I & I Editorial BoardCalifornia Democrats who pushed through the state’s punitive new minimum wage must be feeling mighty proud about now. Not only are fast-food joints closing or replacing low-end employees with overseas workers and robots, now the law is costing the very people it was supposed to help while decimating consumers’ wallets. Well done!
The $20-an-hour wage floor foisted on California’s fast-food restaurants, dubbed with the innocent-sounding moniker Assembly Bill 257, was signed into law last fall. It didn’t take long to become a disaster.
Hoover Institution senior fellow and economist Lee Ohanian showed just how quickly bad policies can wreck an economy. And the damage was done even before the law officially went into effect a month ago today.
“Between last fall and January,” Ohanian wrote, “California fast-food restaurants cut about 9,500 jobs, representing a 1.3% change from September 2023.” By comparison, overall employment in California during that period fell just 0.2%.
Those who are losing their jobs in this new higher-wage environment are those most easily replaced, with the lowest productivity — which usually means minority youths with minimal education and little or no work skills. In short, the most vulnerable among us.
“This includes losses at Pizza Hut and Round Table Pizza which are in the process of firing nearly 1,300 delivery drivers. El Pollo Loco and Jack in the Box announced that they will speed up the use of robotics, including robots that make salsa and cook fried foods,” Ohanian added.
Because of escalating costs, many restaurants are also adding “ordering kiosks,” basically firing workers and replacing them with user-friendly computer terminals.
And, to repeat, this was even before the law went into effect. In the coming weeks and months, expect more job devastation, business closures and sharply higher prices paid by consumers.
Indeed, that latter point — higher prices — is already slamming Cali consumers.
Wendy’s has already boosted prices 8%, Chipotle by 7.5%, Starbucks by 7%. “McDonald’s has announced it will be raising prices, and many other fast-food franchises have announced hiring freezes,” Ohanian observed. Since last September, prices have shot up 10% total.
A recent Washington Times headline put it best: “Fast food chains find a way around $20 minimum wage: Get rid of the workers.”
The same Washington Times story adds, “Rather than make less money, restaurant owners are exploring alternative strategies to maintain profitability. Reducing staff numbers appears to be their primary solution for lowering overheads.”
For consumers, there’s nowhere left to hide from the ravages of inflation. If you voted for the people who passed the bill in California’s legislature, and the person who signed it into law — that’s you, Gov. Gavin Newsom — you have no one to blame but yourself.
And it will get worse, much worse.
Part of the bill that has gotten little notice created a “Fast Food Council.” Sounds innocuous, but in fact it’s a non-elected council that will have near dictatorial powers over fast-food outlets’ labor policies, including pay.
In earlier, more-honest times, this used to be called “fascism.” But today the more fashionable term is “worker-friendly progressivism.”
Isn’t it just a noble idea gone bad? Nope. It’s a cynical deal between so-called progressive politicians, frightened food industry groups and unions to bleed consumers, workers and the fast-food industry, all at once.
“After fast food industry representatives tried to block the bill via a ballot measure, the Service Employees International Union (SEIU) sat down with the International Franchise Association and California Restaurant Association to hammer out a deal,” wrote the now very left-wing Teen Vogue, which credits “organizing” for the victory.
Actually, it was blackmail. The California Restaurant Association sold out the national fast-food chains, which are the targets of this law. The SEIU, which had used “strikes” at 450 fast-food locations to show they mean business, basically extorted the fast-food chains.
No doubt, some of those who went on strike are now collecting unemployment. You’ll pay for that, too. “Would you like higher taxes with that burger?”
If you live in another state, this is still very relevant to you. The current national minimum wage is $7.25. But a move is afoot to raise it to $15 an hour or higher.
While $7.25 doesn’t sound like much, virtually no one other than short-term, part-time teenagers earns that amount. In California, for instance, the median hourly wage in fast-food enterprises was about $14 an hour (according to Salary.com), with essentially no workers earning the national minimum, which is almost half less. Same is true across the country.
So if raising the national minimum wage to $15 an hour won’t hurt that many people, why care? Because it will hurt those who can least afford it.
Why?
“The consensus among economists is that 1% to 2% of entry-level jobs are lost for every 10% increase in the minimum wage,” writes David John Marotta at Forbes. “Raising the minimum wage from $7.25 to $15 could mean a reduction in entry level jobs of 11% to 21%. These estimates would suggest between 1.8 and 3.5 million of jobs lost.”
That’s why.
