I & I Editorial BoardThe Golden State’s leftist Democrat-dominated legislature loves to grandstand as a champion of the downtrodden and the working poor, even if the policies they enact end up hurting those people the most. That’s certainly the case with the state’s minimum wage hike, which is set to hit in 2024.
The state will raise its overall mandated minimum-wage rate from $16 an hour to $16.50 an hour overall, starting in 2024. But some industries will get an even bigger wage shock: fast-food minimum wages go up to $20 an hour starting in April. Meanwhile, workers in the health care industry will see their minimum wage rise to $18, $21 or $23 an hour, depending on the job.
It’s about time, you say?
Let’s start by saying we’re not against anyone getting a raise. But raises should come from the companies themselves, not from government decrees. As study after study in recent years show, government-mandated minimum wage hikes usually hurt those they’re meant to help.
It’s an irony that seems lost on California’s leftist political class, now in total control of the state, continues to “help” those at the bottom rungs of the economic ladder by making it more expensive for businesses to hire them and keep them working.
Already, with California’s looming minimum-wage tax on fast-food chains in the state, employers are tweaking costs by reducing hours, laying off workers and charging you more for that cheeseburger, fries and a drink that you crave.
Though the calendar says it’s still 2023, franchisees of the Pizza Hut chain have announced this week they’re laying off 1,200 drivers who used to deliver their piping-hot pies door-to-door. With the new higher wages, they can’t afford to keep drivers working.
Pizza Hut isn’t the only company making big changes in California’s massive fast-food market, which employs 557,000 workers at 30,000 outlets.
In order to meet the fast-food industry’s estimated $3 billion in added labor costs from the minimum-wage increase, popular chains such as Chipotle and McDonald’s plan “to pass the costs of higher wages in California to customers by raising menu prices,” The Business Insider reports.
Expect to hear shrieks from the left as fast-food outlets do other things to survive in a state that has one of the most-hostile business environments in the country. (California ranks 48th in the nation when it comes to business taxes, according to the nonpartisan Tax Foundation, making it already one of the costliest states in which to operate.)
Let’s also be clear about something: A minimum-wage increase isn’t a raise for workers, it’s a tax on both businesses and workers. A handful of the best workers will still have jobs, while those who are considered marginal — that includes minority and young workers who have less schooling, less training and fewer skills than others — will bear the brunt.
“Most minimum-wage jobs are held by those under the age of 25 and who work part time,” notes Lee Ohanian, a UCLA economics professor and Hoover Institution fellow. “Only about 0.4% of full-time, head-of-households individuals earn the minimum wage.”
So who will suffer?
“Every time we raise the minimum wage, kids lose their jobs,” Ohanian explains. “This isn’t efficient, and it isn’t right. We should not be implementing policies that prevent people from being able to work.”
As for the argument that the hike is needed to “keep up with inflation,” whose inflation are we talking about? Just the workers? How about the businesses? With three-quarters of their costs being labor-related, they have to take immediate action, or go out of business.
And then there are the customers. They, not the businesses, will foot the bill when they buy a suddenly-much-pricier cheeseburger or a pizza. Prices will go up, as they inevitably do, when higher costs can’t be offset by gains in productivity.
For the curious, there are literally dozens of studies and reports out there (including our own) that explode the myths of raising minimum wages, ranging from Walter B. Williams’ 1977 landmark study for Congress that showed minority youths suffered most when minimum wages rise, to more recent studies showing that non-wage losses after a minimum-wage hike offset any gains for workers.
What will now happen, no doubt, is that there will be more automation (robots already prepare food at McDonald’s, Chipotle, White Castle, Panera and other outlets), more self-service terminals, and fewer workers overall.
And, oh yes, stores will close. Marginal stores that can’t make up the higher costs will simply shut down, thanks to inflation and higher wages.
As for hospitals, the other part of the California minimum-wage increase, they’ll pass the higher costs of their services on to you through your medical insurance. Along with everything else in this age of Bidenflation, higher prices sink to the bottom line.
And the costs added to health care will be enormous, in the billions of dollars in California alone, according to estimates. Add to that California’s latest plan to add undocumented illegal immigrants to the state’s Medicaid rolls, and health care costs inevitably will soar.
So expect more layoffs and shutdowns. In a state that already has a record $68 billion spending deficit due to a 25% drop in income tax revenues, that’s one more epic disaster. The only real beneficiaries of this disaster will be politicians, who can pose as champions of the underclass, and unions, which will now see their own cash flows and political clout grow.
— Written by the I&I Editorial Board
Jonathan Williams and Skip Estes
Using these vague “policy violations,” Google is now threatening to demonetize us. It’s part of Big Tech’s effort to silence conservative voices.
All these explanations of the real effect (by the Stellar Editorial Board of I&I) are well known-even, doubtlessly by the California politicians who passed it, and the Union Lobbyists who lobbied for it.
So if the effects are known why are they passed?
So the Politicians can garner votes to keep in power (there are more people in fast food-even though there are real costs like rising unemployment and higher prices-who will benefit than the number who will be seen to be adversely affected). Thus, the Leftist legislature can preen their Liberal feathers-and the Union thugs can pat each other’s backs.
Why is this so?
Because of the marketing campaigns of the politicians and unions (for example, them inveighing against greedy business “that don’t want to pay what their employees deserve.”)
So in reality, the increase in the California minimum wage should be re-named the Sinecure Act That Benefits Leftist Politicians and Union hacks.
And people who are closer to the edge financially will not stop for that fast food at all, which lowers the income for the business that is supposed to pay people all that money, so more cuts get made.
“The Golden State’s leftist Democrat-dominated legislature loves to grandstand as a champion of the downtrodden and the working poor, even if the policies they enact end up hurting those people the most. ”
Of COURSE they love the poor and downtrodden. Why else would they work so hard to create MORE of them?