California recently became the first state to enact a $15 minimum wage, and the business community is stunned. Not by unions pursuing such an increase. They had a $15 initiative on the ballot this November in any event. Rather, the surprise was that California’s lawmakers were so anxious to avoid a popular vote on a measure that significantly reduces opportunities for working class Californians, the very individuals it was supposed to benefit.

In December, The Federal Reserve Bank of San Francisco released a paper examining the current research on the impact of minimum wage increases. It stressed that the “most important” policy consideration was whether there would be “fewer jobs for the least skilled workers” because “they are the ones the minimum wage is intended to help.” It found that the “most credible” research showed minimum wage increases resulting in “job losses” for these workers and “with possibly larger adverse effects than earlier research suggested.”

In January of this year, Gov. Jerry Brown agreed, stating that raising “the minimum wage too much” would put “a lot of poor people out of work.” His conclusion: “There won’t be a lot of jobs.”

How much of an increase is too much? Brown’s Budget Summary for 2016-17, also released in January, stated that $15 would create “major increased costs, estimated at more than $4 billion annually,” sending “the state budget to annual deficits” and exacerbating a projected “recession by raising businesses’ costs, resulting in more lost jobs.”

Good employees are every business’s most valuable asset. But, a minimum wage increase of this magnitude will make many good and valuable employees unaffordable.

Take a typical quick service restaurant employing 25 people with annual sales of $1.25 million. The National Restaurant Association’s annual Operations Report states that the average pre-tax profit margin for such a restaurant is 6.3 percent, or $78,750. While more experienced employees typically contribute more to a business’s bottom line, for this example let’s assume that each of these 25 employees contributed an equal amount to the business’s success of $3,150.

According to the Bureau of Labor Statistics, restaurant sector employees work an average of 26 hours per week. Increasing California’s minimum wage from $10 an hour to $15 for such an employee results in an annual cost increase of $6,760, or more than double what the employee contributed to the business’ success – resulting in a loss of $3,610 per employee per year.

So, Gov. Brown was right, “there won’t be a lot of jobs.” Marginally profitable businesses will close and fewer new businesses will open. Businesses that can move out of state will move. To survive, more profitable businesses will have to reduce workers’ hours to the bare minimum, automate as many positions as possible and raise prices as high as the market will bear. This will be particularly devastating for working class Californians in counties still experiencing high unemployment such as Fresno (10.6 percent), Kern (11.6 percent) and Merced (12.5 percent).

But businesses aren’t alone in facing cost increases. According to California’s Department of Finance, increasing the minimum wage to $15 will cost taxpayers $3.6 billion per year when fully implemented.

For example, schools have employees at or near the minimum wage such as bus drivers, grounds keepers, custodians, staff for special needs students and after school activities. Adjusting to increased labor costs on a fixed budget will require spending cuts such as reducing staff and services, reducing field trips and trips to athletic events, reduced spending on technology, reduced music or arts programs and enlarged class sizes. Underprivileged school districts, already struggling to provide the services their students need, will feel the impact of these cuts far more than affluent districts along California’s coast.

Why would Californians support a minimum wage increase that threatens the quality of education and entry-level job opportunities for the working class? The reality is, they wouldn’t. In February, a poll the California Restaurant Association commissioned showed that, while 63 percent of California voters supported a minimum wage increase, only 46 percent supported an increase to $15. A “key factor” in this discrepancy was that voters thought $15 went “too far” and would either hurt the state economically, hurt small businesses or hurt California’s schools.

So why pass this bill? Gov. Brown’s office will tell you that he negotiated concessions from the unions that were not in the ballot initiative. But, it’s unlikely the initiative would have passed. After months of widely publicized union-sponsored protests, the business community had yet to even make its case and public support was only 46 percent. Passing the bill without a popular vote avoided the risk of a loss in left-leaning California that would have had national implications for the initiative’s main sponsor, the Service Employees International Union, a major source of campaign financing for Democrats.

Brown did get one notable concession. For the last two years of his term, California’s minimum wage will increase just 50 cents a year. For the next governor, it will increase $1 per year for each of the next four years. So, it will fall on Gov. Brown’s successor to deal with the fact that, to quote Gov. Brown, “there will be a lot of poor people out of work.”

Andrew Puzder is CEO of CKE Restaurants, parent of Carl’s Jr. and Hardees.