Those are jobs for people who are the most disadvantaged in our society — mostly living in poor minority communities — who lack decent education, have few if any tradable work skills, might not know how to follow simple instructions or speak English fluently, and don’t yet understand the importance of showing up on time or finishing a job once started.
These are the very basic skills that get you a better job at higher pay. A future, in short. But you have to get that first job to learn them. Do the Democrats that passed this bill want a permanent underclass of unemployables that depends on government handouts? Sure looks that way.
Here’s a modest alternative proposal that would benefit everyone, but especially low-end workers: No minimum wage at all, neither in California nor in the rest of the U.S. Then, everyone who wants a job will have one, and businesses won’t have to hire robots instead of people.
— 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.
If only someone could have warned them this would happen.
Oh wait…..
There is no use crying about those who need to learn job skills being hurt most by this. The college educated zoomers and millennials, trade groups and unions, politicians, activists and regulators don’t truly care and can’t understand a bit of it.
I am enacting my own minimum wage law. I am cutting my purchases of fast food to a minimum.
Keep voting democrap You get these results
Burgers got smaller as well as the fries. Thanks Biden and Newsom.
Democrats don’t understand economics or they don’t care about the policies they implement. Raise the cost of labor and you will get less labor. In this case, restaurants will employ fewer people, reduce their hours of operation or close the business. All of those things have happened so what good have the Democrats done anyone? None but they have hurt people.
“Democrats don’t understand economics or they don’t care about the policies they implement. ”
It’s both. That’s what happens when you use demagoguery and passing out money to secure power.
The government has no business meddling in wages & conditions of employment. It’s a private contract. Newsom is a vile communist. California is a depraved 3rd world cesspool.
Im done with “fast” food, way too expensive. I know how to make a hamburger.
Before long there won’t be any more entry level jobs.
The damage has been done and is permanent. It will only spreed further to other states.
As a lifelong Californian, I continue to be appalled by the laws these elected officials pass, including the governor. This one goes in the opposite direction of ‘protecting’ the homeless and the poorer among us who have difficulty paying for food and frequently use the fast food restaurants.
A few things:
1. Don’t call California “Cali”, it’s annoying, Cali is a city in Colombia.
2. There are lot’s of good paying jobs in California that go unfilled because so many people set their goals low thinking they can only work fast food or similar things like that. Not true. Believe in yourself, take a try at something better. If you enjoy food prep, if you like the fast pace of working in the restaurant business, then by all means go for it, I’m not diminishing the industry. But if you think that is your only option, it’s not. Dress properly, be on time, and be enthusiastic about a job opportunity, and there’s a lot of people wanting to hire entry level employees for $20 an hour or more. It’s an employee’s market in California.
3. Try showing up late for your shift at McDonalds, see how that goes.
Scandinavian countries have no minimum wage laws. They take care to have substantial public welfare laws….but stay out of labor markets. The result is more jobs, lower prices, more businesses. Apparently too complicated for American progressives to understand.
Democrats = the definition of “insanity”.
So many stupid politicians!
Defund the Police means more murders, more violence and more civic mayhem.
DEI means firing excellent leaders with merit to be replaced with those with less merit, less experience and with woeful amounts of mediocrity.
Lowering the police testing standards to increase minority cops, means less qualified cops of all races on the streets with guns and legal permission to shoot.
So dangerous!
And raising minimum wage, not on merit or value, forces the wages on up the rungs of the wage ladder to be raised and “surprise,” the owners have to let employees go and not hire entry level ones.
Known as the “Telescoping Up Costs.”
Why legislate polices that will obviously backfire so badly?
Don’t most union workers get bumps in their own wages when the minimum wage is increased? Yeah, this is FAR more detrimental to the economy than just the impact on those actually earning the minimum wage.
Progressive pols have zero sympathy for the fast food industry to begin with. Its customers (their constituents) ingest high-fat & -salt diets there, ruining their health in the bargain. (Progressives believe the proletariat should be eating a diet of predominantly raw kale!) Corporations and their franchisees (who liberals pretend are the targets of their wage & tax hikes) are seen as the enemy! But corporations and their franchisees don’t pay higher wages/taxes, they pass these expenses along to their customers as higher prices. (Yes, there’s a point at which the entire overpriced enterprise becomes unsustainable, an inflection point CA’s reaching.) In these oblique ways, progressives figure they’re doing (their secular version of) the Lord’s work, putting chicken shacks, burger stands, and pizza joints out of business. Yes, their constituents will be out of both a place to eat AND work, but progs figure (with no regrets!) that this is in everybody’s best interests.