State

Scott’s office forwarded us a press release that says Florida has added more than a million jobs since 2010, a claim that PolitiFact Florida rated Mostly True. But Scott was talking about future projections for California, so we’ll look instead at the number of jobs Florida will gain in the same time frame as Gitis’ analysis.

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From 2012 to 2026, Florida is actually projected to add more than a million jobs. The increase, however, will still be less than California’s.

(We would be remiss to not mention that California’s cost of living is higher than Florida's and its population size is almost twice as big. But as Enterprise Florida touted raw employment numbers, we’ll follow suit.)

Florida added about 552,000 jobs from Dec. 2012 to Dec. 2015. According to the Florida Dept. of Economic Opportunity, the state will gain 1.1 million more jobs from 2015 to 2023. That’s a compounded annual growth rate of 1.5 percent, equal to about 445,000 new jobs from 2023 to 2026.

Put it all together, Florida will add 2.1 million jobs from 2012 to 2026. That’s still 600,000 fewer jobs than California will add in the same time frame with the $15 wage.

Waging in uncharted waters

As we have previously reported, there’s a great amount of debate over the effect that minimum wage hikes have job growth. A spokesperson for Brown forwarded us academic and think-tank studies showing that past increases have had little or no effect on employment.

California’s hike, however, is so unprecedented that past research may be less relevant. All the experts we spoke with suspect it will reduce employment.

"An increase the size of California’s is outside of the experience of any state over the last four decades," said Jonathan Meer, a Texas A&M University economist and co-author of the study Gitis cited. "A dramatic increase in the minimum wage like California’s will undoubtedly reduce employment. However, I would be very cautious about putting any precise figures on the amount."

Two home-state economists — Jeffrey Clemens of the University of California, San Diego and David Neumark of the University of California, Irvine — agreed that the huge wage hike will likely cause job losses, but the magnitude is uncertain.  

"The recently passed minimum wage increases are sufficiently beyond the range of historical experience that I do not think it is possible to predict their effects on employment with any precision," Clemens said.

Neumark added that Scott’s job-poaching mission is nonetheless ill-fated, given that the flow of jobs into or out of California is typically miniscule and the jobs most affected by hike (low-skill jobs in the service and agricultural sectors) are hard to move out of state.

"Maybe a few low-wage manufacturers will move. But there's no reason to expect they'd go to Florida more than many other low-wage states or overseas, so I suspect the employment growth in Florida from California’s minimum wage increase would be negligible, and statistically undetectable," Neumark said. "So Gov. Scott is probably wasting his and his Florida taxpayers' time."

Our ruling

A radio ad by Enterprise Florida said, "Seven hundred thousand. That’s how many California jobs will be lost thanks to the politicians raising the minimum wage….Now Florida is adding 1 million jobs, not losing them."

This is misleading. The 700,000 figure refers to the number of jobs California could have added by 2026 if it didn’t increase the minimum wage, not a decline in net employment. Based on projections, California will still gain more jobs with the minimum wage increase than Florida during the same time frame.

While experts agreed that a $15 wage will reduce employment in California, they said it’s near impossible to pin a number on the impact given how unprecedented the hike is.

We rate the claim Mostly False.